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Community Development

3 Key Ways to Fight Lending Discrimination

In 2017, banks denied 24.8 percent of black home loan applicants.

That’s twice the denial rate of white applicants, according to our analysis at the National Community Reinvestment Coalition. We are a nonprofit coalition that champions fairness in banking, housing and business.

Racial and economic discrimination has influenced who accumulated wealth for almost a century, and it has had a lasting impact on the economic health of entire communities.

After World War II, home ownership created wealth for millions of American families. But purchasing a home was out of reach for millions of minority families.

This racial wealth gap continues to grow, driven by policies that make it difficult to become a homeowner while black. Today, for every $100 in white family wealth, their black neighbors hold just $5.04.

That’s unacceptable.

Here are three things we can do to fight discrimination in lending — a critical step to closing the wealth gap.

1. Track where discrimination occurs 

Mortgage data suggests that banks continue to discriminate against minorities in at least 61 U.S. cities. We need to strengthen data reporting requirements so that we know where lenders discriminate. Unfortunately, Congress recently did the opposite.  It weakened reporting requirements.

2. Increase access to housing counseling

If you’re denied a loan, you can enroll in U.S. Department of Housing and Urban Development-certified housing counseling. This provides an alternative measure of risk and reduces a borrower’s risk of foreclosure by 30%. These services help applicants demonstrate the income and savings required to qualify for loans.

3. Modernize the Community Reinvestment Act

For decades, banks refused to lend money in minority and immigrant neighborhoods. This practice, known as “redlining” because banks marked the neighborhoods on maps with red lines, became illegal in 1977, when Congress passed the Community Reinvestment Act.

Since then, technology has transformed how we live, work and do business, but discrimination persists . The law only applies to a fraction of the nation’s mortgage lenders. #TreasureCRA is a movement to reverse this lingering discrimination and strengthen the Community Reinvestment Act so that it applies to all lenders.

Jesse Van Tol, CEO, National Community Reinvestment Coalition, [email protected]

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