The Department of Justice (DOJ) announced Friday a new nationwide initiative to combat the practice of redlining.
Redlining is a type of lending discrimination in which banks refuse to lend money to people seeking home loans because of their race or national origin. Redlining as a practice first came to prominence during the New Deal era in programs designed to increase the availability of homeownership to Americans, but that deliberately excluded minority neighborhoods. The DOJ notes that redlining “has had a lasting negative impact” for those communities and neighborhoods, as minority families have “persistently lagg[ed] behind in homeownership rates and net worth compared to white families.”
The new initiative will be led by the Housing and Civil Enforcement Section of DOJ’s Civil Rights Division. It will analyze potential redlining practices by both traditional banks and non-depository institutions, lenders that are not the typical bank but that provide mortgage lending services and currently make the majority of mortgage loans in the country. DoJ will also work with other agencies, including the Consumer Financial Protection Bureau (CFPB) and the Office of the Comptroller of the Currency (OCC), to identify and refer fair lending violations.
In his remarks on the new initiative, Attorney General Merrick Garland said that DOJ already has “several open redlining investigations” and noted the settlement of an investigation into Trustmark National Bank. Trustmark was alleged to be engaged in redlining practices in predominantly Black and Hispanic neighborhoods in Memphis, Tennessee. In resolving the allegations against them, Trustmark has agreed to invest in a loan subsidy fund for residents of those neighborhoods, establish a committee for fair lending oversight, and pay a civil penalty of $5 million to CFPB and OCC.
Garland concluded his remarks by vowing that DOJ “will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit.”