State Attorney Generals are prosecuting and winning settlements from banks in New York and Rhode Island for increasing originations in predominantly white neighborhoods while excluding minority neighborhoods from their mortgage business.
Gregory Squires of George Washington University tells National Mortgage News that the lenders probably aren’t intentionally discriminating against minorities. Instead, “seemingly benign internal policies [can] result in discriminatory lending practices.” Such policies and practices can range from avoiding branches in minority neighborhoods or failing to market in those communities to setting minimum mortgage loan amounts, which Squires calls “one of the most problematic practices.”
The article points out that lending patterns in minority neighborhoods have undergone a dramatic change since the financial crisis. “What we’re seeing now are not neighborhoods being flooded with subprime loans, but the re-emergence of [traditional] redlining,” says Squires.