by Blake Michael, Associate Online Editor, Fordham Environmental Law Review Journal

The Federal Reserve defines redlining as “the practice of denying a creditworthy applicant a loan for housing in a certain neighborhood even though the applicant may otherwise be eligible for the loan”. The term is a “nod to how lenders identified and referenced neighborhoods with a greater share of people deemed more likely to default on mortgage. Using red ink, lenders outlined on paper maps the parts of a city that were considered at high risk of default, as well as more desirable neighborhoods for approving a loan. Riskier neighborhoods were predominantly black and Latino.” Due to a general lack of funding, communities began to crumble and segregated neighborhood lines became even stronger. 

Though redlining originated back in the 1930s, and has since been declared by courts to be an illegal racist practice,  its lasting impacts can still be seen in cities across the country, including New York. In 2018, the New Economy Project reported that banks and other mortgage lenders were significantly more likely to deny loan applications as the percentage of black or Latino residents in the New York City Neighborhoods increased.  The organization also published a series of maps that highlight banks’ failure to locate branches in communities of color. Their research found that banks and other mortgage lenders denied black applicants more than twice as often as white applicants (26% over 12%). Further, there are similar denial rate disparities for New Yorkers looking to refinance an existing mortgage (lenders deny 53% of black, 44% of Latino, and 40% of Asian New Yorkers, compared to 30% of white New Yorkers). 

It is easy to see the lasting effects of redlining in the visible segregation of New York’s public schools. According to Matthew F. Delmont, author of Why Busing Failed; Race, Media, and the National Resistance to School Desegregation, “school segregation worked hand in glove with mortgage redlining.” Even in places where school segregation was not mandatory, it became common practice because school boards were able to draw strict boundaries to replicate the existing residential segregation.  Today, the New York City public school system is one of the most segregated public-school systems in the country. “Of the 1.1 million NYC public school students, 15% are white. However, about 75% of Black and Hispanic students attend schools where fewer than 10% of students are white, and about 35% of white students attend schools where more than half of the student population is also white.”

The Community Reinvestment Act of 1977 was an attempt to “redress inequity by making sure banks served poor neighborhoods and faced consequences if they didn’t’.” However, “these laws have proven woefully inadequate.” The Biden campaign has outlined their plan to end racist redlining and other unfair practices in the housing market, this includes strengthening and expanding the Community Reinvestment Act. Though change won’t happen overnight, this is at least as start (especially following the Trump administration’s pattern of deregulation).