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Discrimination in Housing Then & Now


April is National Fair Housing Month. National Fair Housing Month originated from the signing of the Fair Housing Act by President Lyndon B. Johnson on April 11, 1968. The Fair Housing Act prohibits discrimination in the sale, rental, and financing of housing based on race, color, national origin, religion, sex, familial status, or disability.


In 1988, the U.S. Congress passed a resolution designating April as National Fair Housing Month to commemorate the signing of the Fair Housing Act and to raise awareness about the importance of fair housing practices. The purpose of National Fair Housing Month is to promote awareness and understanding of fair housing laws and to highlight the ongoing work that needs to be done to eliminate discrimination in housing.


Why do we need a National Fair Housing Month? Housing in the United States has a long history of being unfair and discriminatory, particularly towards marginalized communities such as people of color, low-income individuals, and those with disabilities. Here are some key examples:


Redlining

Redlining is the practice of denying or limiting financial services, such as loans or insurance, to certain neighborhoods based on their racial or ethnic composition. It was a widespread practice in the United States during the 20th century, particularly in the years following World War II.


The practice of redlining began in the 1930s with the creation of the Home Owners' Loan Corporation (HOLC), which was established to help homeowners refinance their mortgages and avoid foreclosure. To determine the risk of lending in different neighborhoods, HOLC officials created maps of American cities and assigned grades to each area based on their perceived creditworthiness. Areas with large minority populations or that were considered "undesirable" were given low grades and labeled in red on the maps, hence the term "redlining."


The effects of redlining were devastating for minority communities. It made it difficult or impossible for people in these areas to obtain mortgages, which made it hard to buy a home, start a business, or build wealth. As a result, many of these neighborhoods became economically and socially isolated, and the effects of redlining can still be seen today in many cities.


In the 1960s and 1970s, the Civil Rights Movement and advocacy groups brought attention to the discriminatory effects of redlining. In 1977, the Community Reinvestment Act (CRA) was passed, which requires banks to serve the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods. The act also established a regulatory framework to ensure that banks are meeting their obligations under the law.


In 2015, the U.S. Department of Housing and Urban Development (HUD) issued a rule that requires cities and towns to examine patterns of segregation and discrimination in their housing policies and develop plans to address them. The rule also requires the use of data to identify and address racial disparities in access to housing and other opportunities. Most recently, On February 9, 2023, HUD published a proposed rule that "would faithfully implement the Fair Housing Act’s statutory mandate to affirmatively further fair housing (AFFH), which directs HUD to ensure that the agency and its program participants proactively take meaningful actions to overcome patterns of segregation, promote fair housing choice, eliminate disparities in opportunities, and foster inclusive communities free from discrimination."


Despite these efforts, redlining and its effects continue to be a challenge in many parts of the country. Areas that were redlined in the past may still be viewed as high-risk by banks and other lenders, which can make it difficult for people in these areas to obtain loans or credit. This can make it hard to buy a home, start a business, or build wealth. And the effects of redlining can still be seen in many American cities, where racial and economic segregation is still a persistent problem. This can limit access to quality schools, jobs, and other opportunities for people in these communities. Additionally, redlined neighborhoods may be seen as undesirable by investors, which can lead to disinvestment and a lack of resources for community development. This can lead to a cycle of poverty and disinvestment that can be difficult to break.


Racial covenants

Racial covenants, also known as restrictive covenants, were provisions in property deeds that prohibited the sale or lease of property to people of certain racial or ethnic groups. These covenants were common in the United States from the late 19th century until the 1960s, particularly in areas with growing populations of African Americans, Jews, and other minorities.


Racial covenants were often used as a tool to maintain racial segregation in housing and to prevent minorities from moving into predominantly white neighborhoods. They were also used to protect property values and promote residential homogeneity.


The use of racial covenants was challenged in the courts in the 1940s and 1950s, and in 1948, the U.S. Supreme Court ruled in Shelley v. Kraemer that racial covenants were unenforceable under the 14th Amendment to the U.S. Constitution, which guarantees equal protection under the law. However, it was not until the Civil Rights Act of 1968 that racial covenants were officially banned.


Today, racial covenants are illegal and unenforceable, and it is illegal to discriminate on the basis of race, color, religion, national origin, sex, disability, or familial status in the sale or rental of housing. The Fair Housing Act, which was passed as part of the Civil Rights Act of 1968, provides legal protection against housing discrimination and prohibits the use of discriminatory practices in the sale, rental, financing, and appraisal of housing.


However, the legacy of racial covenants can still be seen in many communities today. Even though racial covenants are no longer legal, there is evidence that home appraisers may still be influenced by the racial composition of neighborhoods. This can lead to lower home values in predominantly minority neighborhoods, which can make it more difficult for homeowners to build wealth and access credit. Today, the racial wealth gap is a significant challenge, with people of color having significantly less wealth than their white counterparts. Racial covenants made it more difficult for people of color to build wealth through homeownership, which can contribute to persistent wealth inequality.


In many cases, the effects of racial covenants have contributed to persistent racial and economic segregation in housing and limited access to opportunities for minorities.


Segregated public housing

The history of segregated public housing in the United States dates back to the 1930s, when the federal government began to invest heavily in public housing as a way to address the housing crisis of the Great Depression. Initially, public housing was intended to provide affordable housing for low-income families of all races. However, as public housing developments began to be built, they were often segregated by race, with African Americans and other minorities being forced into substandard housing in segregated neighborhoods.


The Housing Act of 1949 promoted slum clearance and urban renewal, leading to the demolition of many older neighborhoods and the displacement of low-income residents, many of whom were people of color. The act also promoted the construction of new public housing projects, which continued to be segregated by race.


By the 1960s, public housing had become synonymous with poverty and segregation, and there were growing calls for reform. In 1968, the Fair Housing Act was passed, which prohibited discrimination in housing based on race, color, religion, national origin, sex, disability, or familial status. However, the legacy of segregated public housing continued to impact communities of color for many years.


Today, while overt segregation in public housing has been largely eliminated, many public housing developments continue to be located in segregated neighborhoods with high levels of poverty and few economic opportunities. Additionally, many low-income families of color still face barriers to accessing affordable housing in more desirable neighborhoods, due to factors such as discrimination in the rental and mortgage markets, and limited funding for affordable housing programs.


To address these challenges, there are ongoing efforts to promote inclusive and equitable public housing policies, such as expanding funding for affordable housing, increasing access to housing choice vouchers, and promoting mixed-income housing developments. Additionally, there are efforts to address the legacy of segregation and discrimination in housing, such as implementing fair housing policies and programs that promote greater equity in housing access and opportunity for all.


Discrimination by landlords

Discrimination by landlords in the United States has a long history, dating back to the early days of the country. Throughout much of the 20th century, it was legal for landlords to discriminate on the basis of race, religion, and other factors when renting or selling property. Discrimination against people of color was particularly prevalent, with many landlords refusing to rent or sell to African Americans, Latinos, and other minority groups.


The passage of The Fair Housing Act of 1968 made it illegal to discriminate in housing based on race, color, religion, national origin, sex, disability, or familial status. However, discrimination by landlords continues to be a problem in many parts of the country today. Landlords may still discriminate against renters based on their race, ethnicity, religion, gender, or other factors. This can include refusing to rent to certain groups of people or charging them higher rent or security deposits. Discrimination by landlords can also limit the housing options available to people of color, LGBTQ+ individuals, and other marginalized groups. This can make it more difficult for these groups to find safe and affordable housing in desirable neighborhoods. Discrimination by landlords can contribute to the housing segregation noted above, with people of color and other marginalized groups being concentrated in certain neighborhoods and denied access to more desirable areas.


Predatory lending practices

Historically, predatory lending practices were often directed towards African Americans and other minority groups, who were systematically excluded from traditional lending markets and forced to rely on high-cost and high-risk loans.


One of the earliest examples of predatory lending practices in the United States was redlining, as indicated above, which involved denying loans or services to residents of certain neighborhoods, often based on race or ethnicity. This practice effectively prevented many African American and other minority communities from accessing affordable mortgages and other financial services, contributing to housing segregation and other forms of economic discrimination.


In the 1990s and early 2000s, these practices became more widespread, with lenders offering subprime mortgages with adjustable interest rates, low introductory rates, and other risky features that made them difficult for borrowers to repay. As a result, many borrowers were left with unaffordable mortgage payments and high levels of debt, leading to a wave of foreclosures and the collapse of the housing market. The effects of this crisis were felt across the United States, with millions of families losing their homes and experiencing financial hardship.


The housing crisis of 2008 had a disproportionate impact on minority communities in the United States. Prior to the crisis, many minority families had been targeted by predatory lenders who offered subprime mortgages with high interest rates, adjustable rates, and other risky features. These loans were often marketed to families who were not qualified for traditional mortgages, and many borrowers did not fully understand the terms of the loans they were taking on.


As a result, many minority families were left with unaffordable mortgage payments, high levels of debt, and a higher risk of foreclosure. According to data from the National Fair Housing Alliance, African American and Latino borrowers were more than twice as likely as white borrowers to receive subprime loans with higher interest rates, even when controlling for factors like income and credit score.


When the housing market collapsed in 2008, many of these families were unable to keep up with their mortgage payments and faced foreclosure. As a result, minority communities were hit particularly hard by the crisis, with many families losing their homes and experiencing financial hardship. The housing crisis also had broader economic impacts on minority communities. As the crisis spread to the broader economy, many minority families lost jobs and faced reduced access to credit, further exacerbating their financial struggles.


Today, the legacy of the housing crisis continues to be felt in many minority communities, with many families still struggling to recover from the loss of their homes and the broader economic impacts of the crisis. Efforts to address the underlying causes of the crisis, including predatory lending practices and discriminatory housing policies, continue to be critical in promoting greater equity and opportunity for all Americans.


Today, while there have been some regulatory reforms aimed at curbing predatory lending practices in the housing industry, these practices continue to be prevalent in many parts of the country.



Overall, housing discrimination has had a long and troubling history in the United States. While progress has been made over the years, there is still much work to be done to ensure that everyone has access to safe, affordable, and fair housing.


 


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