The Entrepreneur Fund: The History of Lending Discrimination

The Entrepreneur Fund, September 18, 2020: The History of Lending Discrimination

Laws today protect borrowers from discriminatory lending practices, but that wasn’t always the case. For decades U.S. banks denied mortgages to Black families—and those belonging to other minority groups—who lived in certain areas “redlined” by a federal government agency called the Home Owners’ Loan Corporation (HOLC).

  • Lending discrimination occurs when lenders base credit decisions on factors other than the applicant’s creditworthiness.
  • The practice of redlining made it impossible for many members of minority groups to qualify for loans to buy and improve homes.
  • Redlining is one factor behind the persistent racial wealth gap in the U.S. today.
  • Laws today forbid discrimination based on race, color, religion, sex, national origin, handicap, familial status, age, and whether you receive public assistance income.
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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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