The concept of “redlining” as a form of illegal discrimination has been around for at least 30 years. Redlining is a form of illegal disparate treatment based on geography. Consumers receive unequal access to credit or receive credit on unequal terms due to the demographic characteristics of a geographic area — the neighborhood either where they live or where the security property is located. The Department of Justice (DOJ) and banking regulators have alleged that lenders involved in these enforcement actions redlined majority-minority neighborhoods through their marketing, sales and hiring actions. The lender’s actions discouraged prospective applicants from applying for mortgage and refinance loans in a particular area’s majority-minority neighborhoods, in violation, in some combination, of the Fair Housing Act (FHA), Equal Credit Opportunity Act (ECOA), Regulation B and the Consumer Financial Protection Act of 2010 (CFPA). These enforcement actions have been comprised of settlement agreements to resolve allegations of lending discrimination by redlining detailed in complaints filed in courts. New Initiative The DOJ recently announced the start of its new Combatting Redlining Initiative. The new initiative represents the DOJ’s most aggressive and coordinated enforcement effort to address redlining. LEARNING FROM REDLINING ENFORCEMENT ACTIONS BY WILLIAM J. SHOWALTER, CRCM, SENIOR CONSULTANT, YOUNG & ASSOCIATES INC. 14 In Touch
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