Why We Fight
Over 50 years ago, the U.S. Congress passed the Fair Housing Act. Civil Rights leaders fought for this law to end redlining, a practice of discrimination by the federal government which denied government-insured mortgages to African-American neighborhoods.
To this day, the Fair Housing Act remains one of the crowning accomplishments of the Civil Rights Movement for making this type of discrimination illegal. After the Fair Housing Act, though, mortgage lenders changed up their game. They continued to redline. Even though it was illegal, with little political will power to enforce the law, people were still unfairly denied mortgage loans, which kept them out of the housing market and the wealth that this created.
Lenders also began something called reverse redlining (or predatory lending), by offering subprime mortgage loans to minorities, even if they qualified for a better loan. Until the Dodd-Frank Act of 2010, which reformed mortgage lending after the crash of 2008, lenders could make more money by offering adjustable-rate mortgages instead of fixed-rate mortgages. Loan officers who sold these higher-risk loans to communities with less experience or ability to protect themselves, mainly minority neighborhoods, made more commission from those loans.
When the economy failed after the housing market crash, not only were the wealth gains lost but over 10 million Americans had their homes taken through foreclosure, leaving credit blemishes that have continued to impact our communities’ housing needs.
To this day, reverse redlining/predatory lending continues, and we can find the evidence of this by comparing the loan terms made to different borrowers. With home ownership being one of the biggest builders of wealth, and as racial discrimination persists, so does the racial wealth gap. You can learn more about the Fair Housing Act and why it is important that we have federal and state laws to protect the public.
Research by UC Berkeley looked at data from over 3 million mortgages taken out between 2009 and 2015. The conclusions of their research show that African-American and Latino mortgage borrowers pay over $700 million in excessive interest every year, reducing their ability to build wealth. Lenders know that the vast majority of home buyers do not compare lender offers (77%). First time borrowers with little family experience with home ownership are especially vulnerable.
As federal and state public policy fails to protect the public from predatory lending, we need to continue thinking of how we can create change. We know that when people compare lender offers, they can find real savings. Helping our neighbors understand how to compare offers will help reduce this injustice.
We can start right here, in communities across our state of Texas. That’s what we’re doing at Mortgage on a Mission.
Segregated By Design
This short video explains many of the concepts discussed above. The video is based on the book by Richard Rothstein, The Color of Law: A Forgotten History of How our Government Segregated America. You can visit their website for even more information: