When Some Buyers Are More Equal Than Others: Will the U.S. Government “Reboot Redlining”?

Not long ago, New Jersey-based OceanFirst Bank agreed to pay more than $15 million in a settlement with the federal government. This was to resolve the government’s allegations that, for several years, beginning in 2018, the bank violated the Equal Credit Opportunity Act and Fair Housing Act. The problem involved an alleged pattern of ignoring minority neighborhoods.

But that was a past U.S. government. The current Justice Department wants to drop settlements like this. The current federal government is moving to relieve lenders of their obligations to ensure access to information and financing in mainly minority counties.

Access to financing is, of course, essential for households hoping to build wealth through real estate.

What a Court Found OceanFirst Had Done

OceanFirst was faulted for its focus on majority-white areas, a federal district court heard, to the detriment of mainly Black, Hispanic and Asian areas.

When the case later settled, the U.S. government directed OceanFirst to:

• Invest at least $14 million to support home loan accessibility, refinancing, and renovations for residents of majority-nonwhite neighborhoods in Middlesex, Monmouth, and Ocean counties.

• Invest $700K into outreach and information-sharing in these allegedly underserved New Jersey counties.

• Invest $400K in community partnerships to provide homeowner support, and avert foreclosures.

OceanFirst agreed last year to expand its operations, and train its staff on fair lending practices. It further agreed to create a position for a director of community lending for minority communities.

You might call it diversity, equity, and inclusion. Or you might just call it fair. The Justice Department at the time called it holding institutions “accountable for their discriminatory actions while ensuring racial and economic justice for all Americans.”

The OceanFirst settlement was one of numerous successes of an anti-redlining initiative launched in 2021.

In late 2021, the U.S. Department of Justice launched its Combatting Redlining Initiative.

Current Administration Keen to “Reboot Redlining” – Harvard’s Journal of Law & Technology

Now, agencies and lenders are being allowed to take down guardrails against discrimination in lending. The Department of Justice has already freed multiple banks from their obligations under hard-won redlining settlements.

This includes a redlining lawsuit against a nonbank mortgage lender serving the Philadelphia area —which, the current administration now says, has done enough. The lender’s practices (between 2015 and 2019) had been challenged under the Equal Credit Opportunity Act, the Consumer Financial Protection Act, the Fair Housing Act, and other provisions geared to stop discrimination in lending. Dropping the consent order in this additional case is just one example of federal agencies closing down enforcement actions brought under prior leadership.  

The Harvard-based Journal of Law & Technology (JOLT Digest) reminds readers that the Equal Credit Opportunity Act, in 1974, changed a system in which women were denied loans without male co-signers. After addressing discrimination based on sex or marital status, the Act expanded. Congress extended its equal opportunity provisions to minority borrowers, and also barred age discrimination.

The term redlining, says the JOLT Digest, comes from red lines on maps used by the U.S. government to designate minority neighborhoods as too “risky” for lending, and discourage the issuance of mortgages to minority applicants.

The federal government’s new assault on fair lending “goes beyond merely reversing half a century of work to revert to a world where banks are permitted not to lend in particular neighborhoods,” the Harvard-based journal states. That’s because lenders now have the capacity to digest data from online sources and engage in a high-tech kind of racial and financial profiling.

Meanwhile, in Arkansas…

There’s a group that owns some 150 acres — no minorities allowed.

The Arkansas attorney general’s office says it’s looking into the white supremacist group. The whites-only, anti-Jewish community is named Return to the Land.

Its co-founder says the group is now considering an expansion into Springfield, Missouri.

KOLR-TV, a CBS outlet in Springfield, quotes the co-founder as saying:

Whites should have the ability to live among their own people if that’s what they want to do, and mass immigration is quickly making that nearly impossible in many Western nations.

Orwoll told the CBS outlet of his hopes to acquire land in every state in the nation.

Excluding anyone from property due to their perceived religion, ethic background, or race offends federal law. How can inclusivity be supported in the age of data control? Explore more with Deeds.com.

Shen v. Simpson: Florida Singles Out Chinese Migrants

In April, the U.S. Court of Appeals for the 11th Circuit heard the case of Shen v. Simpson, a challenge to Florida’s Senate Bill 264. The law excludes many people of Chinese heritage from buying homes across much of the state. To a less extreme extent, S.B. 264 also unfairly impacts immigrants from Cuba, Venezuela, Syria, Iran, Russia, and North Korea.

The law clashes with several federal provisions, including the Fair Housing Act, and the Equal Protection and Due Process Clauses of the U.S. Constitution’s Fourteenth Amendment.

Civil liberties groups and multiple law firms have taken on the case, named for four people of Chinese descent, raising their families in Florida. The families are now barred from owning real estate there. The law, effective July 1, 2023, prohibited persons from “foreign countries of concern” from owning real property within 10 miles of any military installation or critical infrastructure in the state. Additionally, China-specific restrictions bar China-based politicians and business organizations from directly or indirectly owning any interests in Florida real estate.

The law includes civil and criminal penalties (including imprisonment) for violations. It punishes both buyers and sellers. But the Eleventh Circuit halted the law’s enforcement.

Meanwhile, the struggle continues, as other states have put forth similar legislation — apparently looking to see what sticks.