Kriston Capps is a staff writer for CityLab covering housing, architecture, and politics. He previously worked as a senior editor for Architect magazine.
In cities like Jacksonville and St. Louis, maps of mortgage approvals and home values in black neighborhoods look the same as they did decades ago, before the passage of the landmark fair housing law.
“Sue the bastards.”
That was the slogan adopted by the National Neighbors advocacy campaign for fair housing in 1970, two years after Congress passed the Fair Housing Act. At long last, black home buyers and renters were able to seek and find justice in the courts, in part because it was possible to demonstrate racially discriminatory practices among landlords and real-estate companies. President Donald Trump made his public debut in 1973 as just such a landlord, sued by the Department of Justice for discriminating against black tenants.
It was harder to sue the bastards when they were banks. Among the many provisions of the Fair Housing Act, the most difficult to enforce were the sanctions on lending. While private actors could test a landlord’s willingness to rent to a black applicant versus a white applicant, it was much harder to suss out discrimination in mortgage origination.
“The biggest banks—even in the 1960s, when most forms of interstate banking were illegal—were immense, formidable institutions,” write scholars Richard Sander, Yana Kucheva, and Jonathan Zasloff in their forthcoming history, Moving Toward Integration: The Past and Future of Fair Housing. “Underwriting a mortgage was a much more involved process than deciding whether to rent to a tenant or sell to a prospective home buyer.”
The Fair Housing Act—which Congress passed 50 years ago today, on April 11, 1968—had an impact on sellers and renters that was quickly felt. Progress was slow, but progress was visible. It has taken much longer, however, to uproot redlining and other practices by which banks routinized racial discrimination.
Fifty years after the Fair Housing Act, the full historical weight of banks’ discriminatory practices is still evident in the persistent racial segregation of communities. While discrimination in lending is illegal, disparities in lending are enormous. According to an investigation by Reveal from the Center for Investigative Reporting earlier this year, African Americans and Latinos continue to be denied mortgages at far higher rates than whites in 61 metro areas. Using the data from Reveal and other sources, CityLab has visualized how that discrimination manifests itself in two of those cities.
Mapping where banks approve or reject mortgages reveals a stark and dramatic pattern of disparity: Where de jure segregation was once the rule, de facto segregation still persists. For example, in Jacksonville, new home mortgages still fall within the very same lines that banks drew to prevent black families from moving into white neighborhoods or building wealth some 80 years ago.
The gulf between black and white households in new home mortgages reflects a vicious cycle—one in which a lack of wealth blocks the creation of new wealth, a cycle spanning generations.
In the early 20th century, LaVilla and Sugar Hill were upscale black neighborhoods in Jacksonville visited by the likes of Duke Ellington, Ella Fitzgerald, and Zora Neale Hurston. The area included a 30-acre park and stately homes for members of Jacksonville’s black professional class. Nevertheless, in the 1930s, the Home Owners’ Loan Corporation (HOLC) deemed LaVilla and Sugar Hill—along with other predominantly black neighborhoods—as hazardous or in decline. So-called hazardous areas “embrace[d] principally the Negro areas of the city” including “a community of the best class of Negros,” as HOLC described them at the time.
The red areas delineated places where traditional lenders would not make loans. Today, these formerly redlined areas in and around downtown remain where the majority of the Jacksonville’s black residents live. They are also places where the lowest number of the conventional mortgages are made in the city.
Predominantly black census tracts in Jacksonville—where more than three-quarters of the population is black—were granted four conventional mortgages per 1,000 housing units in 2015 and 2016. The rest of Jacksonville had nine times as many mortgages in the same time period.
Households in predominantly black census tracts applied for fewer mortgages overall. That’s an aspect of the vicious cycle: The racial wealth gap puts mortgage applications out of reach for many black Americans. The median income of a black household in Jacksonville is $34,692, compared to $56,771 for a white household.
However, black residents are also more likely to be denied. In Jacksonville’s predominantly black neighborhoods, 30 percent of loan applications were dismissed, compared to 12 percent in the rest of the city. According to the analysis by Reveal, black loan applicants in the Jacksonville metro area were twice as likely to be denied a conventional mortgage as white applicants, even after controlling for factors like income and loan amount.
Much of what made up LaVilla and Sugar Hill is gone today. The Jacksonville Expressway, completed in 1960, tore through the area. Buildings were demolished in successive revitalization attempts. But the effects of redlining remain.
In October 2015, The Reinvestment Fund, a community development financial institution, conducted an analysis of Jacksonville’s housing markets and their market strength, defined by sale prices and rate of neighborhood occupancy, foreclosure, vacancy, and home improvements. The resulting map looks remarkably like the redlining map made over 80 years ago.
Jacksonville, as a city with a historically large black population (by 1910 the city was 50 percent black), was early to adopt racial zoning. But the persistence of redlining extends beyond Southern cities that gave rise to Jim Crow legislation. Today, Northern and Midwestern cities also see huge gulfs in mortgage approvals between black and white households. In 2015 and 2016, just 5 percent of black residents in the city of St. Louis received a conventional mortgage—despite making up 48 percent of the overall population.
Fair-lending enforcement would not happen in earnest until years after the Fair Housing Act. As Moving Toward Integration explains, the Community Reinvestment Act of 1977—which requires financial institutions to describe their service area and detail how they are “affirmatively” serving their customers—threw a wrench into discriminatory lending practices that seemed beyond the reach of the Fair Housing Act.
“By requiring banks to go on record about what they considered their market area . . . [the law] intentionally created a conundrum for any institution that was redlining: How could it accept deposits from customers to whom it was unwilling to lend?” the book reads.
The implementation of fair lending is still being written today. Legislative reforms in 1989 and throughout the early 1990s boosted the scope of the Community Reinvestment Act, requiring more proactive regulation. Civil rights advocates argue that the act is out of touch, given the sweeping transformations in the financial world—the worst of which culminated in the Great Recession.
Earlier this month, the Treasury Department announced the first significant reforms to the Community Reinvestment Act since 1995. Advocates for civil rights such as the National Community Reinvestment Coalition had hoped to see more, including a formal recognition that the law should apply to other kinds of financial institutions beyond banks. The decline of bank branches and surge in digital banking has unforeseen and unintended consequences for a compliance law written long before the internet was around.
Other reformers think that the solution extends back further than lending laws. Richard Kahlenberg, a senior fellow at The Century Foundation, argues for updating the Fair Housing Act itself with an Economic Fair Housing Act—a tool to address exclusionary zoning.
One-hundred-and-one years ago, in 1917, the U.S. Supreme Court ruled in Buchanan v. Warley that the government could not enforce racial zoning, a proto-civil rights victory. About 50 years later, the Fair Housing Act fulfilled the promise of that now-obscure decision by outlawing racial discrimination. It took another 50 years for the Supreme Court to decide (in 2015) that policies that implicitly affected minorities were also unconstitutional. And yet: a defining problem of the 20th century poses the same stubborn challenge for the next one.
As Kahlenberg writes, “[E]conomic segregation in housing is damaging, and perhaps even as insidious as outright racial segregation, because while in effect it still excludes substantial numbers of people of color from good places to live, it does so with the open consent of the law.”