The Fair Housing Act’s unkept promises

It was just a week after Dr. Martin Luther King’s assassination, when, 50 years ago today, President Lyndon Johnson signed the Fair Housing Act of 1968.

The final major piece of legislation enacted during the civil rights era, the Fair Housing Act was designed to end the practice of redlining, or government-sanctioned lending discrimination. Back in the 1930s, federal officials drew lines on maps around neighborhoods with high concentrations of African Americans and immigrants, and told banks they were “hazardous” to lend in.

With a few strokes of the pen, housing discrimination on the basis of race was banned. Johnson called it “one of the proudest moments of my presidency.” He said he “signed into law the promises of a century.”

But 50 years on, it’s clear, those promises have not been kept. Today, the homeownership gap between black people and white people is greater than it was when segregation and discrimination were legal, according to the most recent figures from the Census Bureau.

I’ve been investigating racial discrepancy with my colleague Emmanuel Martinez. We combed through 31 million mortgage records and found a troubling pattern of home loan denial to people of color in cities across the country.

Here’s a breakdown of what we’ve learned, and potential change we’ve seen since our first story came out two months ago:

People of color continue to be denied home loans at rates far greater than white people, even when they make the same amount of money.

We found 61 cities across the country where people of color were far more likely to be turned down for a conventional home loan than their white counterparts, even when they made the same amount of money, wanted to take out the same size loan and buy in the same neighborhood.

The disparity was present in major metropolitan areas, including Atlanta, Detroit, Philadelphia, St. Louis, San Antonio and Washington, D.C., along with smaller cities from Iowa City, Iowa, to Santa Fe, New Mexico. (To see a full list of cities where we found problems in lending, check out our modern-day redlining app.)

The Fair Housing Act is rarely enforced.

Since President Donald Trump took office, the Justice Department has not sued a single lender for failing to lend to people of color. Workers in the agency’s civil rights division report they have lost faith in their leaders’ integrity.

“It might be very frustrating for people, who were motivated by a desire to enforce and uphold civil rights law, to see those laws being undermined by senior leadership,” former Justice Department civil rights lawyer Gary Herbert told Reveal from The Center for Investigative Reporting.

On March 29, U.S. Sen. Bob Casey, a Democrat from Pennsylvania, and Pennsylvania state Sen. Vincent Hughes, wrote to U.S. Attorney General Jeff Sessions, demanding an investigation into modern-day redlining reported by Reveal.

“We are shocked by the revelations contained in the report,” they wrote. “These findings must be completely and fully investigated and if the claims are found to have merit, the appropriate and necessary steps should be taken to ensure that these practices cease.”

Two weeks later, the Justice Department has not responded to Casey and Hughes’ letter. Spokesman Devin O’Malley declined to comment, or even acknowledge receipt of the request.

Members of Congress want answers.

In the absence of action from the Trump administration, lawmakers on Capitol Hill have sought to turn up the heat on banks in other ways.

During his first appearance before the House Financial Services Committee, newly installed Federal Reserve Board Chairman Jerome Powell was grilled on racial disparities in lending. Members of the committee pressed Powell to address the problem, which they said was destroying neighborhoods.

“Where there’s loan activity, houses have a chance to sell. Where houses sell, people move in. Where people move in, restaurants, community centers and grocery stores are built,” Democratic Rep. Lacy Clay of Missouri told Powell. “And none or very little of that is happening in low- to moderate-income neighborhoods in St. Louis or elsewhere in this country.”

Powell did not offer a specific remedy, but told the committee the Federal Reserve would use its authority to crack down on discrimination.

“Racial discrimination in mortgage lending and in any kind of lending is completely unacceptable,” he said. “And wherever we have authority, we will use it to stop that from happening and punish it when it does happen.”

Since then, Democratic Sen. Elizabeth Warren of Massachusetts has said Ben Carson’s failure to enforce anti-discrimination laws is “the scandal that should get (him) fired” as secretary of the Department of Housing and Urban Development.

Rep. Keith Ellison, a Democrat from Minnesota, has entered Reveal’s investigation into the Congressional Record. Ellison and Rep. Maxine Waters of California, the ranking Democrat on the Financial Services Committee have asked for hearings on modern-day redlining,

And locally, people are taking action.

Since Reveal published its investigation, attorneys general in four states and the District of Columbia have begun to probe fair lending violations in their communities.

“Mortgage discrimination on the basis of race is unlawful and wrong. I will not tolerate it in our state,” said Washington state Attorney General Bob Ferguson, where Reveal identified three communities – Bellingham, Wenatchee and Tacoma – where people of color faced statistically significant disparities in mortgage lending.

Ferguson, along with attorneys general in Iowa, Delaware and the District of Columbia said they were troubled by our reporting and had begun looking into the matter. They joined Pennsylvania, where Attorney General Josh Shapiro had earlier announced an investigation led by his office’s Bureau of Consumer Protection.

Pennsylvania state Treasurer Joe Torsella has also launched an investigation into three banks identified by Reveal that hold state deposits. In Philadelphia, the City Council held a hearing into Reveal’s findings, prompting community advocates to come forward with ways that banks and other mortgage lenders could be held accountable locally.

When he signed the Fair Housing Act 50 years ago, President Johnson proclaimed, “the bell of freedom rings out a little louder.” But he also said, “there is much yet to do.”

Aaron Glantz can be reached at aglantz@revealnews.org. Follow him on Twitter: @Aaron_Glantz.