February 23, 2018

Pennsylvania AG investigating allegations of redlining in Philly

AG Josh Shapiro to Philly lawmaker: 'We're willing to step up'

Housing Race
Stock_Carroll - Rowhomes Rowhouses  Thom Carroll /PhillyVoice

Rowhomes in West Philadelphia.

Redlining practices appear to still be alive and well in Philadelphia, according to a recent study.

In what he called a "somewhat unusual step," Pennsylvania Attorney General Josh Shapiro responded by announcing in a state budget hearing this week that his office is investigating the claims of ongoing racial discrimination in Philly's home loan market.

The report, published by The Center for Investigative Reporting, uncovered a troubling pattern of loan denials for minorities in a number of major cities across the country. Philly was one of the largest areas where discriminatory lending is still abound, the analysis found.

"You get a mortgage because you're white, you don't get a mortgage because you're black or Latino," Pennsylvania Sen. Vincent Hughes (D-Philadelphia) said to Shapiro in the Tuesday hearing. 

"The pervasiveness of what is being revealed to us around discriminatory lending practices is intolerable."

Shapiro then told Hughes that his office had opened the investigation in conjunction with the U.S. Bureau of Consumer Protection, adding, "We are chasing this down and we take this seriously."

"We're willing to step up," Shapiro told Hughes. "You have sounded an alarm on this. Frankly, you've kept this issue alive as well in terms of talking about it. I appreciate it, and I thought it was important for you to know that that investigation is now underway."

An analysis of 31 million mortgage records nationwide found that black applicants were denied a conventional mortgage at significantly higher rates than whites in 48 cities, according to the report. Latinos (25 cities), Asians (9) and Native Americans (3) also faced discrimination, it said.

The study also found that African American applicants were 2.7 times as likely to be turned away as whites.

In Philly, the analysis showed that – even after accounting for income and other factors – the greater the number of African Americans or Latinos in a neighborhood, the more likely a loan application would be denied there.

One woman reportedly told the organization that although she had saved a "fair amount" of money to buy a row home near Malcolm X Park in West Philly, she was rejected twice by lenders and faced "so much trouble just left and right."

The study named a number of big-name lenders, including Cherry Hill-based TD Bank. It also called out local lender Philadelphia Mortgage Advisors, which told the organization in a statement that "We treat every applicant equally and promote homeownership throughout our entire lending area."

Shapiro told Hughes that his office is not afraid to take on "the big guys." He cited his participation in a group of dozens of Attorneys General from across the country that sent a scathing letter to Equifax last fall, demanding the credit bureau to stop charging fees to consumers who attempted to freeze their credit following a massive data breach of the agency that affected 143 million people nationwide.

Hughes also weighed in that if lending discrimination is prevalent in Philly, it must also be an issue across Pennsylvania.

"We need a coordinated effort to get at the root of this,” Hughes said.

The full Center for Investigative Reporting report can be read here.