Reverse Redlining & Predatory Lending

For decades redlining denied Black neighborhoods credit. In the subprime era the pattern inverted: lenders now sought Black borrowers out, steering them into costlier, riskier loans even when they qualified for better, a practice fair-housing lawyers call "reverse redlining." Loan officers at one major lender called them "ghetto loans."

The two largest fair-lending settlements in Justice Department history followed. Bank of America's Countrywide unit paid $335 million in 2011 for charging more than 200,000 Black and Latino borrowers higher fees and interest, and steering them into subprime loans, based on race rather than creditworthiness (2004–2008). Wells Fargo paid $175 million in 2012 for the same pattern against tens of thousands of Black and Hispanic borrowers (see wells-fargo-wachovia). When the 2008 crash hit, these loans foreclosed first, stripping away much of the housing wealth Black families had managed to build and widening the gap again. See who-benefited.