Redlining remains a current, measurable barrier to fair access in housing and insurance. Recent national datasets show large, persistent gaps: Black homeownership sits in the mid‑40s percent range versus the mid‑70s for non‑Hispanic white households—a gap near 28–30 percentage points (Census CPS/HVS). In the latest full HMDA cycle (2023 activity, released 2024), Black mortgage applicants were denied at roughly twice the rate of white applicants and faced a higher incidence of higher‑priced loans (Federal Reserve analysis of 2023 HMDA; CFPB HMDA). Properties in majority‑Black neighborhoods are also more likely to appraise below contract price, increasing financing risk (FHFA UAD). Federal enforcement has expanded: the Justice Department’s Combating Redlining Initiative reports securing more than $122 million in relief for affected communities (DOJ; DOJ CRI hub). The NAIC’s Special (EX) Committee on Race and Insurance continues to spotlight inequities across personal lines and promote regulator and industry action.
Despite these efforts, disparities persist across lending, valuation, and insurance pricing. DOJ and CFPB’s July 2024 action against First National Bank of Pennsylvania required $13.5 million in relief and ongoing community‑lending commitments, exemplifying remedies now common in redlining resolutions—branch or LPO placement, loan subsidies, outreach, and compliance enhancements (CFPB/DOJ FNB order; DOJ CRI hub). In insurance, the widespread use of credit‑based insurance scores can raise average premiums for Black and Hispanic consumers because of underlying credit disparities; recent research documents 50% to 100%+ premium differences tied solely to credit tier, reinforcing equity concerns (CFA; FTC; NAIC consumer guidance). States are tightening oversight of algorithms and external consumer data: Colorado’s rules under SB21‑169 require governance and testing to prevent unfair discrimination from models that use credit and other external data (Colorado DOI).
What is Redlining?
In housing finance, redlining refers to patterns of denying, discouraging, or avoiding mortgage applications in neighborhoods of color or otherwise limiting access on worse terms. While unlawful, modern evidence shows continuing disparities in application outcomes and pricing by race/ethnicity and geography (CFPB HMDA; DOJ CRI hub). Because home equity is a key driver of household wealth, these gaps amplify long‑run wealth differences when financing is costlier or less available (Census CPS/HVS).
Regulators have tightened controls on valuation practices that can transmit or amplify bias. In June 2024, federal agencies finalized interagency quality‑control standards for automated valuation models (AVMs)—requiring policies, testing, and controls to ensure credible valuations and compliance with nondiscrimination laws, formally linking valuation governance to fair‑lending compliance (OCC/Fed/FDIC/NCUA/CFPB/FHFA final AVM rule). In parallel, the federal PAVE initiative promotes appraisal‑bias mitigation, including clearer reconsideration‑of‑value (ROV) pathways when appraisals contain factual errors or indications of bias.
Discriminatory Underwriting Guidelines
Data from the latest HMDA cycle (2023, released 2024) show that Black conventional home‑purchase applicants experienced denial rates roughly twice those of non‑Hispanic white applicants—often in the high‑teens percent versus single‑digits to low‑teens for whites, depending on segment—and were more likely to receive higher‑priced mortgages when approved. A substantially larger share of Black borrowers used FHA/VA loans, which generally carry additional insurance costs (Federal Reserve 2023 HMDA; CFPB HMDA). CRA supervision is also evolving: while modernization finalized in late 2023 has faced timing adjustments, the Federal Reserve underscores continued emphasis on banks’ responsiveness to community credit needs, which intersects with redlining risk in low‑ and moderate‑income and majority‑minority areas (Federal Reserve CRA).
Under ECOA/Regulation B, lenders may not discriminate on protected bases, including race and age; neutral‑seeming rules can still be unlawful if they create unjustified disparate impacts. Proxy risks arise when criteria like minimum property values, loan‑amount cutoffs, or geographic overlays disproportionately exclude communities of color. Agencies expect robust governance, fair‑lending testing, and accurate adverse‑action reasons—including for third‑party and AI/ML tools and valuation models subject to the 2024 AVM rule (AVM rule). In insurance, credit‑based insurance scores materially affect premiums and tend to increase average costs for Black and Hispanic consumers; several states restrict or ban credit use in auto rating (e.g., Massachusetts) and require exceptions for extraordinary life circumstances (Massachusetts DOI; NAIC; FTC). Colorado’s insurance‑AI rules require carriers to test algorithms and external consumer data (including credit) for unfair discrimination and take corrective action where disparate impacts are found (Colorado DOI).
How Your ZIP Code Impacts Your Rate
Geography still shapes access and pricing. HMDA analysis shows lenders’ application and origination shares can lag in majority‑minority tracts, and borrowers in these areas are more likely to receive higher‑priced loans (CFPB HMDA). DOJ’s Combating Redlining Initiative has resolved matters across diverse metros, including Los Angeles County (City National Bank), Jacksonville, FL (Ameris Bank), and the Philadelphia‑Camden‑Wilmington region (First National Bank of Pennsylvania), with cumulative relief exceeding $122 million and remedies that include branch presence, staff, and targeted subsidies (DOJ CRI hub; DOJ Ameris; CFPB/DOJ FNB; DOJ total relief). Valuation patterns also vary by neighborhood composition: appraisals come in below contract price significantly more often in majority‑Black neighborhoods, raising the risk of failed financing or larger down‑payments (FHFA UAD).
These neighborhood‑level effects compound over time. Research and market data consistently indicate that homes in predominantly Black neighborhoods are valued less on average than comparable homes elsewhere, and Black borrowers rely more on FHA/VA channels with higher all‑in borrowing costs—both factors that slow wealth accumulation (CFPB Research; Federal Reserve 2023 HMDA). Together with underwriting and pricing disparities, these geographic patterns help explain why the homeownership gap remains near 30 percentage points (Census CPS/HVS).
How You Can Help Bridge the Gap
Consumers can act quickly when discrimination is suspected: file a detailed complaint with the CFPB and a Fair Housing complaint with HUD; if an appraisal is involved, request a reconsideration of value from your lender and, if needed, submit an appraiser complaint via the Appraisal Subcommittee. Shop multiple lenders (banks, credit unions, CDFIs, and MDIs), and ask specifically about Special Purpose Credit Programs (SPCPs), down‑payment/closing‑cost assistance, and whether positive rent or utility history can be considered—priorities emphasized in the Enterprises’ Equitable Housing Finance Plans. If your community faces branch closures or weak mortgage coverage, submit CRA public comments on local bank performance and proposed mergers.
For homeowners insurance and auto coverage, request written rating/underwriting reasons, compare quotes across carriers, and ask how credit is used in your state. Many states provide protections such as “extraordinary life circumstances” exceptions, and some restrict credit in auto rating (e.g., Massachusetts) (NAIC; Massachusetts DOI). In states like Colorado, insurers must test algorithms and external consumer data (including credit) for unfair discrimination, giving consumers leverage to challenge unexplained disparities (Colorado DOI). Consider mission‑driven lenders via the CDFI Fund directory, and keep copies of adverse‑action notices to understand decisions and pursue corrections.
The Bottom Line
Modern data confirm that redlining’s effects continue: HMDA shows higher denial odds and pricing burdens for Black and Hispanic borrowers; appraisals are more likely to undervalue properties in majority‑Black neighborhoods; and federal enforcement has secured nine‑figure relief. Regulators have strengthened guardrails—most notably the 2024 interagency AVM quality‑control standards—and continue to emphasize CRA supervision and coordinated DOJ–CFPB actions (AVM rule; CRA; DOJ CRI hub). Lenders and insurers should maintain rigorous model governance, fair‑lending testing, and accessible reconsideration‑of‑value processes to mitigate proxy bias and valuation risk.
Industry leadership and regulators are aligning on measurable outcomes. The NAIC Special (EX) Committee on Race and Insurance and state AI fairness frameworks (for example, Colorado) signal that governance, testing, and transparency are now expected. Consumers can accelerate progress by documenting issues, using official complaint channels, and seeking inclusive programs and institutions—steps that, taken together, help narrow long‑standing access and wealth gaps.
Featured image by Counter / Getty Images.
Discriminatory Underwriting Guidelines
How Your ZIP Code Impacts Your Rate
