Redlining How Banks Destroy Neigborhoods

Redlining
How Banks Destroy Neighborhoods

By Nadine Brown

The various methods which have been used for many years, with the sanctions of city governments, to isolate certain neighborhoods, and literally box black and poor minorities into decaying areas of cities around the country, are almost as numerous as the arms of an octopus. These practices have long been widespread in the city of Detroit.

Urban renewal, accurately labeled "negro removal" some 30 years ago, has been a major culprit. So has the rezoning of neighborhoods from residential to

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Common Council President Carl Levin, on behalf of the Council, asked Detroit's lending institutions in a January 5 letter to make the following pledge:

"We pledge not to arbitrarily reject mortgage loans for residential property within any specific part of Detroit served by us because of the location of the property. We also pledge to make loans available on low and moderate income residential property throughout Detroit within the limits of our legal restrictions and prudent practices."

The following institutions indicated they would be willing to make such a pledge:

Bank of the Commonwealth Metropolitan Savings Association*
First Independence National Bank of Detroit
Detroit and Northern Savings and Loan Association
City National Bank
Detroit Bank and Trust*
First Federal Savings and Loan Association of Detroit*
Surety Federal Savings and Loan Association
Advance Mortgage Corporation
Detroit Federal Savings
National Bank of Detroit*
Manufacturers Bank
Standard Federal Savings and Loan*

There were no replies from the following institutions:

Standard Savings and Loan*
Associates Investment and Management, Inc.*
North Western Goldberg Community Improvement Association*

*Cited in denial reports at Common Council Hearings

REDLINING

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commercial, after agents of the latter conned people into ágning petitions; absentee landlords, who would not repair their properties or build on land they own; and block-busting by some unscrupulous real estate agents, who steered whites away from a neighborhood when a black family moved in, to name a few.

But the more subtle and tricky practice of some banks, savings and loan associations, and mortgage companies, aided and abetted by some insurance firms, to systematically deny loans to ghetto residents, has finally come under massive attack in Detroit. This practice is called redlining.

Federal agencies such as the Federal Housing Administration (FHA) and the U.S. Department of Housing and Urban Development (HUD) are accused of leading the policy of redlining or being in collusion with the lending institutions. There is evidence that they have played some kind of role in it.

Now the City Council and Mayor Young's administration, with the help of an aroused community, are moving to put an end to redlining.

The issue was aired at a lengthy public hearing on redlining, called by the City Council Jan. 13. The hearing was spearheaded by Councilwoman Erma L. Henderson, founder and executive director of the Equal Justice Council and the Woman's Council of Concern. With the help of these groups, she was able to mobilize a number of organizations into a Citizen's Committee on Redlining.

The battle was launched at the Woman's Conference on Land Use last April, after sending fifteen persons from its task force to Chicago to probe the redlining issue there. They brought back a comprehensive report.

The Council hearing drew an unexpected crowd of Detroiters, who packed the auditorium at the City-County Building. There were poignant pleas and angry indictments from 40 witnesses. They included some ten officials from the State Legislature, the Federal Mortgage Association, the City Council Planning Commission and its Research Division, Mayor Young's office, and the religious sector.

The witnesses told of being denied home improvement loans; of being refused mortgage and insurance money because of the locations of their homes; and of being forced to sell for much less than the actual value.

What surprised some officials was that many persons who testified carne from the more affluent sections of the city and that a large number were white, instead of an overwhelming number of underprivileged blacks in the inner city. Some said they tried to buy homes in the inner city because they are cheaper than suburban homes. But the lending people said they would lend no money for anything in the inner city. Witnesses also. told of being shafted by some appraisers.

Jay E. Brant, Director of the Council's Division of Research and Analysis, said the results of their probe gave reason to believe that many people are victims of redlining. He cited eleven cases from the many persons who had responded to the Division's request to come forth, and all had agreed to testify at the hearing. Several had applied for home improvement loans ;others sought mortgages.

Ms. Dee Miller said she was denied a loan on a house at 981 Burns in Indian Village, which is one of the better neighborhoods. She said she was told by First Federal Savings that they couldn't write the mortgage because the property was depreciated beyond repair, but the appraiser didn't look at most of the rooms in the house.

Mrs. Lucy Sims said she was denied a $4,000 home improvement loan last August by Michigan National Bank at 9000 E. Jefferson. She said the bank told her the denial was based on the property appraisal. She said she later got the loan from the National Bank of Detroit at 12 per cent interest.

Raymond Bazmore, who lives n the Northwest section, said he was denied a $12,000 small business loan by Metropolitan Savings at Seven-Mile and Greenfield after an appraisal was allegedly made. He said the lending officer told him, "We are not lending money in that area. We are not lending money for anything east of Southfield."

Mrs. Dorothy Cole stated that she was refused a home improvement loan from Standard Federal Savings and Loan at Griswold and Jefferson, and that an official of that Branch told her, "Our institution is not allowed to approve loans on HUD houses."

None of the people testifying received the reasons for denial in writing. Other lending institutions named, besides those above, were: Detroit Bank and Trust, Associates Investment and Management, Inc.,

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The NAACP will "greenline" banks who fail to change their practices, asking customers to withdraw their funds.

Redlining

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Bank of the Commonwealth, Mid-State Mortgage Co., North Western Goldberg Community Improvement Association, and Standard Savings and Loan.

William H. Oliver, director of the UAW Fair Practices Department, told the SUN that he believes he suffered no loss in the sale of his home on Edison because of his position in the union. But he said that redlining is going on, in spite of the fact that the 1968 Housing Act gives people the right to go to the FHA, which is required to serve them justly. Citing the problems with the same issues many of us have had to fight in the past, he said:

"It's a master plan to destroy the effectiveness of Blacks to buy homes in the center city. This is a return to the '50's, when the government had a system where you couldn't get insured through the front door, and blacks were referred to a clearing house for mortgages. This was really an assigned risk program which, more than often, kept a bad mark on credit records."

Back in the '20's, black and poor minorities were integrated in what is now the inner city. Many didn't even attempt to get loans, because they felt it would be a futile effort.

It was the late Rev. Charles Hill who sounded the alarm in the late '40's, when he learned that officials had plans underway to quietly move people from downtown and elsewhere into the newly built Brewster Project. The citizens' group that he called together was successful in blocking that move, and saw to it that blacks from the slums, many of whom had been moved out to make way for the renewal, inhabited those living quarters.

People were uprooted in the '50's in the wake of urban renewal in the Lafayette area, with the promise that they could move back when new apartments and houses were erected. But the cost of rent or house notes was so far out of their reach that they could not afford to move back.

And many people remember the well publicized scandal of 1970-'71, when the head of the City Department of Safety Engineers burned thousands of building code violation records. Without the records, the people could not continue their efforts to take absentee landlords to task for failure to make repairs on the houses, for which they had been cited by that same department.

Testifying for the NAACP, Roger Miller, chairman of the organization's Housing Committee, said the results and affects of redlining "have always been discriminatory against minorities."

Miller said if the lending institutions refuse to sign an agreement that they will end redlining and invest loan money in the areas that have been redlined, the NAACP will "greenline" the redlined areas by calling on every Detroiter who has a savings or checking account, safe deposit box, or any business transaction to withdraw their money from that firm and deposit it with one that has signed the agreement.

Regarding the new federal law to end redlining, sponsored by Sen. William Proxmire, which goes into effect June 30, Ms. Henderson said she feels it is a good measure, but "We still will have to pass some local law. We usually have to do that." She added that she likes the set of bills sponsored by State Representatives George Cushingberry and Dennis Hertel.

Levin said the Council will have to look at all of the measures and decide whether state or local legislation is preferable. "We will ask banks to set up appeal boards with community people," he said, and added that he feels the Council is in accord on the redlining issue.

Nadine Brown is a regular contributor to the Michigan Chronicle.