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Illinois lawmakers discuss discriminatory practices in home lending and ownership

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HOME INEQUITY

SPRINGFIELD, Ill. - State lawmakers discussed the need for racial equity in lending and homeownership Thursday. While they noted the 1968 Fair Housing Act outlawed redlining and other discriminatory actions, many families still face a lack of access to credit.

Legislative Black Caucus members say lawmakers must address generational poverty by giving Black and brown homeowners the same opportunities white Illinoisans receive.

"We know we have achieved racial equity when race no longer predicts life's outcomes. Disinvestment is rooted in policy," said Sen. Jacqueline Collins (D-Chicago). "And Black and Latino communities are still negatively impacted."

Treasurer Michael Frerichs is the chief investment and banking officer for the state. Frerichs explained his team changed the culture and policies within the treasurer's office to address inequities in programs and investments.

"All financial and investment firms that do business with our office or seek to do business with our office must disclose how their firm promotes equity, diversity, and inclusion," Frerichs said.

The Illinois Department of Financial and Professional Regulation (IDFPR) says the economic system depends on the extension of credit and repayment of debt. Still, Acting Director of Banking Chasse Rehwinkel says few individuals can afford to pay the full asking price for housing. Similarly, certain communities face longstanding restrictions from growing assets.

"Until we address that innate history, basing our credit-worthiness is going to be a challenge for financial institutions because it's built on that initial sin of screwing up different communities," Rehwinkel said.

Planning to improve

Asiaha Butler from the Resident Association of Greater Englewood suggested adopting a 21st-century homestead act. Butler feels this could give back money the government previously stripped away from minority communities. Recent studies show Black Americans pay higher mortgage interest rates, insurance premiums, and more property taxes than white families.

WBEZ and City Bureau studied this racial disparity in Chicago from 2012-2018. Their investigative report found 68.1% of housing loans during that period went to majority-white neighborhoods. 8.7% of the loans went to majority-Latino areas and 8.1% went to Black neighborhoods.

The Illinois Bankers Association agrees disparities in mortgage access are a persistent problem. The group also notes these disparities create barriers to financial security and wealth building in minority communities.

"Ethnicity, national original, and gender should never be a barrier to home ownership," said Executive Vice President Ben Jackson. "We also believe that when discriminatory lending and other abuses occur, violations should be investigated and punished to the full extent of our federal fair housing and equal credit laws."

The association wants to partner with lawmakers to tackle the homeownership disparities and equitable access for families.

"Regulation isn't working"

Housing Action Illinois feels banks need to have more long-term plans to help communities.

"Promises of engagement in one-time down payment assistance or other rollouts of time-limited lending programs are appreciated," said Shelia Sutton. "But, these responses do not fix the systemic racism in our lending and homeownership landscape."

Several lawmakers emphasized the time for equity in housing is long overdue. They want bank executives to step up to the plate.

"This is a criminal situation, as far as I'm concerned," Sen. Mattie Hunter (D-Chicago) said. "You all have withheld billions and billions of dollars from my community, from our community. Many of ya'll really need to lose your banking license. Regulation isn't working, and it hasn't worked which is what brought us here today. Today is only the beginning."

Lawmakers will continue to strategize on the best plans to present during veto session.

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Mike Miletich

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