This Recent Settlement Is Adding Millions To Funds To Help Black Homebuyers

mini house with a key
Alyssa Guzik
February 9, 2024

The Department of Justice is taking significant steps toward rectifying decades of redlining that have perpetuated systemic inequalities and hindered economic growth in marginalized communities. Its most recent settlement will help Black homebuyers in the future.

To “narrow the racial wealth gap,” the Biden Administration implemented plans in 2021 to tackle several contributors to the wealth disparities between Black and white communities. One source of those disparities is redlining, the denial or limitation of financial services and opportunities to specific neighborhoods based on their racial composition. The DOJ recently made additional progress in remedying this situation.

In a ruling issued on February 5, 2024, the DOJ found First National Bank (FNB) responsible for discriminating against Black homebuyers between 2017 and 2021. They are requiring FNB to pay back $13.5 in redlining damages.

As part of its defense, FNB’s position was that redlining was under the purview of the North Carolina-based Yadkin Financial Corporation it acquired. However, the DOJ is still holding FNB accountable. The settlement will be placed in a fund to subsidize home loans for Black and Latino homebuyers in cities throughout North Carolina where discrimination occurred.

Although the Fair Housing Act of 1968 made it illegal to deny housing based on race and established federal financial regulators, banks found ways around the law. From denying loans to offering higher interest rates and inequitable home appraisals, financial institutions have found ways to keep homeownership out of reach for many Black families.

Since the beginning of the Biden Administration initiative, the Department of Justice has settled $122 million in redlining restitution. It hopes to provide additional funding to Black homebuyers in the future to make amends for the redlining of the past.