The great divide: 'Redlining' kept neighborhoods separate, unequal

From a young age, Terrell Taylor’s father had pointed advice about loans.

"My dad raised me not to go to the bank," he said. "I guess it just felt like the banks aren’t for us.”

Save up and pay in full, his dad said. So Taylor, 36, saved money to flip houses, living in each home as he fixed it up because he couldn't afford to buy a second house to flip without a line of credit. Then Taylor saved money from flipping houses to open a west Montgomery restaurant.

When he wanted to do some small renovations to the restaurant, Taylor said he again had troubles getting loans, despite having two to three times more in collateral than what he was asking for in the loan.

Montgomery is one of the worst cities to get a loan if you are a minority, according to a yearlong study released this week by Reveal from the Center for Investigative Reporting. The investigation found that black residents are three times more likely to be denied a mortgage compared to white residents.

For the 50th anniversary of the Fair Housing Act, the Montgomery Advertiser sought out stories of lending discrimination in the city and heard from residents who talked about their lack of trust in banks, the inability to get a loan despite having the necessary qualifications and high interest rates.

These questionable banking practices have some saying that they are an example of modern-day redlining, an illegal lending practice.

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Lines drawn

Imagine getting in a car at the intersection of Carter Hill Road and Norman Bridge Road in the 1940s.

Drive southeast on Carter Hill and look left. Look right. Sanford Street zooms by, then Boultier Street. Whether one knows it, lenders have cut up the neighborhood, block by block.

Houses to the left are deemed "definitely hazardous." To the right, homes are "definitely declining."

Cross Pineleaf Road and the landscape changes dramatically. On a brief sliver of road, those houses are considered "best." A line has been drawn down the length of Carter Hill to determine which houses buyers should get loans for and which they shouldn't.

That idea seems unlikely, even impossible, yet in Montgomery and throughout the country, banks and private companies in the mid-20th century drew maps to segment the city, maps that created barriers to mortgages and home ownership for residents of color.

After the financial ravages of the Great Depression, federal officials were scrambling to devise a plan to reverse the economic collapse.

President Franklin D. Roosevelt created the Home Owners' Loan Corp. (HOLC) — one of several New Deal initiatives in the 1930s — to refinance home loans and ease the burden on many Americans.

The formation of HOLC created one of the strongest tools for housing discrimination.

“You are looking at policies that were formulated without much consideration for the African-American population," said David Goldfield, Robert Lee Bailey Professor of History at the University of North Carolina at Charlotte.

In order to classify which loans were best to refinance, HOLC mapped cities into areas considered best, still desirable, definitely declining or hazardous. Those designations would eventually become the now infamous "redlining maps."

That practice cut off capital to select neighborhoods, Goldfield said, which drove down property values and created a "self-fulling prophecy" that reinforced prominent stereotypes about black residents. The ability to own a home also creates an opportunity to join the middle class and accumulate wealth by building equity, he said.

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In the early 2000s, Amy Hillier, now an associate professor in the School of Social Policy and Practice at the University of Pennsylvania, compiled mortgage data and mapped it.

Until then, she said the prevailing narrative around redlining was that black citizens were almost completely excluded from getting a mortgage refinanced through HOLC.

The data she collected wasn't perfect, Hillier said, because it only showed who was approved for a mortgage, not everyone who applied. Still, it was enough to show that some black homeowners were actually able to get or refinance their loans.

The catch was that those mortgages would often have high interest rates, making them difficult to pay off, she said.

The private sector and academics also contributed heavily to drawing discriminatory maps, Hillier's research found.

"The federal government was largely following the lead of the private sector. There were maps already made in the private sector,” she said. "It is a cop-out to just point the finger at HOLC.”

Goldfield pointed toward old fire insurance maps called "Sanborn maps" that were adopted by banks to discriminate against black home buyers as an example.

One of the uglier parts about housing discrimination, Hillier said, is that it has a way of reinventing itself over time. There continue to be huge disparities in home ownership, she said, especially for women of color, and those gaps are a large part of the country's growing class schism.

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Modern-day redlining

The Reveal study shows that "modern-day redlining" continues in many of America's cities. It found 61 metro areas out of 409 where residents of color were more likely to be denied a loan — controlling for nine different economic and social factors, such as income, amount of the loan and the neighborhood where they wanted to buy property.

The data released through the Home Mortgage Disclosure Act does not include credit scores or debt-to-income ratio.

The yearlong investigation is based on 31 million records. It used techniques utilized by top academics, the Federal Reserve and the Department of Justice.

In Montgomery, a black resident is three times more likely to be denied a conventional mortgage than a non-Hispanic white applicant, while Asian applicants were 2.3 times more likely to be denied. Those numbers peg the city as 14th worst of the metro areas studied.

Mobile was ranked as the worst, with blacks more than 5.5 times more likely to miss out on being approved for a loan. Huntsville was 11th and Tuscaloosa was 19th in the study.

When residents of color are able to get loans, the rates are often sky high.

Harvey Knight, 39, has lived in a house in west Montgomery for 13 years. When he first purchased his home, he was able to obtain a high-interest mortgage.

Luckily, he said he was able to pay off the loan quickly, partially with money that he had saved during his time in the Navy. That allowed him to buy homes on his street for $5,000 and $1,500 respectively and rent them out.

Of the several black residents that the Montgomery Advertiser talked to, many didn't finance their home, opting to save up or go through a rent-to-own agreement.

Knight said west Montgomery has given him the opportunity to raise a family in a relatively cheap area, though he acknowledged that it doesn't offer him an environment conducive for his kids.

"It could be better. It could be a lot better," Knight said. "There is nothing to do over here for the kids."

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Persistent effects

One housing advocate in the region is the Central Alabama Fair Housing Center (CAFHC), which was founded in 1995 and is primarily funded through a United States Department of Housing and Urban Development (HUD) grant.

It has three different branches: an education and outreach program, an enforcement wing, and a testing program. The group receives about 100 requests for assistance each year, said Faith Cooper, associate director for CAFHC.

Of the hundred cases each year, she said that over half tend to be disability related, with the next highest percentage being race.

"When we opened, the majority of the cases were race-based," Cooper said.

The group will often conduct "pair testing" when they suspect discrimination by sending both a white and black applicant, comparing the differences in how they are treated when attempting to find a new home, said Tafeni English, executive director at CAFHC.

Older CAFHC studies mirror the one recently published by Reveal, with leaders there saying issues of housing discrimination can't easily be erased.

The Sanborn maps and HOLC maps have, without a doubt, shaped the current socioeconomic breakdown of the city, English said.

"People think that segregation just happened naturally, and it didn't. It happened as a result of governmental policies," Cooper said. "Because this was caused by governmental action, it takes governmental action to dismantle it."

That push for government intervention gained steam in 2015 when President Barack Obama created a federal rule called "Affirmatively Furthering Fair Housing," which was seen by many as the first real step to actively enforce the Fair Housing Act, Goldfield said. The rule required that any community receiving a HUD block grant to submit their development plans.

The victory was short-lived. Earlier this year, Trump administration rolled back deadlines for data submission until 2020, alarming housing advocates.

Despite the recent shift in policy, some Montgomery residents remain hopeful for change.

John Burt, 25, doesn't believe that the systemic and social inequities will persist. He has lived in west Montgomery his whole life and said he is comfortable with the area.

"If I wanted to move out east, then I'd move out east, but it's the simple fact of how I'd feel when I'd move out there," he said. Black residents are often given extra long looks and treated differently when in predominantly white areas, Burt said.

In his neighborhood, he said there are issues with drug use and crime, but there is a sense of community and people watch out for each other and their houses.

In his mind, future tides will shift toward equality, he said, and that is already evident in the younger generation of Montgomery residents.

"It's all about what you're taught. The upbringing people had is related to what they hear and see," Burt said.

Terrell Taylor agreed that change is coming to west Montgomery, especially as downtown expands. Those changes though may not be coming fast enough.

"People live where their income allows them to live," he said.

In west Montgomery, the average person is more likely to be a janitor than a doctor, Taylor said. And when people finally do get their chance to move, they often leave without hesitation.

"Once people get a good job, they're gone. They move," he said. "It's a change happening, but it's a slow process. They don't want to wait around."

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Advertiser photographer Albert Cesare contributed to this report