By Ashley Benkarski
NASHVILLE, TN — Not approved, but not denied.
That’s the story one local man said happened when he applied for a home equity loan with a Regions Bank in the Nashville area despite having a near-perfect credit score, a six-figure income with a stable work history, no credit card debt, no car loans, no mortgages and a long history of business with the institution.
The situation went as expected until the underwriting process, when Dr. Jasper Brewster was asked to provide additional documentation for approval. Every time he provided proof the underwriter requested, Brewster said, he’d be asked to provide more. He alleged this process went on for more than 60 days, at which point he closed out his accounts with the institution and began banking elsewhere.
Tennessee Tribune publisher Rosetta Miller-Perry said she experienced a similar issue when seeking a loan to purchase an office for her newspaper more than 25 years ago. In that case, she was asked to assign her mortgage-free condominium as collateral instead of the usual down-payment. The underwriters were two white men, she said.
“If I were white it wouldn’t have happened that way,” Perry commented.
If this was happening to a doctor like himself, Brewster wondered, what are they doing to people who don’t have such titles?
Underwriters are essentially the gatekeepers of the loan process, and that power can allow for discrimination though redlining itself is illegal.
An investigative report conducted by Reveal News found in 2016 Black applicants in Memphis were 2.7 times more likely to be denied a conventional home mortgage when compared to their white counterparts. That same report also found evidence suggesting discriminatory housing in the Knoxville area.
But just because the Reveal report doesn’t list the Metro Nashville and Middle Tennessee areas doesn’t mean modern-day redlining isn’t happening there—It just isn’t being reported.
Housing discrimination can fall into three “buckets,” said Morgan Williams, general counsel for the National Fair Housing Alliance, an organization specializing in issues of housing discrimination.
The first, and most talked about, is redlining. Under this practice, financial institutions would draw red lines around areas with residents they considered at risk of default–often focusing on Black or Latinx communities. Though federally outlawed under the 1968 Fair Housing Act and the 1977 Community Reinvestment Act, redlining has a lasting legacy and finds its own home in legal loopholes.
The second type of discrimination occurs during the process of loan origination. Under this category, underwriter requirements are used to support individual complaints of discrimination. The NFHA uses testing evidence in a controlled manner– treatment of minority clients is observed, such as a pattern of loan officers not providing services to those borrowers, Williams said.
Finally, there’s the “disparate impact” rule, which focuses on conduct that on its face isn’t discriminatory but when put into practice has a discriminatory effect. The disparate impact tool is valuable, remarked Williams, as it helps to conduct reviews and change policies in institutions.
The Department of Housing and Urban Development under the Trump administration recently issued a final rule that the NFHA said would strike down the “disparate impact” Fair Housing Act tool used to protect civil rights, “making it harder to challenge systemic racism by housing providers, financial institutions, and insurance companies that deprive people of the services and opportunities they need,” the organization said in a statement.
In a comment, Regions said:
“At Regions we seek to make the loan application process as simple as possible while ensuring that all necessary documentation is completed to protect the interest of the borrower. We are committed to providing excellent service to all loan applicants in a fair and equitable manner. We value customer feedback and encourage our customers to share their experiences, both positive and negative, with us so that we can improve our processes and address their concerns.”
If you feel your rights have been violated due to discrimination in housing it’s important to report any instances of discrimination, perceived or proven, to your financial institution.
You should also contact the Tennessee Fair Housing Council at tennfairhousing.org or call 615-874-2344.