What is “Redlining,” and is it Legal in Massachusetts?

In late October of 2021, it was reported that the Justice Department’s Civil Rights Division in Massachusetts had launched a new initiative to combat redlining. But what exactly is redlining, anyway? Is it really illegal in Massachusetts? What kind of penalties might you incur if you or your organization engages in redlining?

If you are facing any kind of legal consequences for redlining in Massachusetts, get in touch with a criminal defense attorney. Our lawyers have experience with civil litigation and can help you defend yourself against your criminal charges.

Redlining Explained
Redlining is the practice of denying people access to mortgages on the basis of their race. This has been illegal for many years, and it was a major topic of discussion when the Civil Rights Act was passed over half a century ago. Back in the 1930s, the federal government began identifying certain minority neighborhoods as risky candidates for mortgage loans. This led to a massive decrease in value for these neighborhoods that persisted well into the 90s.

Generally speaking, a lender is only guilty of redlining if, aside from their ethnicity, the borrower exhibits features that would otherwise make them a good candidate for a mortgage. A lender cannot be guilty of redlining if the mortgage applicant would be denied regardless of their race. Lenders are also fully within their rights to deny entire neighborhoods mortgages based on geographic features of the area, such as floodplains, even if they are dealing with a minority neighborhood.

What are the Penalties for Redlining?
The legal consequences of redlining take the form of civil penalties. These fines were recently adjusted based on inflation in 2021, so the new amounts are slightly higher. For a lender’s first offense, they may face a maximum penalty of $21,663. For a second offense, the maximum fine is $54,157. For any subsequent offenses within a seven-year period, the maximum penalty is $108,315.

While these numbers might not sound troubling for a major mortgage lender, it is worth noting that you can be fined for each individual offense. This means that if you have a set policy that the court defines as redlining, you could potentially face millions in penalties for just a handful of denied mortgages.

There are Many Other Discriminatory Practices to Watch Out for
According to the Fair Housing Act, there are many other potential discriminatory acts for which you could be penalized:

● Lowballing: Making excessively low appraisals for certain ethnicities
● Use of Racially Exclusive Images in Advertisements
● Excessively Burdensome Qualification Standards
● Imposition of Onerous Interest Rates
● Racial Steering: Guiding certain ethnicities away from specific types of loans

Enlist the Help of a Qualified Attorney Today
If you have been searching the Massachusetts area for a qualified, experienced criminal defense attorney, look no further than the Law Offices of Johnson, Sclafani & Moriarty. We know how serious the penalties for redlining can be, and these kinds of charges can be incredibly detrimental to your organization. With our help, you can prove that your actions were not discriminatory. Book your consultation today. 413-732-8356