The Department of Justice's role in stimulating minority homeownership: A Continuation of The Fair Housing Act's Legacy

United States v. OceanFirst Bank (D.N.J.) and United States v. Citadel Federal Credit Union (E.D. Penn.) are two cases where banks and credit unions were found to be intentionally avoiding, or redlining, communities of color. In response, the Department of Justice has worked to eliminate financial discrimination. The resolutions met in both cases are part of the ongoing judicial effort to combat redlining and housing discrimination in America. These two cases and the initiative itself are representative of progressive trends in homeownership and wealth for communities of color in the United States. 

Historically, home ownership and loan accessibility have been institutionally discriminatory through the practice of redlining. Redlining was a practice in which loan lenders avoided serving individuals or communities of minority descent. Through civil rights activism, the Fair Housing Act prohibited owners or lenders from discriminating based on race, religion, or gender. Although the act alone was not entirely sufficient, it created a precedent that the United States v. OceanFirst Bank and United States v. Citadel Federal Credit Union cases can stand on.

The United States v. OceanFirst Bank (D.N.J.) case is based on a complaint and accusation against OceanFirst Bank, a bank based in New Jersey, that it had been redlining majority Asian, Black, and Hispanic neighborhoods in New Jersey. The case claimed that, since 2018, the bank had failed to provide “mortgage lending services” to these minority-majority areas and actively discouraged residents from applying for home loans. OceanFirst Bank also focused its outreach and branch placement exclusively on majority-white communities, contributing to a pattern of exclusion and lack of access to financial services for communities of color. In resolving this case, OceanFirst Bank and the U.S. Department of Housing and Urban Development (HUD) entered into a conciliation agreement. As part of this agreement, the bank consented to invest at least $14 million into a loan subsidy fund aimed at improving access to mortgage loans, home improvements, and home refinancing in minority-majority neighborhoods. This settlement marked a significant step forward in addressing the lingering effects of redlining, a practice that has historically denied financial services to communities based on race.

Citadel, a Pennsylvania-based credit union, was similarly charged with providing disproportionately low amounts of home loans to majority-Black and Hispanic neighborhoods in its market area. In addition to the low loan rates, Citadel’s infrastructure reflected a clear bias: out of its 24 branches, only one was in a community of color, while the remaining 23 were in majority-white neighborhoods. In response to these allegations, Citadel Federal Credit Union reached a settlement in which it agreed to open or acquire three new full-service branches and invest $6 million or more into loan subsidies for minority-majority communities in Philadelphia. The United States v. Citadel Federal Credit Union case follows the same pattern of restitution for previous actions of discrimination that the United States v. OceanFirst Bank case establishes. The two thematically have concrete plans that establish equity and accommodate for years of intentional inaccessibility to communities of color.

The resolutions from the two cases are starkly different from the housing cases that precede them. Corrigan v. Buckley (1926) upheld racially restrictive covenants — agreements among white property owners not to sell or rent homes to Black Americans. This case led to the stifling of Black citizens’ ability to generate wealth and have the general sense of autonomy that white civilians were allowed to experience. Corrigan v. Buckley (1926) was also backed by the argument that the 14th Amendment does not pertain to the case as the right to guaranteed equal protection for all citizens is only applicable at the state level and not in private agreements. This was a loophole that allowed for discrimination in homeownership against Black citizens for over twenty years, and was further solidified in Shelley v. Kraemer of 1948, which established that racially restrictive covenants do not violate the 14th Amendment, but asking for judicial state-wide approval violates the 14th Amendment as it infringes on the equal protection clause’s state-wide application. 

The passing of the Fair Housing Act of 1968 marked a turning point in the fight against housing discrimination. The act, pushed forward by the Civil Rights Movement and the recent assassination of Dr. Martin Luther King Jr., made it illegal to discriminate in housing based on race, religion, gender, and other identities.  It also ended the practice of racially restrictive covenants, making both public and private discrimination unlawful. Further amendments to the act in 1988 expanded protections to include people with disabilities and increased the responsibilities of HUD, giving the department greater authority to investigate housing discrimination claims.

Observing the two cases reveals that early to mid-twentieth century America proved difficult to live in for citizens of minority descent. With a Supreme Court that approved of racially restrictive covenants, autonomy and liberty were restricted for those who did not meet the status quo. As the progression of policy shows, the United States has been able to advance in ensuring access to minorities and those who did or currently do not fit the status quo. Though the HUD continues its work to ensure equal housing opportunities, the Department of Justice is also working to end the remnants of redlining and financial discrimination; the departments are tackling the same concern from different angles. Despite this progress, there are still accessibility concerns with housing as living expenses increase, but wages are stagnant, which adds to the already existing crisis of housing the homeless. Cases such as City of Grants Pass v. Johnson, a case that allows cities to criminalize sleeping in public areas despite not having permanent shelter, highlight this issue. To ensure a future in which housing, home ownership, and renting can be promised to all citizens, there must be more efforts to investigate citizen complaints, hold corporations accountable for discriminatory acts, and continue implementing concrete plans that repair relationships between minority-majority communities and businesses.

Edited by Ananya Bhatia