Author: Rubinowitz, Leonard S
Summary
This is the fourth of a series of papers analyzing publicly initiated reinvestment strategies. Like many other states, Missouri passed a fair housing statute in the early 1970’s. Section 3 of that law, which was approved June 22, 1972, is entitled ”Prohibited acts of lending agencies.” It provides that no financial institution doing business in the state shall deny or otherwise discriminate by altering the terms of “a loan or other financial assistance because of race, color, religion or national origin” of the borrower. In the last three years, several states have had bills introduced in and/or passed by their legislatures which go beyond outlawing discrimination by lenders on the basis of the characteristics of the borrower to include a prohibition against arbitrary denial of a loan on the basis of neighborhood characteristics. Sponsors of these bills have argued that they are necessary to supplement earlier fairness in lending statutes since a refusal by a lender to make loans in certain older or racially changing neighborhoods may have the effect of discriminating against minorities without actually violating earlier fair housing statutes. This paper reviews recent statutory and regulatory fairness in lending initiatives which prohibit loan denial on the basis of group or neighborhood characteristics.
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