Neighborhoods considered high risk or “hazardous” were often redlined by banks, NCRC explains, denying them access to capital investment that had the potential to improve the housing and economic opportunities of residents.
Social upheaval in the US has helped accelerate outreach into disadvantaged communities in attempts to balance the playing field while making up for transgressions of the past. The death of George Floyd at the hands of police in Minneapolis, Minn. three years ago served to spark bolstered efforts by banks to lend money for mortgages and other needs into minority communities.
What does it mean when someone is redlining?
Last week, BMO unveiled a program through which $1 million would be earmarked to provide underserved communities a path to homeownership – an offshoot of a pilot program launched last year. The program offers $13,000 in grants to eligible borrowers across the Midwest to help with down payment and closing costs, officials said. When paired with other home financing programs, eligible borrowers can secure up to $25,000 in combined assistance.
In an interview with Mortgage Professional America, Scott Freudenberger, BMO’s head of community investment, agreed such efforts have been stepped up across the country. “When I started in this role, we had started a team of outreach relationship matters to really work with nonprofit and counseling agencies and community partners to really drive this work,” Freudenberger, who’s been at BMO for 21 years, said. “This was about 15 years ago.”
What changed after George Floyd?
The Floyd tragedy was a watershed moment that has reignited efforts to improve neglected communities, he suggested: “I would say it was much less in the banking industry then,” he said. “It has ramped up slowly since then but I would say the last couple of years, especially with everything that went on with George Floyd – just a much ramped-up focus over the last couple of years for sure. Which is great to see, because it’s something that everybody realizes we need to do a lot more.”
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