Redlining Redux

New Mortgage Industry Policy Could Charge Borrowers Higher Fees by Zip Code

By Mary Kane, 05/15/2008

In the middle of the housing boom, when virtually anyone could get credit, redlining wasn't even in the picture. It was an almost forgotten remnant of the past -- a piece of lending history that involved lengthy legal battles and community organizing work to change a dark banking industry practice of denying credit based on where people lived or because of their race. But now, in the aftermath of the mortgage market meltdown, the cost and availability of credit for some borrowers is again becoming a concern -- raising questions about whether a new kind of redlining is on the horizon.

A recent policy by the mortgage industry that would charge higher fees for loans to borrowers in certain zip codes is behind the concerns. It has quickly led to charges of redlining and violations of fair housing laws. This has reignited old battles over access to credit -- fights that housing advocates thought they had settled years earlier.