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redlining
‘Bluelining’ Is the Insurance Industry’s Latest Contribution to Climate Injustice
Areas previously affected by redlining are now also those prone to flooding and higher temperatures, a problem compounded by poor infrastructure that fails to mitigate these risks.
May 22, 2024
In an era of climate disasters, Americans in vulnerable regions will need to rely more than ever on their home insurance. But as floods, wildfires, and severe storms become more common, a troubling practice known as “bluelining” threatens to leave many communities unable to afford insurance—or obtain it at any price.
Bluelining is an insidious practice with similarities to redlining—the notorious government-sanctioned practice of financial institutions denying mortgages and credit to Black and brown communities, which were often marked by red lines on map.
These days, financial institutions are now drawing “blue lines” around many of these same communities, restricting services like insurance based on environmental risks. Even worse, many of those same institutions are bankrolling those risks by funding and insuring the fossil fuel industry.
This situation will demand a radical rethink of how we approach investing in our communities based on climate risks.
Originally, bluelining referred to blue-water flood risks, but it now includes other climate-related disasters like wildfires, hurricanes, and severe thunderstorms, all of which are driving private-sector decisions. (Severe thunderstorms, in fact, were responsible for about 61% of insured natural catastrophe losses in 2023.)
In the case of property insurance, we’re already seeing insurers pull out of entire states like California and Florida. The financial impacts of these decisions are considerable for everyone they affect—and often fall hardest on those in low-income and historically disadvantaged communities.
A Redfin study from 2021 illustrated that areas previously affected by redlining are now also those prone to flooding and higher temperatures, a problem compounded by poor infrastructure that fails to mitigate these risks. This overlap is not a coincidence but a further consequence of systemic discrimination and disinvestment.
This financial problem exists no matter where you live. In 2024, the national average home insurance cost rose about 23% above the cost of similar coverage last year. Homeowners across more and more states are left grappling with soaring premiums or no insurance options at all. And the lack of federal oversight means there is little uniformity or coordination in addressing these retreats.
This situation will demand a radical rethink of how we approach investing in our communities based on climate risks. For one thing, financial institutions must pivot from funding fossil fuel expansion to investing in renewable energy, natural climate solutions, and climate resilience, including infrastructure upgrades.
What about communities in especially vulnerable areas?
One strategy is community-driven relocation and managed retreat. By relocating communities to low-risk areas, we not only safeguard them against immediate physical dangers but also against ensuing financial hardships. Additionally, preventing development in known high-risk areas can significantly decrease financial instability and economic losses from future disasters.
As part of this strategic shift, financial policies must be realigned. We need regulations that compel financial institutions to manage and mitigate financial risk to the system and to consumers. We also need them to invest in affordable housing development that is energy-efficient, climate-resilient, and located in areas less susceptible to climate change in the mid- to long-term.
Meanwhile, green infrastructure and stricter energy efficiency and other resilience-related building codes can serve as bulwarks against extreme temperatures and weather events.
The challenge of bluelining offers us an opportunity to forge a path towards a more resilient and equitable society. We owe it to the future generations to do more than just adapt to climate change. We also need to confront and overhaul the systems that harm our climate. The communities most exposed to climate change deserve no less.
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The US Housing Crisis Is 4 Decades in the Making
There is no developed country in the world besides the United States where the very ill, mothers who have just given birth, elderly people who worked all their lives, and veterans who fought for their country are unhoused.
Aug 21, 2023
Yesterday, I read a story about a family of four—granted two were very young—so excited about all the money they were saving living in a tiny house. Today, the story was about a young man who had no cash, so he has tricked out a semitruck interior. Last week it was a renovated shipping container from Lowe's, the week before, it was a fully fixed-up ancient school bus. Some of these projects look like they might be OK places to live, especially if you live in a climate where you can be outdoors much of the time—a very quickly shrinking portion of the world.
What is going on? This is the wealthiest country in the history of the world, as Noam Chomsky reminds us. I am 69 years old. The people in my generation, and even more the generation older than I, were able to purchase homes at prices that haven't been seen for decades, at sweet mortgage interest rates that made it possible in many cases for one parent to work and the family to prosper. This mostly applies to white Americans, as the GI Bill (for the WWII generation) mainly helped almost all returning white GI's become homeowners.
When I was starting to look for my own housing, amazing deals on land and fixer-uppers, as well as reasonably priced starter homes, existed and in fact were still abundant in some cities and states. Even for Black home buyers, who had been blocked by redlining (policies created by banks to keep the suburbs white), 40 years ago homes were more affordable and many Black families took advantage of relatively low prices to purchase homes.
What appears to be happening is that, like so many other long term failures, the housing crisis can be laid at the dead, unmourned feet of Ronald Reagan.
Today, there are no housing bargains. In fact, in many states and cities, there is no housing at all for anyone except the most affluent. With no real incentives from the government to build workforce housing, developers build to make the largest profit possible—and the large profits are in luxury housing. In my state, Vermont, not only is the great housing deal a thing of the past, but there are also no rentals available. Some friends recently applied for a rental in my small town, Brattleboro, and when the landlord told them he would rent to them, he informed them that he had received 119 applications, and the place was on the market for about a week, if that.
What appears to be happening is that, like so many other long term failures, the housing crisis can be laid at the dead, unmourned feet of Ronald Reagan. Before 1980, the federal government actually used to build housing. During Reagan's transformational eight years as president, he essentially disposed of the idea that building housing is an obligation of the government. Reagan sponsored a completely inadequate supposed substitute for building the housing desperately needed by a fast growing country. The population has grown by a full third from 1980 until today—the federal government has not built any housing for the 105 MILLION more people who now populate the country.
The Reagan plan, which has been an abject failure, was to give tax breaks to developers to build a small number of market-rate apartments in their upscale projects. Reagan said in 1981 that every church and synagogue should take in 10 homeless families and voila! no more homeless. He also turned his back on a scandal in which U.S. Department of Housing and Urban Development money was given to Republican consultants to confer on how to stop building housing altogether instead of the intended use: building and repairing low-income housing. It seems to some that the housing crisis has happened quickly, but I would argue that it has been four decades in the making.
In every other developed country, there is social housing for those in need. In Vienna, Austria, the social housing is so desirable that 78% are renters, many by choice. The rentals are mixed income, and are a major social network in the city. How social housing is viewed in Europe varies by country, but there is nothing like the problems poor people face in the United States. There is no developed country in the world besides the United States where the very ill, mothers who have just given birth, elderly people who worked all their lives, and veterans who fought for their country are unhoused.
We will continue to see the youth, and the not so young, of America creatively housing themselves—whether it is the shed set up in Mom and Dad's back yard, the ubiquitous garage and basement apartments for the more fortunate, old, used RVs, or possibly a regrowth of house shares, communes, and other methods of keeping a roof over one's head. What is highly unlikely is that we will see a time in the near future where the current younger generation is heading to the local savings and loan for a mortgage.
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'Racism--Pure and Simple': Buffett Lender Redlined Philly-Area Homebuyers, Says DOJ
"This settlement is a stark reminder that redlining is not a problem from a bygone era," said Kristen Clarke, an assistant U.S. attorney general, announcing a $20 million deal with Trident Mortgage.
Jul 27, 2022
The U.S. Justice Department announced Wednesday that a mortgage company owned by billionaire businessman Warren Buffett engaged in an illegal "pattern or practice of lending discrimination" by "redlining" in the Philadelphia area, and will pay $20 million in a settlement agreement.
"The complaint also alleges that Trident's employees exchanged emails where they referred to neighborhoods of color as 'ghettos' and made racist jokes."
The DOJ, which launched a Combatting Redling Initiative last October, is calling the deal the first it has ever reached with a nonbank lender and the second-largest settlement in the agency's history involving the illegal practice of denying mortgage loans to potential homebuyers of color.
The U.S. Consumer Financial Protection Bureau alleged in a complaint filed Wednesday that from at least 2015 until 2019, Trident Mortgage Company--which is owned by Buffett's Berkshire Hathaway Inc.--violated the Fair Housing Act and the Equal Credit Opportunity Act by avoiding "providing home loans and other home mortgage services in majority-minority neighborhoods" in metropolitan Philadelphia, including in New Jersey and Delaware. The lender also "discouraged those living in, or seeking credit to purchase properties in, these neighborhoods from seeking or applying for credit from Trident."
Under the terms of the agreement, Trident will invest over $20 million in boosting credit opportunities in neighborhoods of color in the Philadelphia metropolitan area.
"This settlement is a stark reminder that redlining is not a problem from a bygone era. Trident's unlawful redlining activity denied communities of color equal access to residential mortgages, stripped them of the opportunity to build wealth, and devalued properties in their neighborhoods," said Kristen Clarke, assistant attorney general of the U.S. Justice Department's Civil Rights Division, announcing the deal.
\u201cRedlining is a term used to describe a practice dating back to the 1930s and in short \u2013 it occurs when banks and other lenders deny or discourage loan applications or credit services based on the race of the residents in certain neighborhoods.\u201d— AG Josh Shapiro (@AG Josh Shapiro) 1658929138
"Along with our federal and state law enforcement partners, we are sending a powerful message to lenders that they will be held accountable when they run afoul of our fair lending laws," she added.
Speaking at a Wednesday press conference announcing the settlement, Clarke said that "Trident's office locations were concentrated in majority-white neighborhoods, and that Trident's loan officers were directed to not to serve--and did not serve--the credit needs of neighborhoods of color."
"The complaint also alleges that Trident's employees exchanged emails where they referred to neighborhoods of color as 'ghettos' and made racist jokes," she added. "There's even a photo of a senior Trident manager posing in front of a Confederate flag."
Jacqueline Romero, the U.S. attorney for the Eastern District of Pennsylvania, asserted that "for far too many years Philadelphia's Black, Latino, and other communities of color have lacked equal access to lending and legal deed ownership. These historically redlined areas of Philadelphia continue to experience disproportionate amounts of poverty, poor health outcomes, limited educational attainment, unemployment, and violent crime."
\u201cOur investigation uncovered that Trident, which is part of Berkshire Hathaway, illegally redlined neighborhoods in the Philadelphia area, excluding qualified families seeking to own a home. This action is the 1st federal redlining resolution involving a non-bank mortgage lender.\u201d— Rohit Chopra (@Rohit Chopra) 1658930616
Pennsylvania Attorney General Josh Shapiro, a Democrat, said that "this was systemic racism--pure and simple. This is about real people. People who were ignored and who were harmed and left behind."
Although redlining officially ended following the passage of the Fair Housing Act in 1968, studies have shown the policy persists in practice in scores of metropolitan areas across the nation. Additionally, communities that were redlined remain predominantly minority and low-income today. A 2015 study by the National Community Reinvestment Coalition found that in Baltimore, race--and not economic status--was the most important factor in mortgage lending. Formerly redlined communities also face greater climate-related risks.
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