PHILADELPHIA (AP) – Jonathan Jacobs had almost no savings, a modest income and a credit report marred by a disputed cellphone bill. But he easily bought a newly renovated row house in Point Breeze, a South Philadelphia neighborhood that’s historically African American.
“It took about 15 minutes” to fill out the paperwork, the career counselor said. “Now I pay less to own a house than I did to rent an apartment. That’s the American dream.”
Jacobs, who is white, got a special home loan from New Jersey-based TD Bank that is designed to help low-income people and blighted neighborhoods, where banks are required to lend under the landmark Community Reinvestment Act of 1977. The law was designed to correct the damage of redlining, a now-illegal practice in which the government warned banks away from neighborhoods with high concentrations of immigrants and African Americans.
But the law didn’t anticipate a day when historically black neighborhoods would be sought out by young white homebuyers. So instead of lending to longtime black residents of Point Breeze, most of the loans there are going to white newcomers such as Jacobs.
The Community Reinvestment Act “is based on geography, so it’s perfectly possible to comply with CRA and have that pattern,” said Patricia McCoy, a law professor at Boston College who oversaw mortgage policy initiatives for the Consumer Financial Protection Bureau under President Barack Obama. “That’s not the idea, of course, but the law allows it.”