Redfin has reached a settlement with the National Fair Housing Alliance regarding a federal lawsuit in which the nonprofit accused the real estate company of perpetuating redlining practices through its policies.
Redfin will, among other changes, eliminate its minimum housing price policy, which determined who could access its services, according to a settlement filed Friday in a Washington federal court. The NFHA and nine other housing organizations alleged in 2020 the minimum pricing policy violated the Fair Housing Act by discriminating against sellers and buyers of homes in communities of color.
“The steps Redfin has agreed to take are a positive move toward stamping out some of the nation’s most harmful practices, like redlining and appraisal bias,” said Lisa Rice, president and CEO of the NFHA, in a statement.
For five years, Redfin will suspend its minimum home price policy on listings it refers to Partner Agents, according to the settlement. It may still use price to determine when services will be handled by Redfin employees.
“Since we can’t afford to have our employees sell an unlimited number of homes at money-losing prices, Redfin will continue the general practice of using price to decide whether to serve a customer via a partner or an employee,” the company said in the statement.
However, the firm will implement a price threshold monitoring and alert system to identify instances in which thresholds in predominantly non-white service areas exceed those in predominantly white service areas within a larger metro business area.
The company in addition will increase efforts to promote racial diversity in its recruiting and outreach and pay $4 million in damages, according to the settlement, which does not include an admission of liability from the brokerage. Of those proceeds, $1 million will fund programs geared toward down payment assistance, credit and homebuyer counseling.
“Redfin and NFHA both have long standing commitments to fair housing, and we’d rather spend money to advance fair housing rather than litigation,” the company said. “Our commitment to broadening the price range of the homes we can sell is why, every year, by design, we lose money selling low-priced homes.”
The NFHA sued Redfin in October 2020 after an investigation funded in part by a grant from the Department of Housing and Urban Development. The complaint alleged Redfin offered no services in non-white ZIP codes at a disproportionately higher rate than in white ZIP codes in 10 cities across the Midwest, Southeast and East Coast.
Records indicate that over the past 18 months, both sides agreed on a series of deadline extensions regarding Redfin’s response to the complaint.
The settlement is the latest reckoning across the mortgage industry over long-standing racial bias. The Biden Administration last month unveiled proposals to address bias in home appraisals, and Fannie Mae earlier this year reached a $53 million settlement in a housing discrimination suit. Wells Fargo has also come under fire this year over allegations it perpetuated “modern-day redlining” in hindering Black borrowers’ refinancing efforts.