Many of these laws were enacted to stop unscrupulous real estate agents who would cause homeowners to sell fast at a lower-than market price because of planted rumors that a different race had purchased property. This activity, called blockbusting, would panic entire blocks of people who had been raised to fear or hate certain races.
The panic would start with one home for sale and a discriminatory real estate agent who may have brought people of another race to look at the home, or who just went door to door spreading rumors. At the height of this activity, it was not unusual for a homeowner to get an anonymous letter about a family of a different race moving in that warned the homeowner that his or her property value would drop if someone of this race moved in. Then, a smiling real estate agent would show up at the homeowner’s front door offering to buy the home right away, of course at a lower-than market value price.
Other common practices this law addresses are:
1. steering certain minorities to certain areas where the major concentration of that minority lives and away from areas where few of that minority live; and,
2. lenders who refuse to use the standard criteria when writing loans in certain minority areas, requiring those loans to be harder to obtain, and to carry significantly higher fees and higher interest rates without justification.