Introduction
In recent years, redlining has been accepted to be the separation within housing neighborhoods and communities based on race, a more indirect form of racial segregation . In its official definition, redlining is the practice of racial discrimination within any kind of housing. Generally, people know these practices to have stemmed from banks who would deny mortgage loans or insurance providers who would restrict services to certain areas within a “risky” community to Black and Latino homeowners. However, contrary to belief, the issue of redlining is actually more institutionally-rooted than it is “business-related”.
Historically, redlining has been found to date back to the 1930s-era as a part of the New Deal homeownership programs designed to balance the increasing number of foreclosures due to the Depression. Specifically, the Home Owners Loan Corporation (HOLC) and the Federal Housing Association (FHA) served as the two primary operators that determined neighborhoods on a map were unfit for bank, insurance, savings and loan association, and other financial service investments. In the Underwriting Manual of the FHA, many racial provisions were outlined in order to ensure that these goals were met. Provision 223 details requirements of “investigat[ing] areas surrounding the location to determine whether or not incompatible racial and social groups are present” to the extent that a prediction can be made on the “possibility or probability of the location being invaded by such groups” as “a change in social or racial occupancy generally leads to instability and a reduction in values.” As shown through the provisions manual of the FHA, it was an established rule for associations to examine communities and label the areas in which marginalized groups (racially and socially) were present or closeby to protect the racial harmony, social status, and property value of that community. These neighborhoods would be physically demarcated with red shading on a map, while areas with more preferential lending statuses would be marked green and intermediate zones with blue shading. Not coincidentally, these decisions were based on the area’s racial composition rather than income areas. As a result, most of the areas deemed unfavorable and thus shaded in red, were neighborhoods where Black residents lived.
Impact
Although the redlining mapped zones were internal documents never made public by the federal government, the consequences were clear to Black homeowners who were unable to get mortgage loans supported by government insurance programs, contrary to their white counterparts. Overall, due to the ramifications of redlining, Black neighborhoods that were deemed too risky for investments were left underdeveloped and any attempts to improve these neighborhoods were commonly obstructed by financial institutions that would label these communities unfit to invest or outright reject any improvement plans. To make matters worse, within these communities many blocks were left empty with buildings crumbling as existing businesses went bankrupt or left, new ones were not allowed to replace them. Resultantly, this limited Black Americans access to banking, healthcare, retail merchandise, and oftentimes, grocery stores. The only notable exception to this business cycle, which still exists today, was the regeneration of alcohol stores and bars which surpassed the redlined communities “investment risk”. Another detrimental impact of this business cycle was the absence of employment opportunities within the local community as any potential small-scale business could not or did not want to locate in these neighborhoods. Correspondingly, the repercussions of redlining contributed to the larger cycles of crime, intergenerational incarceration, single-Black mother narratives, and stigmas on the Black communities’ usage of America’s welfare system, all of which allowed others to perpetuate the “justifications” made for the practice itself.
Misconceptions
While it is apparent through the Fair Housing Act of 1968, which prohibits housing discrimination, and Home Mortgage Disclosure Act requiring the release of lending data, that redlining is illegal, the consequences of redlining has not been resolved and its ramifications still impact the Black community. Today the average income for African-American’s is about 60 percent that of the average white-American income, with average wealth being about 5 percent of white wealth. Because of the federal housing policy implemented through the 20th century, a large attribution to this discrepancy in income and wealth attainment, especially for middle-class families, is due to the ability to gain wealth equity on homes. And because historically, Black homeowners have been denied mortgage loans to purchase homes, race being a component of property values, and Black neighborhoods being underdeveloped, this cycle of generational inequalities have persisted.
What Now
For more information on redlining, its impacts, and ways to support the Black and other marginalized communities from dismantling this system, here are some resources you can take advantage of:
- The Color of Law by Richard Rothstein (Book)
- The Color of Money by Bill Dedmen (Article Series)
- Housing Segregation and Redlining in America: A Short History by NPR (Video short)
References
Gaspaire, Brent. “Redlining (1937- ).” African American History. BlackPast, December 28, 2012. https://www.blackpast.org/african-american-history/redlining-1937/.
Gross, Terry. “A ‘Forgotten History’ of How the U.S. Government Segregated America.” NPR. NPR, May 3, 2017. https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america.
Jackson, Candace. “What Is Redlining?” The New York Times. The New York Times, August 17, 2021. https://www.nytimes.com/2021/08/17/realestate/what-is-redlining.html.
Rafferty, John. “Redlining.” Encyclopædia Britannica. Encyclopædia Britannica, inc. Accessed December 30, 2021. https://www.britannica.com/topic/redlining.