Redlining

Q: Can you tell me more about Redlining?
~ Susan K.
Austin, Texas

A: Redlining, practiced from the 1930s – 1960s, blocked African Americans from obtaining homes, home loans, and home repairs and remains a major factor in the wealth gap between Black and white families.  The federal agency, the Home Owners’ Loan Corporation, utilized Redlining to legitimize racial discrimination across the Unites States between 1935 and 1940.  The agency created color-coded maps for American cities that indicated risk levels for long-term real estate investment or mortgage security.  And there was nothing hidden about these practices.

The Home Owners’ Loan Corporation was part of the New Deal reforms started under President Franklin Delano Roosevelt to lift the United States from the Great Depression.  Neighborhoods that received the grade A, colored green on the maps, were considered the “best.” Neighborhoods that received the grade D, colored red, were considered “hazardous.”  Metropolitan areas with a large population of Black families were the most likely to be redlined, while areas that were predominately white were the most likely to be colored green. In redlined neighborhoods, it was virtually impossible to get a loan. Grade B neighborhoods were considered “desirable” and were colored blue and Grade C neighborhoods were deemed “declining” and were colored yellow. 

The 1896 U.S. Supreme Court case Plessy v. Ferguson legitimized Jim Crow segregation and provided states with a legal way to ignore their constitutional obligations to their African American citizens.  When the Home Owners’ Loan Corporation began redlining in the 1930s, many cities were already racially segregated; it was common for neighborhoods to consist predominantly of Black or white families.  Redlining prevented both Black and white families from obtaining home loans in Type D neighborhoods, but the larger impact was on Black families,  who were blocked from buying homes in the neighborhoods where they already lived or neighborhoods where predominately white families lived. 

After the signing of The Civil Rights Act of 1968, also known as The Fair Housing Act, it became unlawful to refuse to rent, sell, or provide financing for a dwelling based on race, religion and national origin.  The 1977 Community Reinvestment Act further outlawed redlining.  The Fair Housing Act could prohibit future discrimination,but by the time it was passed, the patterns of neighborhood segregation had been established.  Additionally, Zoning Laws continued to make African American neighborhoods undesirable.  Many urban areas with larger black populations were zoned for industrial plants, waste disposal, and other industries that would cause hazardous living conditions and depreciate the housing value in the neighborhood.

Public Housing was also established under the New Deal programs.  African American neighborhoods were frequently demolished to build new highways and infrastructure. Displaced residents had little housing options except for segregated public housing.  A greater percentage of African Americans living in public housing or rented apartments, were prohibited from moving to the suburbs, and gained little to no housing appreciation.  Today, the national homeownership rate is 44% for Black families compared to 74% for white families.  African American  homeowners are almost five times more likely to own property in a formerly redlined neighborhood, resulting in diminished home equity, less generational wealth, less financial resources to pay for higher education, and overall economic inequality for Black families.  Black incomes on average are about 60% of white incomes, but Black wealth is only about 5-7%  of white wealth.  These differences are largely attributed to the discriminatory federal housing policies enacted in the 20^th century.

Jennifer Hasso
Jim Crow Museum
2021

Sources:

Gross, T. (2017, May 03). A 'forgotten history' of how the U.S. government segregated America. Retrieved February 22, 2021, from https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america

Richardson, B. (2020, June 30). Redlining's legacy of inequality: Low homeownership rates, less equity for black households. Retrieved February 22, 2021, from https://www.forbes.com/sites/brendarichardson/2020/06/11/redlinings-legacy-of-inequality-low-homeownership-rates-less-equity-for-black-households/?sh=45c041042a7c

Wolfe-Rocca, U. (n.d.). How red lines Built White WEALTH: A lesson on housing segregation in the 20th century. Retrieved February 22, 2021, from https://www.zinnedproject.org/materials/how-red-lines-built-white-wealth-color-of-law-lesson