Redlining Brief: History, Company & Effects
The term ‘redlining’ is one we hear so often, yet few are aware of what redlining really is, or of its effects. With the help of the Digital Scholarship Lab at the University of Richmond’s Mapping Inequality Project, we will tackle what redlining (and company) is and how its effects still linger today.
Redlining is a discriminatory practice in which money-lending entities (banks, the federal government) withhold loans to homeowners simply due to the geographic location in which they reside. The term redlining was made popular by sociologist John McKnight in the 1960’s, but the practice was widely commonplace as early as the 1940’s. Still, redlining was not the only harmful housing practice being used.
During the early 1930’s, hundreds of thousands of people were losing their homes to foreclosure. Banks were setting shaky “balloon mortgages” which meant low, early payments that “ballooned” in price and became too expensive for the mortgage payer to afford. Banks would typically have to seize the property and auction it off to make the profit back, leaving the inhabitants essentially homeless. To quell the national suffering of the Great Depression and the newfound mortgage crisis, president Franklin D. Roosevelt rolled out his solution: the New Deal. This package consisted of multiple new federal programs, all with aims to restore the economy and get people ‘back on their feet.’ The production of these federal programs, specifically the Home Owners Loan Corporation (HOLC) marked the transition of housing discrimination from individual efforts to a systematic degradation & isolation of Black neighborhoods. Let it be known that the HOLC is not the only culprit; the Federal Housing Administration, Works Protection Act, Veterans Administration and many more New Deal Programs also exacerbated the inequities of the situation.
Before these programs existed, Black people were being kept out of White neighborhoods through discriminatory practices such as restrictive covenants written within individual house deeds. When selling/renting homes, realtors wrote contracts which specifically stated to whom the house could and could not be sold to; typically, it was set so that the house could never be sold to or by a Black individual. These contractual restrictions were carried out by individuals, but oftentimes encouraged within communities by racist organizations masked behind casual names, like Neighborhood Improvement Associations. The idea of racial homogeneity was imperative to White homeowners, and it fervently guided the formation of the Black Ghetto in the early 1900s to the 1930s (see Supreme Court case Corrigan v. Buckley, 1926.)
The 1930’s is when discriminatory housing practices got into the hands of the federal government. By this time, the real estate industry was its own capital enterprise. There were local real estate boards in place, and these boards governed their respective city’s future landscape. They would play an even more pivotal role under the New Deal. When president FDR introduced the Home Owners Loan Corporation (HOLC) in 1933, home foreclosures were at an all time high. During 1933, 1,000 homes were being foreclosed a day. So, the purpose of the HOLC was literally to purchase the mortgages of those who lost their homes or were about to lose their homes and refinance them. According to livingnewdeal.org, the HOLC made over one million loans between 1933 and 1936, with the average loan summing up to about $58,000 in today’s money. These funds were meant to get people back under their own two feet after shady bank practices left so many without homes. But, the capitalistic ideals of these men in power created absolute turmoil for Black communities. To ensure that the government was not spending more than it “should have been” (I put that in quotation marks because they are never spending enough unless it is on police, which it is then too much), the Roosevelt administration sent local appraisers into neighborhoods with cities over 50,000 people to “rank” neighborhoods in determining how much money, if any, the government should invest in them. Neighborhoods were graded A-D: A for Best, B for Still Desirable, C for Definitely Declining, and D for hazardous. “A” neighborhoods were hot spots, where mortgage lenders would give maximum loans. “B” neighborhoods were where mortgage lenders tried to stay around 65% appraisal. “C” neighborhoods were to receive loans less frequently, and “D” neighborhoods were given loans very conservatively. The government viewed it as a “waste of money” to invest in “C” or “D” areas, and allocated the funds away from these neighborhoods. The “D” neighborhoods, which were the most avoided areas, were outlined in red. Hence, the name “redlining.”
Once the Federal government adopted these lending habits, private entities, such as banks, followed suit. To look further into this, check out the Richmond University Digital Scholarship Lab’s Mapping Inequality project. This project consists of digitized maps put together from the actual graded maps and scanned appraisal sheets from Home Owners Loan Corporation in the 1940s, documenting almost every major city across the country.
What resulted from this White Supremacist grading hierarchy was a debilitating intersection of race and poverty in the Ghetto, one that some historians say exacerbated the racial wealth gap. As more and more Black individuals migrated from Jim Crow South to the Industrial North (just to be exploited further), restrictive covenants were keeping the Black migrants out of neighborhoods with adequate housing and instead forced them in dilapidated housing within neighborhoods that were rated “hazardous” or “definitely declining”. Because of these ratings, the inhabitants could do nothing about their circumstances. Black people were forced to accept higher mortgage rates, low paying jobs with awful working conditions, and exclusion from general society. Neighborhoods marked as “definitely declining” soon turned “hazardous” as more Black people were housed within the area. What determined a neighborhood’s grade was numerous things, but none more powerful and decisive than that of racial composition, and appraisers were not even trying to hide it. If you don’t believe me, click on any “Hazardous” city and look at the comments made by 1940’s appraisers on the racial composition of the area. The question of “Negro percentage” is written on every standard appraisal sheet, and appraisers refer to the close proximity of Black inhabitants as an “infiltration” of “undesirables” (Toledo) or an increase in “subversive racial elements” (Los Angeles.)
One of the most eerie parts of engaging with this project is looking at Toledo’s map and recognizing the differences between now and then. As I mentioned earlier, any zone labeled “definitely declining” could typically turned “hazardous” soon after, which always meant a larger Black/ethnic White presence (European immigrants, although placed higher than Black Americans, were also discriminated against by Anglo-Saxon Americans (they referred to themselves as ‘Native Born’ Americans but I will not refer to them in that manner whatsoever.)) One tactic that was used by realtors to turn was to convince White homeowners in these “C” areas to sell their homes for cheap prices, typically by telling them racial minorities were moving into the neighborhood and decreasing their property value, and then mortgage that house to a Black family at a higher price. This was an evil technique called “Blockbusting” and was used to expand the Ghettos of America as the northern Black population increased, without letting them “infiltrate” White, homogenous communities, but this tactic very much screwed over the White individuals who would sell their homes as well. If you see your hometown on the map, I would encourage you to try and find similarities/differences in the displayed neighborhood layouts & trends.
Practices like issuing racial covenants (Shelley v. Kraemer,1948 and Jones v Mayer, 1968) redlining (Fair Housing Act of 1968) and blockbusting (sometimes referred to today as racial steering — varies by state, but definitely still a thing today) are now technically illegal, but that is not to say we are not still paying the consequences for these practices (or that they still don’t happen.) A lot of the neighborhoods affected by the New Deal are dealing with the same issues, or lack thereof. For example, Ottawa Hills was one of the only areas with an A rating within the Greater Toledo area in 1940. Today, Ottawa Hills remains one of the most affluent neighborhoods around Toledo. It is easy to look at that city now and admire its cleanliness, its residential flare or even the people who can afford the expensive homes in the area. But we can not ignore the fact that the area was getting approved for hefty federal loans left and right while the most dilapidated structures in the most worn down areas were left to rot because they seemed unfit to invest in, costing lives and ultimately enabling a false narrative to arise. A narrative of entitlement on one side, and incompetence on the other. In order to defeat these untruthful narratives we must first equip ourselves with the truth, no matter how hard it may be to find or deal with. The truth will, and must challenge our privileges. Before you question if America’s incredibly racist past has anything to do with our present lives, ask yourself, “am I even truly aware of America’s racist past?” Once you answer that question, the rest will invite themselves to be answered.
As always, here are my resources for any fact checking & follow ups. Have a great day!
Balloon Mortgage by Julia Kagan
Examining the Black-white wealth gap
'Legacy of Shame': How Racist Clauses in Housing Deeds Divided America by Clare Trapasso
Mapping Inequality: Redlining in New Deal America, Digital Scholarship Lab at U of Richmond
Origins of Economic Disparities: The Historical Role of Housing Segregation by Douglass S. Massey (book)
Redlining by Taylor Rae Almonte
The Indelible Color Line: The Persistence of Housing Discrimination by Gregory Squires
What Is Blockbusting in Real Estate? by Erin Eberlin
