Home ownership – the means by which most Americans begin to generate familial wealth. Understanding this, I wanted to take a look at the history of home ownership, dating from the 1930’s through present day, and find out exactly how redlining impacted housing segregation in the United States, especially amongst the African American and Latino communities.
First, what is redlining?
According to Dictionary.com, “redlining is a discriminatory practice by which banks, insurance companies, etc., refuse or limit loans, mortgages, insurance, etc., within specific geographic areas, especially inner-city neighborhoods.” It’s important to understand this concept as it directly assisted in the boxing out of a solid chunk of America’s population from realizing the dream of acquiring their own home.
Following the Great Depression, FDR’s administration began pushing the idea of home ownership and the ability for the average working folk to expand their horizons and take a bite out of the American dream. Playful ad campaigns pushed suburban ownership. The public and private sectors worked in conjunction to develop new neighborhoods that would surround the great cities we’ve come to know.
In 1934, the Federal Housing Administration (FHA) was created to assist in providing Americans federally guaranteed loans and 30-year mortgage terms to begin migrating from cities to the suburbs (a movement which would later be widely referred to as white flight). The goal was simple: build the middle class (while keeping others out of it).
Throughout American history, banks were known for unfair loan practices; but, nothing made it an acceptable way of business more than in the early 1930s when the Home Owners Loan Corporation (HOLC), accompanied by local lenders and realtors, began evaluating the mortgage loan risk of 239 cities nationwide. They looked at a series of factors to help determine where the government’s investments would stand the greatest opportunity of return with the greatest weight being tied to the general racial makeup of a neighborhood; or, in their words: “[the] threat of infiltration of foreign-born, negro, or lower grade population.” Upon receiving the city assessment and security maps, generated by the FHA, private banks would take a red marker and literally outline neighborhoods on the map that were given the lowest grades, hence redlining.
City maps were examined and broken down into four categories (map provided by HOLC, Division of Research & Statistics):
- Grade A (green): highly desirable
- Grade B (blue): somewhat desirable
- Grade C (yellow): declining
- Grade D (red): to be avoided
Areas that were “more black” than others or even located near black people were given lower grades of C and D. Simply put, your chances of receiving an insured mortgage loan in either of these two categories was nearly zero. By excluding African Americans and Latinos from the mortgage market, it opened up many families to predatory lending which assisted in sparking subsequent generations of despair and poverty.
By the 1950s, industrial companies had packed up and moved to the surrounding suburbs where white people now abundantly lived. This meant people of color were relegated to levels of high unemployment and diminishing neighborhoods that were being disinvested in and ignored. For twenty years, between the 1930s and 50s, three-fifths of homes purchased were financed by FHA. Realize, of that number, less than 2% of FHA loans went to non-white homebuyers.
One of the shrewdest examples of just how crazy this system became took place in 1941 on the north side of Detroit. A private company looking to build in the Wyoming and 8 Mile areas decided to erect a wall that would extend a half mile south of 8 Mile Road.
The Birwood Wall, as it was called, was meant to split the black community members from the white community members and was less of a true deterrent and more of a symbolic middle finger. It was a six-feet-tall, cement barrier meant to signify to folks on the outside – you don’t belong here. The wall satisfied the desires of the FHA, which went on to provide the necessary loan to begin building the development.
Fast forwarding to today, the devastating effects of redlining (the 1930s – 1970s) are still felt. Taking a glance at cities like Chicago, Cleveland, New York, Baltimore, Richmond, etc., it’s apparent that the visionaries behind the neighborhood survey assessment saw their work to fruition. Many of the areas which were marked with C and D grades still face severe poverty to this day. Sadly, the despair is only being highlighted more by the expeditious nature of gentrification we’re witnessing all across the country.
For many black and Latino residents of these neighborhoods, predatory lending sent them into financial spirals. For the elderly who were fortunate enough to maintain their homes over the years, they found themselves being preyed upon by companies who’d offer less than market value to acquire their homes, flip them, and rent them out for exorbitant fees.
To those who’ve made it this far through the reading, I pose a simple question: as we continue to speak on and protest current social issues, how will we use our voices to also affect longstanding economic injustices? If you have a story about redlining, or gerrymandering, or educational inequities, or privatized prisons, or any social topic you’d like to discuss, please share it below. The more we share, the more our minds expand. Life is lived to the fullest when we make learning the focal point of it all.