The FHA writes redlining into federal policy
The 1934 National Housing Act created the Federal Housing Administration, which graded Black neighborhoods "hazardous," refused to insure mortgages there, and recommended racial covenants — steering federally backed home loans to white families and suburbs.
The National Housing Act of 1934 created the Federal Housing Administration to make homeownership affordable by insuring long-term, low-down-payment mortgages. It worked — for white families. The FHA adopted the color-coded "residential security" logic of the Home Owners' Loan Corporation, refusing to insure loans in Black and integrated neighborhoods marked red for "hazardous." Its Underwriting Manual explicitly favored racial homogeneity and recommended restrictive covenants barring sale to Black buyers. For a generation, the federal government underwrote the white suburb and starved the Black neighborhood — the single most consequential engine of the modern racial wealth gap.
The web
Connections to other moments, systems, and investigations — the links rarely drawn together.
- part of·ThreadWho Benefited: The Wider Economy & the Wealth Gap
Federally backed mortgages built white suburban wealth and bypassed Black families.
- part of·ThreadRedlining & Housing Discrimination
The FHA operationalized redlining nationwide.