FHA Underwriting Manual Codifies Redlining, Rating Black Neighborhoods 'Hazardous'

The Federal Housing Administration's 1935 and 1936 Underwriting Manuals explicitly rated neighborhoods by racial composition. Neighborhoods with Black residents received 'D' (red) ratings classified as 'Hazardous,' making them ineligible for FHA-backed mortgages. The manual stated that 'infiltration of inharmonious racial groups' degraded property values. This federal policy systematized and nationalized redlining, denying an entire generation of Black families access to the primary wealth-building vehicle of homeownership. Between 1934 and 1962, the FHA backed $120 billion in home loans; less than 2% went to Black borrowers.