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. Surveyors were instructed to mark any area with even one Black resident as high-risk. This federal policy systematized and nationalized redlining, denying an entire generation of Black families access to the wealth-building vehicle of homeownership. Reverse redlining funneled predatory contract sales into these same neighborhoods.