Redlining & Housing Discrimination

Redlining was the practice of denying mortgages, insurance, and investment to neighborhoods because of their racial makeup — and it was, above all, a federal policy. In the 1930s the Home Owners' Loan Corporation drew "residential security" maps that colored Black and integrated neighborhoods red for "hazardous," and the Federal Housing Administration then refused to insure home loans in those areas. The FHA's own Underwriting Manual warned against "inharmonious racial groups" and recommended racial covenants barring Black buyers.

The effect was vast. During the mid-century decades when federally backed, low-interest mortgages built the American middle class, that subsidy flowed almost entirely to white families in white suburbs, while Black families — confined to redlined neighborhoods — were denied loans, watched their areas starve of investment, and were preyed upon by contract sellers and, later, predatory lenders ("predatory inclusion," in Keeanga-Yamahtta Taylor's phrase).

Redlining was outlawed by the Fair Housing Act of 1968, but its map is still legible: formerly redlined neighborhoods remain poorer, with lower home values, less tree cover, worse health outcomes, and less inherited wealth. It is one of the clearest mechanisms by which a racial caste was converted into a wealth gap. See who-benefited.