Redlining

Home Owners' Loan Corporation Philadelphia redlining map

Redlining is a discriminatory practice in which services (financial and otherwise) are withheld from potential customers who reside in neighborhoods classified as 'hazardous' to investment. These neighborhoods were often predominantly inhabited by people of color, particularly African Americans. The term originates from the practice by the United States federal government and private sector of drawing red lines on maps around areas it deemed unworthy of investment, starting in the 1930s. Redlining has had long-term detrimental effects on affected communities, contributing to a cycle of poverty and limiting access to housing, credit, and opportunities for wealth accumulation.

History

The roots of redlining can be traced back to the establishment of the Home Owners' Loan Corporation (HOLC) in 1933, as part of the New Deal, to prevent home foreclosures during the Great Depression. The HOLC created "Residential Security Maps" for several American cities, grading neighborhoods from "A" (best) to "D" (worst). Areas graded "D" were often outlined in red ink, signifying high risk for mortgage lenders. These areas were predominantly African American neighborhoods, but also included areas with a high concentration of immigrants and other minorities.

The practice was further institutionalized by the Federal Housing Administration (FHA), which refused to insure mortgages in and near African-American neighborhoods—a policy known as redlining. This policy was mirrored by private banks and other lending institutions, effectively denying minorities access to home loans and insurance.

Impact

Redlining has had profound and lasting impacts on American society, contributing to racial disparities in wealth, health, and education. By limiting access to mortgages and insurance, redlining forced many people of color into rental markets, preventing them from building equity and wealth through home ownership. This has contributed to the racial wealth gap seen in the United States today.

Moreover, redlined communities often suffer from underinvestment in infrastructure, schools, and public services, leading to poorer health outcomes, lower educational attainment, and higher rates of poverty. The lack of investment also discourages business development, perpetuating a cycle of economic disadvantage.

Legislation and Remediation

In response to the civil rights movement and growing awareness of redlining's effects, the United States Congress passed several pieces of legislation aimed at combating this practice. The Fair Housing Act of 1968 prohibited discrimination concerning the sale, rental, and financing of housing based on race, religion, national origin, or sex. The Community Reinvestment Act of 1977 was designed to encourage commercial banks and savings associations to help meet the needs of borrowers in all segments of their communities, including low- and moderate-income neighborhoods.

Despite these legislative efforts, the legacy of redlining continues to affect communities, with disparities in housing, education, and economic opportunities still prevalent. Ongoing efforts to address these disparities include community reinvestment initiatives, fair lending enforcement, and policies aimed at increasing access to affordable housing.

See Also

• Discrimination
• Racial Segregation
• Urban Decay
• Gentrification
• Housing Discrimination