Redlining

Written by Anne

Redlining, a prime example of systemic racism, made it nearly impossible for Black families to own homes and build wealth. Although it was made illegal in 1968, redlining continues to impact millions of Black Americans today.


What is redlining?

Redlining is the practice of refusing loans or mortgages to specific geographic areas that normally have a high percentage of minorities, especially Black residents. The term often refers to mortgage lenders literally drawing red lines around places that they don’t want to give loans to.


History

In the 1930s, “during the Great Depression, almost half of all homeowners were in default” (Explained). In order to reduce debt, President Franklin D. Roosevelt signed the New Deal, which gave out mortgage credits to millions of Americans. Because of this, many white families were able to become homeowners. In order to decide which areas were best to give mortgage credits to, the Home Owners Loan Corporation (HOLC), a government-sponsored organization, drew color-coded neighborhood maps. The colors indicated different areas based on wealth and the best areas to give out loans. For example, green meant the “best” area with high wealth, red meant “hazardous” areas to give loans to, mostly poor areas with a large percentage of Black families. Many mortgage lenders believed that if they gave loans to Black people, property values would decline, thereby putting the loans in danger. Thus, Black families were often denied loans and had to live in apartments or housing projects. As owning a home allows you to easily build equity and wealth, the white families were able to increase their wealth through many generations while Black families were limited to poorer neighborhoods where they could not build equity. Additionally, since education is funded by property taxes, the neighborhoods with lower property values had a lower quality of education, making it difficult for Black students to finish higher levels of education and thus work higher-paying jobs.


Taken from the New York Times, 2017


Impact

In 1968, the Federal Housing Act made redlining illegal as part of the Civil Rights Act. However, the Act was not heavily enforced, and currently “it is still much harder for a Black person to get a mortgage or home loan than it is for a white person” (NPR). In 2017, the median household income for a white household was $68,145, while for Black households it was $40,258 (2017 US Census). Because of the lack of well-funded education and resources in these poorer neighborhoods, Black people struggle to break the cycle of poverty as white families’ generational and overall wealth increases, widening the racial wealth gap. Even though redlining is illegal today, many Black families across America continue to suffer the consequences of this systemic racism.

Sources:

https://www.census.gov/content/dam/Census/library/visualizations/2018/demo/p60-263/figure1.pdf

https://www.dictionary.com/browse/redlining

https://www.britannica.com/topic/redlining

https://www.federalreserve.gov/boarddocs/supmanual/cch/fair_lend_fhact.pdf

https://www.npr.org/2017/05/03/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america

https://youtu.be/Mqrhn8khGLM

https://youtu.be/O5FBJyqfoLM

https://www.nerdwallet.com/article/mortgages/home-equity-explained-matters

https://www.nytimes.com/2017/08/24/upshot/how-redlinings-racist-effects-lasted-for-decades.html

https://www.washingtonpost.com/news/wonk/wp/2018/03/28/redlining-was-banned-50-years-ago-its-still-hurting-minorities-today/

Cover photo: https://www.washingtonpost.com/news/wonk/wp/2018/03/28/redlining-was-banned-50-years-ago-its-still-hurting-minorities-today/


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