Topic of the Week: Redlining
Hello everyone. I apologize for the hiatus on writing. Now that I’m back on track, this week’s Social Justice topic is redlining. The reason why this word was chosen is due to the negative impact redlining has had on people of color being able to secure critical life chances that can still be seen today. This article will be primarily concerned with redlining in the mortgage industry.
First off, redlining is defined as the practice of denying services, either directly or through selectively raising prices, to residents of certain areas based on the racial or ethnic composition of those areas.
A cogent example of redlining occurring was in the formation of the Federal Housing administration (FHA). To provide a brief background on the FHA:
The FHA is a United States government agency created in part by the National Housing Act of 1934. It sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building. The goals of this organization are to improve housing standards and conditions, provide an adequate home financing system through insurance of mortgage loans, and to stabilize the mortgage market.
However, the goals in the formation of the FHA were felt unilaterally. Redlining occurred from the creation of the FHA in 1934, and lasted until 1968* (see footnote below). How did this occur though?
The FHA explicitly refused to back loans to black people or even other people who lived near black people. Through an overt practice of denying mortgages based upon race and ethnicity, the FHA played a significant role in the legalization and institutionalization of racism and segregation. The Underwriting Manual established the FHA’s mortgage lending requirements, ultimately institutionalizing racism and segregation within the housing industry.
This practice wasn’t just exclusive to the FHA. The mortgage industry as a whole (which allowed people without large savings or family money to buy homes) adopted many of these same practices. This had all sorts of truly horrific consequences for black people, black families, and black neighborhoods. Many of these consequences can be seen firsthand right here in Southern California. During the 1930s, FHA activity in California exceeded that of any other state and you would be hard-pressed to deny their influence on housing in Los Angeles.
The Underwriting Manual was literally institutionalized racism because the guidelines that deemed people of color unworthy of securing mortgages was embedded in the actual institutions of the FHA and the HOLC (Home Owners’ Loan Corporation). To facilitate private investment through the FHA, the HOLC, and the Federal Home Loan Board Bank (FHLBB), the federal government crafted a national set of standards for assessing mortgage risk. Through its 1935 City Survey Program, the HOLC gathered data about neighborhoods from approximately 239 cities and compiled the results into a rating system ranging from A to D. Communities with A ratings represented the best investments for homeowners and banks alike; B, neighborhoods that were still desirable, C, those in decline, and D, areas considered hazardous. To visually capture these rankings, the HOLC then turned these ratings into color-coded maps, using green for A, blue for B, yellow for C, and red for D – the origin of the term “redlining.”
The ratings purported to use “objective criteria”, but racism snuck in; the HOLC and FHA valued homogeneity over heterogeneity, particularly in regard to ethnicity and race. Those communities depicted in “red” usually contained minorities: African-Americans, Mexican-Americans, Asian-Americans, and sometimes newly arrived immigrant groups like Slavs, Jews, and Italians. This system of redlining ultimately drew private investment away from heterogeneous communities like Boyle Heights and Watts. Working class and white ethnic communities fared better, but were also sometimes penalized, often receiving C and sometimes D ratings.
Neighborhoods fell into a vicious circle of decline: the inability to access capital lead to disrepair and the physical decline of a community’s housing stock, which in turn reinforced the redline designation. That redlining became equated with race and class led to the naturalization of segregation; white, working-class homeowners often sought to exclude those populations seen as threatening to home values. Redlined communities also sat closer to industrial areas, vice districts, and environmentally compromised settings, exposing residents to health risks and crime. Being able to secure a mortgage for a home is also a prerequisite for many other life chances, such as where one gets to own a home determines what school district one’s children attends, thus what quality of education their children can receive, what kind of retirement planning can be done as a home is a critical component, and the ability to engage in long-term investment. Too often, Americans think of “racial sorting” as a “natural” process of the market. Yet HOLC maps force us to reconcile how intentional and structural such procedures are. Contributing scholar Robert K. Nelson of the University of Richmond’s Digital Scholarship lab (DSL) succinctly puts it:
HOLC maps were “explicitly racist . . . the racism isn’t subtext. It’s just text.”
Are there any silver linings? The answer is quite ambiguous. The process of regulating housing at the federal level eventually led to fair housing acts that have benefitted minority homeowners, Nelson points out. Brent Cebul, a postdoctoral scholar at the DSL adds that “though it came at the expense of minorities, the FHA and HOLC did establish a new form of wealth through housing policy and enabled working-class whites and, on rare occasion, nonwhites to join the middle class. Over time, though hardly equally distributed, this has also increasingly helped Asian, Latino, and black Americans to varying degrees”.
Even though the segregation of redlining has paved the way to fair housing acts and segregation within metro-neighborhoods has declined, new kinds of segregation have popped in its place such as segregation within suburban communities and gentrification in urban cities.
After redlining was dismantled in the 1960s, white families moved from cities to the suburbs (white flight) when they saw their previously homogenous communities gradually become heterogeneous. Now as the suburbs are beginning to attract more people of color, there is a new trend of white families moving from suburbs to farther-out fringes, hunkering down in all-white neighborhoods, affluent gated communities, or unincorporated housing developments at the exurban fringe. Exclusionary zoning laws make it difficult to build mixed-income housing or apartment buildings in many suburban areas, despite court cases seeking to make cities more diverse. These housing policies mean that cities compete for different types of people, and by banning apartment buildings or affordable housing, cities can better attract affluent white taxpayers.
Gentrification can also trace its roots back to the disenfranchisement that resulted from white flight and segregationist policies. While zoning laws in suburban cities prevent affordable housing, politicians manipulate zoning laws in the city to allow massive developments to (re)attract wealthier (read white), future urbanites, only to greet people of color with a few token nods at mixed-income housing and further displacement. The discourse of neighborhoods of color being “inherently pathological” conveniently ignores the pernicious reality that has been partially outlined in this newsletter. Also the idea that such communities need an outside intervention of politicians (looking at the demographic of who’s a politician in this country, white people are overrepresented in political office based on their population size), business developers (business elites/CEOs also being overwhelmingly white), and high-end artists fuels this offensive, white savior complex. There have always been talented artists in the “hood.” The presumptive, artist gentrification narrative is itself an erasure of these artists of color. Gentrification is also “polite” institutionalized racism.
Thank you all for reading this week’s newsletter. I intended for this topic to be a nice transition from the last piece I wrote on “Why Blue Lives Matter is Messed Up.” This last piece talks about the tendency of white suburbia’s unquestioned reverence of the police, as policing helped play a role in the creation of affluent, predominantly white suburbia through enabling and protecting inherited land and wealth. It’s so important that we are able to look at the scope of inequity with an intersectional lens- how do these overt (ex. police) and covert forms (ex. redlining) of institutional violence and racism shape our surroundings today?
*1968… that is only 1-2 generations away from my age… that would be like stunting the upward mobility of my parents, which would obviously matriculate to me present-day. This would require myself to work twice as hard versus children of parents who were immediately deemed “qualified” (read white) for a loan.