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Redlining Presentation
Redlining is an unethical practice that denies financial services to residents based on race or ethnicity, originating from discriminatory policies in the 1930s, such as those implemented by the Home Owners Loan Corporation (HOLC). The consequences of redlining, including significant disparities in homeownership for Black Americans and ongoing mortgage bias, persist today, despite the 1968 Fair Housing Act aimed at prohibiting racial discrimination in housing. The document discusses the historical background, impact, and current challenges related to redlining while posing questions about how to address its legacies.
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Redlining Presentation
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- 3. What is Redlining? Redliningis an unethical practice that puts services (financial and otherwise) out of reach for residents of certain areas based on race or ethnicity. It can be seen in the systematic denial of mortgages, insurance, loans, and other financial services based on location (and that area’s mortgage default history) rather than an individual’s qualifications and creditworthiness.
- 4. Housing Policy inthe United States: A Primer
- 5. 1930’s The creation ofthe Home Owners Loan Corporation (HOLC) by the federal government was meant to stem the dramatic increases in home foreclosures during the Great Depression. The HOLC was responsible for: ● Making new, low-interest loans to homeowners affected by the Great Depression. ● From the years 1933-1936, the HOLC issued 1 million home loans. ● In 1935, the Federal Home Bank Board (the parent organization of the HOLC) directed the agency to do an assessment of high risk loans in 239 cities across the US.
- 6. 1930s, continued The HOLCcreated a series of maps of these 239 cities which were color-coded and ranked. 1 the highest rank and 4 the lowest rank. HOLC examiners systematically graded neighborhoods based on criteria related to: ● The age and condition of housing, ● Transportation access, ● Closeness to amenities such as parks or disamenities like polluting industries, ● The economic class and employment status of residents, ● And ethnic and racial composition.
- 7. >150More than 150of these original HOLC Maps still exist.
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- 9. “Homeownership is thenumber-one method of accumulating wealth, but the effect of these policies that create more hurdles for the poor is a permanent underclass that’s disproportionately minority,” -John Taylor, president and chief executive of the National Community Reinvestment Coalition
- 10. The Federal HousingAdministration The HOLC maps were used as guidance for lending decisions by the FHA, banks and other lending institutions in the United States. These lenders systematically denied people of color and other ethnicities access to the capital needed to buy homes throughout the US. The Federal Housing Administration (FHA) is a United States government agency founded by President Franklin Delano Roosevelt, created in part by the National Housing Act of 1934. The FHA sets standards for construction and underwriting and insures loans made by banks and other private lenders for home building.
- 11. Where did theterm redlining come from? Community groups in Chicago’s Austin neighborhood coined the word redlining in the late 1960s, referring literally to red lines lenders and insurance providers admitted drawing around areas they would not service. But in the 1930s and 1940s, there were virtually no legal obstacles to lending discrimination. Redlining—not yet given a name—was simply considered to be good business.
- 12. Lenders and Realtors Lendersand realtors were involved in perpetuating the segregation of neighborhoods via the HOLC maps. They used REVERSE REDLINING and GREENLINING to steer prospective homebuyers to certain neighborhoods. Reverse redlining is marketing inferior credit and other products to those same neighborhoods. Greenlining is incenting investment in previously redlined neighborhoods.
- 13. National Association ofReal Estate Boards (NAREB), now the National Association of Realtors (NAR) “A REALTOR® should never be instrumental in introducing into a neighborhood ... members of any race or nationality ... whose presence will clearly be detrimental to property values in that neighborhood.” --from the association’s 1924 code of ethics. The reference to “race or nationality” was not removed until 1950. The National Association of Real Estate Associations was formed in 1908, later becoming the National Association of Real Estate Boards (NAREB). In 1913, NAREB adopted a Code of Ethics.
- 14. The discriminatory practices capturedby the HOLC maps continued until 1968, when the Fair Housing Act banned racial discrimination in housing.
- 15. Fair Housing Actof 1968 The Fair Housing Act of 1968 prohibited discrimination concerning the sale, rental and financing of housing based on race, religion, national origin or sex.
- 16. NAR fought theFair Housing Act Many factors played into NAR’s resistance: ● Historic prejudice in the United States, ● The belief that property values were more stable if neighborhoods were occupied by the same racial/social classes ● and the argument that people should be free to refuse to sell or rent a home to anyone for any reason — even if the decision was based on race.
- 17. Despite Supreme Courtdecisions such as Shelley v. Kraemer (1948) and Jones v. Mayer Co. (1968), which outlawed the exclusion of African Americans or other minorities from certain sections of cities, race-based housing patterns were still in force by the late 1960s. Those who challenged them often met with resistance, hostility and even violence.
- 18. The GI Billalso impacted African-Americans access to housing opportunities after the war.
- 19. Impact of RedliningToday
- 20. 40.6% The homeownership ratefor black Americans fell to 40.6%, the lowest level in the Census Bureau’s quarterly data going back to 1994, according to a government report on Thursday. This was the smallest share recorded for black households since the 1950 decennial Census when it was 34.5%. (U.S. Census Bureau, 2019)
- 21. Mapping Black Homeownership Gap 2019 Notone of the 100 cities with the largest black populations has a black homeownership rate close to the white homeownership rate. Even in places where black households are the majority, like Atlanta,, Georgia, the gap persists. (https://www.urban.org/urban- wire/mapping-black-homeownership-gap)
- 22. Mortgage Bias Still Exists Arecent analysis of nearly 7 million 30-year mortgages by University of California at Berkeley researchers found that black and Latino applicants were charged higher interest — an average of nearly 0.08% — and heavier refinance fees when compared with white borrowers. That was in face-to-face transactions. When applying online or through an app, minorities still ended up paying more, though terms were slightly better than when borrowing in person. The upshot: Long-standing discrimination faced by people of color in getting a home loan can be reproduced in software-based lending, technology that advocates say is supposed to prevent bias. (https://www.cbsnews.com/news/mortgage-discrimination- black-and-latino-paying-millions-more-in-interest-study-shows/)
- 23. Racial Segregation 50years after the Fair Housing Act Southside of Chicago HOLC Map Source: https://www.washingtonpost.com/graphics/2018/national/segregation-us- cities/
- 24. Discussion Questions How canplanning interventions reduce the impact of redlining? How do cities best address the legacies of redlining in their communities? Will redlining effects continue to persist in the United States? Why or Why not?
- 25. Class Activity ● Getin groups of 2 or 3 ● Complete activities 1.1 and 1.2 of the Redlining Activity ● Send to Dr. Reese upon completion.