What is Redlining?

The History, Impact, and Future of Redlining

February is Black History Month and GROWTH by NCRC is shining a spotlight on a topic that is still affecting Black and Brown communities today—Redlining.  Here at GROWTH, we are passionate about ending discriminatory policies like Redlining that impact access to housing.  So, what is Redlining anyway and why does it matter?

Definition: What is Redlining?

Redlining is a term for the way lenders classified neighborhoods with people more likely to default on their mortgage. Lenders would literally use red ink on paper maps to outline parts of cities that were considered high risk and a poor investment based on demographics alone—things like age, sex, and yes, skin color.   And guess what? Neighborhoods that were considered riskiest were those made up of predominantly Black and Latino descent. Redlining robbed these neighborhoods of wealth for generations, limiting people of color from buying in newer suburban communities and forcing them into less desirable urban corridors and housing projects.

History and Impact of Redlining

Maps like the ones above were created for the federal government through an agency called the Homeowners’ Loan Corporation and then by the Federal Housing Administration. The federal government worked with these organizations and with local banks and real estate agents to create redlining maps.  They called it “responsible lending.” Seriously. Additionally, the FHA refused to insure mortgages obtained in black or near black neighborhoods fearing that homes sold to blacks would decrease property values.  Further still, the FHA subsidized massive amounts of new construction so long as those new homes weren’t sold to African American families or individuals (Gross).

In the 1960s at the height of the Civil Rights Movement, new laws were passed that prohibited redlining.  The 1968 Fair Housing Act and the 1977 Community Reinvestment Act (CRA) banned discrimination in lending and other financial services based on someone’s race, nationality or ethnicity.   The CRA also makes lenders track how often they deny and approve loans to low-to-moderate income households.

You might be asking yourself, “Why is this still an issue?” According to Brookings Institution, “…in cities with a history of redlining, the redlined areas today remain more segregated and more economically disadvantaged with higher Black and minority shares of population than the remainder of the city,” (Perry and Harshbarger). These areas have lower household income, home values, rent, and older housing stock. And even though the Fair Housing Act was passed in 1968, the homes that were once available to African Americans and other minorities were no longer affordable.  Over time appreciation had doubled, tripled, or even quadrupled the value.  So, the white people that bought into those suburbs gained the wealth and equity that came with it. White families were able to send their children to college with the equity in their home or leave wealth to their children at their passing.  African Americans did not have that privilege.  They had been banned from buying homes in those suburbs, making it harder to overcome the economic disparity the black community has endured and still endures today.

Future of Redlining

There is good news.  Leaders like Kamala Harris, Elizabeth Warren and Pete Buttigieg released housing proposals in 2020 that offer solutions to reverse redlining. And the new 2021 Biden administration aims to advance racial equity with several executive actions related to housing, income, and healthcare.

On January 26, 2021, Biden signed an executive order directing the Department of Housing and Urban Development (HUD) to address racially discriminatory federal housing policies. The presidential memorandum on housing directs HUD to “examine the effects of the Trump administration’s regulatory actions that undermined fair housing policies and laws,” (Naylor)   The same order also “recognizes the central role the federal government has played in implementing discriminatory housing policies across the United States from redlining to destructive federal highway construction.” (Naylor)

Biden plans to further address housing discrimination by restoring the Affirmatively Furthering Fair Housing (AFFH) rule enacted during the Obama administration and revoked by Trump. This rule requires communities to identify and address housing discrimination in order to receive federal funding from HUD to improve housing options, transportation, healthcare, and economic development.  The Biden Administration is also proposing a new Homeowner and Renter Bill of Rights that will protect future homebuyers from overpriced mortgage loans and renters from discrimination if they require federal housing assistance.

Our Mission and Redlining

At GROWTH by NCRC, our mission is to provide homeownership for low-to-moderate-income families and/or in low-to-moderate income neighborhoods with an end goal of reversing the impact of redlining. We promote the idea that everyone should be able to buy a home without fear of discrimination.  We empower homebuyers to build stable lives and vibrant neighborhoods and lift communities by creating mixed-income housing and greater diversity. Safe, affordable, quality housing shouldn’t be a privilege for the few.    Every family deserves the opportunity to own a home, to build wealth, and to enjoy the American Dream. Check out this Code Switch Video to learn more about the far-reaching impact of redlining.

Works Cited:

Gross, Terry. “A ‘Forgotten History’ Of How The U.S. Government Segregated America.” A ‘Forgotten History’ Of How The U.S. Government Segregated America | WBUR News, WBUR, 3 May 2017, www.wbur.org/npr/526655831/a-forgotten-history-of-how-the-u-s-government-segregated-america.

Naylor, Brian. “Biden Aims to Advance Racial Equity with Executive Actions.” NPR, NPR, 26 Jan. 2021, www.npr.org/sections/president-biden-takes-office/2021/01/26/960725707/biden-aims-to-advance-racial-equity-with-executive-actions.

Perry, Andre M., and David Harshbarger. “America’s Formerly Redlined Neighborhoods Have Changed, and so Must Solutions to Rectify Them.” Brookings, Brookings, 14 Oct. 2019, www.brookings.edu/research/americas-formerly-redlines-areas-changed-so-must-solutions/.