How Redlining Began under what party
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HE WHO HAS AN EAR LET HIM HEAR!
By: Willy Bill| The Cafe' Blog| Politics of Systemic Change
During the Great Depression, the Democratic administration of President Franklin D. Roosevelt created several New Deal programs to stabilize the American economy and housing market.
The housing crisis was particularly severe because many homeowners were unable to make their mortgage payments, while banks were reluctant to provide new loans. In response, the federal government established programs designed to prevent foreclosures, encourage homeownership, and make mortgage lending more accessible. Two of the most important agencies involved in these efforts were the Home Owners’ Loan Corporation (HOLC), established in 1933, and the Federal Housing Administration (FHA), established in 1934.
The HOLC was created primarily to help homeowners who were at risk of losing their homes because they could not keep up with their mortgage payments. As part of its work, the HOLC developed residential security maps for numerous American cities. These maps classified neighborhoods according to their perceived level of lending risk. Areas were graded from the most desirable to the most hazardous. Neighborhoods that were considered risky were frequently outlined in red. Black residents and other racial minorities were often concentrated in neighborhoods that received the lowest grades, while neighborhoods with larger white populations were more likely to receive favorable ratings.
These maps are closely associated with the origins of the term “redlining.” The practice of marking certain neighborhoods as undesirable for lending contributed to a system in which residents of those communities could have greater difficulty obtaining mortgages and other forms of credit. However, historians and recent researchers have questioned the idea that the HOLC maps alone created or caused redlining. The maps were one component of a much broader system of discriminatory housing practices that existed before the HOLC and continued after the maps were created.
The Federal Housing Administration played an especially important role in this system. Unlike the HOLC, which primarily assisted existing homeowners and refinanced mortgages, the FHA was created to encourage mortgage lending by insuring loans made by approved lenders. This greatly expanded access to long-term mortgages and helped shape the modern American housing market. However, FHA underwriting practices also incorporated racial considerations into assessments of neighborhood and property risk. Its guidelines favored neighborhoods that were considered racially stable and discouraged lending in areas where racial integration was occurring or where Black residents were concentrated.
As a result, FHA policies could make it more difficult for Black families to obtain federally insured mortgages, particularly when they attempted to purchase homes in predominantly white neighborhoods. At the same time, Black neighborhoods could be viewed as higher-risk areas, limiting the availability of mortgage credit and investment. These practices contributed to patterns of residential segregation and unequal access to homeownership. Because homeownership became an important way for American families to accumulate wealth, restrictions on access to mortgages also had consequences that extended beyond housing itself.
It is important, however, to distinguish between the HOLC maps and the broader practice of redlining. Although the HOLC maps are often presented as the origin of redlining, research indicates that discriminatory lending practices involved many institutions and existed before and after the HOLC maps were produced. Banks, local governments, real estate agents, appraisers, neighborhood organizations, and federal housing officials all played roles in determining where people could buy homes and who could receive mortgage financing. The FHA’s policies were particularly influential because of the enormous role that federally backed mortgage insurance played in shaping lending practices.
Was Roosevelt Responsible?
As president, Franklin D. Roosevelt supported and signed legislation establishing major New Deal housing programs, including the HOLC and FHA. His administration therefore played an important role in creating the federal framework within which discriminatory housing practices became institutionalized. It would be historically accurate to say that these policies developed during Roosevelt’s presidency and that his administration was responsible for establishing the federal agencies that implemented them.
At the same time, attributing redlining solely to Roosevelt would oversimplify the history. Roosevelt did not personally create every housing policy or determine how individual neighborhoods would be evaluated. The policies were developed, interpreted, and implemented by numerous federal officials and agency administrators. Local governments, banks, real estate professionals, appraisers, and private lenders also participated in the housing system and helped determine how discriminatory practices operated at the local level.
The history of redlining is therefore better understood as the result of a combination of federal policy, local practices, private-sector decisions, and existing patterns of racial segregation. The Roosevelt administration established important federal housing programs that influenced this system, but discriminatory housing practices were not created by Roosevelt alone. Instead, they became institutionalized through the interaction of federal agencies, local governments, financial institutions, and the real estate industry.
Understanding this distinction is important because it shows how government policy and private practices worked together to shape American communities. The New Deal helped expand federal involvement in housing and made homeownership more accessible to many Americans, but the benefits of these programs were not distributed equally. Black Americans and other minority communities frequently faced barriers that limited their ability to benefit from federally supported housing programs. These policies contributed to residential segregation and helped create disparities in homeownership and wealth that persisted long after the original New Deal programs had ended.
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