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Government maps were found to have areas where African American residents lived outlined in red. According to the Federal Housing Administration (FHA), properties that were “redlined” were considered risky investments. The FHA, a government organization that is responsible for insuring mortgage loans, was established in 1934. This organization started promoting segregation efforts by refusing to insure mortgages in and near African American neighborhoods.

The origins of this term can be traced back to homeownership programs that were created as part of the 1930s New Deal. These programs offered government insured mortgages for homeowners.

As the programs advanced, government guidelines were established for appraising properties. Color coded maps were used to rank the loan value of neighborhoods across the United States. The neighborhoods on the maps were ranked by letters A through D, “A” being considered the least risky neighborhoods and “D” considered the most risky investment-wise. It was no coincidence that most of the “D” areas–outlined in red–were where large populations of African American families lived.

 Private lenders began to use these color coded maps, successfully preventing African American home buyers from qualifying for secure mortgages from many well-known banks. The Underwriting Manual of the FHA stated that, “incompatible racial groups should not be permitted to live in the same communities.” The manual also recommended the use of highways as a point of separation between African American and Caucasian neighborhoods.

The unfair custom of redlining would soon come to an end when the Fair Housing Act of 1968 was passed by President Lyndon B. Johnson. This act prohibited discrimination concerning the sale, rental, and financing of housing based on race, religion, national origin, sex, handicap and family status. Later on, a second act would be passed by President Gerald Ford called the Home Mortgage Disclosure Act of 1975. This act requires many financial institutions to maintain, report, and publicly disclose loan-level information about mortgages.

These actions have an ongoing impact on the African American society. The long term effect of redlining includes the overall decline in value of African American neighborhoods, preventing African American homeowners from making a profit when selling their homes. 

By: Moses Rangel

mrangel2025@theaskacademy.org

This content was originally published here.

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