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Old photo of equal housing protests during civil rights movement

Redlining: A History

I’m sure I’m not alone in feeling naïve and a bit mortified by how little I know of the Black experience in the United States. The school curriculum in my all-white New England town taught only the basics of how the slave trade operated and how it related to the Civil War and Reconstruction. And while I was well aware in real time of the chaotic Civil Rights Movement of the 60s, the recent protests across the country have made us all so much more aware of the rich, ugly, and heart-wrenching tales of past, present, and persistent racism.

Take, for example, the practice of REDLINING. My real estate licensing textbook defines the term as: “The practice of lenders outlining neighborhoods where the lender will not lend to homeowners and will take back mortgages; the practice is illegal.” At the time, this term was new to me, so I investigated further. A brief synopsis of redlining:

In response to a housing shortage, the federal government, as part of the 1933 New Deal, began a program explicitly designed to increase—and segregate—America’s housing stock. The program was designed to develop and provide housing to white middle and lower-middle-class families. People of color were purposefully left out of these new suburban subdivisions and were instead pushed into urban housing projects.

The Federal Housing Administration (FHA) furthered governmental segregation efforts by refusing to insure mortgages in or near Black neighborhoods and instituting racially restricted deeds and covenants. The justification, at the time, was that if African-Americans bought these homes, the property values would decline and the loans they were insuring would be at risk. This rationale was never based on any study or reality.

Metropolitan maps were color-coded by various governmental agencies and real estate agents to indicate where it was “safe” to insure mortgages. Coloring African-American neighborhoods in RED alerted appraisers that loans there were too risky. In fact, the “Underwriting Manual” of the FHA stated that “incompatible racial groups should not be permitted to live in the same communities.” In some instances, concrete barriers or highways were built to physically separate white developments from abutting African-American and Latino housing.

Most middle-class families in the US gain their wealth from the equity they have in their property. The enormous difference between a 60% and a 5% wealth ratio between white and Black America is almost entirely attributable to the accumulation of federal housing policies implemented throughout the 20th century. That continuous accumulation of equity allowed white people to send their children to college, to maintain and improve their property, and to take care of their older parents—a chance for upward mobility.

Though state-sponsored segregation is a policy long past, real estate agents MUST remain on high alert for any infraction of Federal Fair Housing laws. Always look for the Fair Housing symbol.

For more information, see Richard Rothstein’s The Color of Law: A Forgotten History of How Our Government Segregated America.

2019 remodeling impact report cover photo of home interior

October 22nd, 2019

Wondering what improvements might get you the biggest bang for your buck? Here's the latest from National Association of Realtors!