Redlining in America
Part 2: Assessment
This is Part 2 of a 3-part series on the history of redlining in America. If you’ve not read Part 1 yet, start there as it goes over the government agencies that will be discussed in this post — Redlining in America - Part 1: The Origin of Redlining
As discussed briefly in the previous post, the Home Owners’ Loan Corporation (HOLC) and Federal Housing Administration (FHA) each used assessment methods to judge the perceived risk of investing in properties. The degree of safety vs. risk a property was judged to have by these agencies, from an investment standpoint, would decide if a mortgage was saved from foreclosure (HOLC) or if the government would insure a new mortgage (FHA). These assessments would make or break a family’s attempts to become homeowners or avoid loosing their home during the Great Depression.
These were colour-coded maps, made for every metropolitan area in the US. It used colour blocks to mark our the perceived investment risk of neighbourhoods using a 4-colour range.
Green — Grade A — “In Demand”
Blue — Grade B — “Still Desirable”
Yellow — Grade C — “Declining”
Red — Grade D — “High Risk/Hazardous”
While in theory this may make sense to some degree, the way these divisions were made is the issue. While matters like building quality or age, cost, population growth, and proportion of homeownership vs. renting; it is inescapable that a significant portion of the assessment was based on the ‘racial’ and economic make-up of the neighbourhood. In the HOLC’s own words, their assessment judged the “threat of infiltration of foreign-born, negro, or lower grade population.” The very wording of the paperwork is discriminatory, with terms like “unskilled labor-merchants questionable characters,” “Foreign-born families...%,” and most tellingly “Infiltration of...” which pertained to groups such as “Italians & Negro”.
The weight of “undesirable” ethnic groups on a rating can be seen in how they are spread over the grades. To qualify for a Green (Grade A) rating, a neighbourhood would have to be void of “a single foreigner or Negro.” Spatially, there were often the newer-built suburbs. Surrounding areas with older suburbs would then be rated as Blue (Grade B), as they became closer to the city centre and more mixed with a small number of the “undesirable” populations. Yellow (Grade C) neighbourhoods would often be those bordering the Red (Grade D) ones. They would have older buildings and were considered to be in “transition” and decline. Finally those in the Red grading would typically be inner-city neighbourhoods surrounding the central business district of a city. These would be neighbourhoods with predominantly Black, foreign and working-class occupants.
The University of Richmond offers an amazing interactive map of neighbourhoods using scanned HOLC maps and links them to the official HOLC paperwork relating to each. I recommend taking a look and reading the documents that accompany various graded neighbourhoods.
FHA’s Underwriting Manual
From 1935, the FHA provided their appraisers with an instructional document called the Underwriting Manual that outlined how they wanted properties to be rated. The text of this document carries a clear racial agenda: "If a neighborhood is to retain stability it is necessary that properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally leads to instability and a reduction of values," and "incompatible racial groups should not be permitted to live in the same communities."
The zoning approach was comparable to the HOLC’s colour-coded maps. The manual directed appraisers to issue value based on strict criteria, of which 40% was weighted on “Relative economic Stability” (the economic and employment status of the neighbourhood’s occupants, eg “laborer”), and a further 20% on “protection from adverse influence” (these could include: nearby businesses, schools, or “offensive noises or odors,” element common in inner-city neighbourhoods). The assessments were harshly issued, with some criteria resulting in an automatic rejection. Overall, many of the criteria were inherently prejudice against the urban setting, with elements that were rated being impossible to achieve in an urban setting, like “natural light and ventilation,” and “proximity to joining buildings.”
The FHA used its position as an insurance provider to discourage banks from issuing loans to urban neighbourhoods. This did not affect only homeownership, but also businesses within these communities.
This is just the bare-bones basics of redlining and how it was assessed, the previous post in the series addresses the origins of these agencies and policies, while the next will go into the destructive results of the polices on urban setting in the decades that followed and how the perpetuated structural racism in America.
Redlining in America - Part 1: The Origin of Redlining
Redlining in America - Part 3: Discrimination and Damage
BOOK Rothstein, R. (2018) The Color of Law: A Forgotten History of How Our Government Segregated America. New York: Liveright Publishing Corporation.
— This was probably the single most useful book I used during research.
WEBSITE New America: The History of U.S. Housing Segregation Points to the Devastating Consequences of Algorithmic Bias
— The material is pretty heavy technically, but had great info on assessment criteria.
PDF A scanned copy of the full FHA Underwriting Manual
Dual HOLC Map of Brooklyn, 1938 / Current Overlay | Source
Cover of FHA Underwriting Manual, 1938 | Source
FHA Underwriting Manual fold-out form, 1938 | Source
This post has been sponsored by my much loved and long-time Patreon supporter Joanna Daniels. She and I would like to dedicate the post to the loving memory of her mother Joan Daniels. She will be sorely missed.
[ Support SRNY through Patreon and Ko-Fi ] And join us on Discord for fun conversation! I also have an Etsy with upcycled nerdy crafts
