The Discriminatory Practice That Shaped American Cities
Redlining was a discriminatory housing practice that began in the 1930s, where banks along with the federal government denied mortgages and loans to people living in neighborhoods deemed "high risk" - often because the residents were either black, immigrants, or low-income. These neighborhoods were literally outlined in red ink on government maps, which is how the practice got its name.
In the 1930s, during the Great Depression, the U.S. government created two programs to stabilize the housing market: the Home Owners' Loan Corporation (HOLC) and the Federal Housing Administration (FHA). Their job was to encourage homeownership and reduce foreclosures, yet the way they did it embedded systemic racism into American cities, including Boston.
The HOLC would send assessors into neighborhoods to evaluate "risk." They looked at the housing quality, infrastructure, and income levels, but would also consider the race and ethnicity of the people who lived there. They graded the neighborhoods from A to D.
A was the best ranking you could get: mostly white neighborhoods, wealthy suburban areas.
B was still desirable for them: white working and middle-class areas.
C was declining; the area was either racially mixed or had older houses.
D was hazardous; this meant that the place had Black, immigrant, or low-income neighborhoods.
This is where the color-coded maps come into play. The D neighborhoods were shaded red on the map. While the HOLC made the maps, the FHA would put them into practice. This meant that anyone applying for a federally backed home loan would have the FHA use these maps to decide whether the neighborhood was a "safe investment" or not. Green and blue areas were easily given loans; in contrast, red areas were denied loans, regardless of income or credit.
These practices of redlining cut off entire neighborhoods from investment and opportunities. Schools in redlined areas received less funding because property taxes fund schools. This meant fewer opportunities and resources for the children. Businesses avoided setting up in these zones because they feared low returns, a poor neighborhood, and not much business to conduct. Public services were also neglected, including road construction, trash pickups, and even policing.
This was the result of a self-fulfilling cycle: areas marked as "risky" were left to decline, and that decline was then used as a reason to deny them help.
On the other end, people in desirable areas could buy homes, build equity, and pass wealth and opportunities down to their children.