Redlining: How Systemic Racial Discrimination has Impacted Access to Financial and Physical Well-being
Racial discrimination in mortgage lending in the 1930s shaped the demographic and wealth patterns of American communities today through the now illegal practice of redlining. The Home Owners’ Loan Corporation (HOLC) was a government sponsored corporation founded in 1933 as a part of the New Deal, that created “Residential Security Maps” of major American cities. The HOLC maps were color coded by neighborhood, with green being the “best” or “safest” areas, and red being “hazardous” or “least safe” for investment. The “redlined” areas were the ones local lenders discounted as credit risks, in large part because of the residents’ racial and ethnic demographics. These maps were used by banks and other financial institutions in order to determine which areas were “safe” to invest in and provide financial services to, and they have had long lasting negative effects on the neighborhoods that were redlined.
According to a study, most of the neighborhoods (74%) that HOLC graded as high-risk or “hazardous” are now low-to-moderate income neighborhoods. Further, most (64%) of the HOLC graded “hazardous” areas are predominantly black and brown neighborhoods today. The practice of redlining was prohibited under the Fair Housing Act of 1968, but its effects are still prevalent in cities across the country. The Community Reinvestment Act (CRA) of 1977 was put into place in order to help encourage banks and savings associations to help meet the needs of borrowers in all segments of the communities where they drew deposits, including low- and moderate-income neighborhoods (in the Philadelphia metropolitan area a low- to moderate-income neighborhood is considered one where most families are at approximately 50 – 80 % of AMI for a family of 4 that is $43,500 – $87,000 respectively). The CRA was and is crucial in combating the effects of redlining, and has helped to create beneficial changes in the way that banks operate within low to moderate income communities by ensuring that they were investing in the communities they were operating in.
Healthy Rowhouse Project advocates for policies and programs that combat the long-lasting effects of redlining; such as the health of those living in previously redlined neighborhoods. Housing is a social determinant of health, and homes that are not healthy mean occupants that are not healthy. There are often minor to moderate fixes for a home that is not healthy that can help those living there have improved health outcomes. Making repairs to a home with the Restore, Repair, Renew neighborhood home improvement loan program is one way to assist families preserve their most important assets, improve health, and work towards closing the racial wealth gap.