By Sam Smith
From the Progressive Review, January 2000
TPR recently quoted from a column by Dick Case of the Syracuse Herald American which revealed that the practice of redlining mortgage loans for American cities began in the Roosevelt administration, far earlier than is generally realized. A former Syracuse city planner, Emanual Carter, who had come across the practice while reading “A Prayer for the City” by Buzz Bissinger, told Case, “I think this program almost guaranteed the demise of our cities.”
Now, Jane Levey, editor of Washington History magazine, points out to us stunning corroboration contained in a lecture delivered 23 years ago to the Columbia Historical Society by historian Kenneth T. Jackson. Jackson, in his address to an organization that is now the Historical Society of Washington, outlined what was, in effect, a federally-organized program of urban residential apartheid.
One of the New Deal’s reforms had been the creation of the Home Owners Loan Corporation, which provided federal guarantees for home mortgages. Jackson reported that between 1933 and 1936 alone, the HOLC supplied funds for one tenth of all owner-occupied, non-farm residences in the country. The FHA, and later the VA, took over the task.
There was a huge need. Before the FHA and VA, first mortgages usually covered no more than one-half to two-thirds of the appraised value and the term was typically only between five and ten years. By the end of 1958, the FHA had enabled nearly five million families to own homes and helped more than 22 million to improve their properties.
At the same time, however, the legislation discouraged the construction of multi-family units and provided only small short-term loans for repair of existing homes. This meant, Jackson noted, that “families of modest circumstances could more easily finance the purchase of a new home than the modernization of an old one.”
While such restrictions are well known, other aspects of the program have been long hidden, such as the FHA weighting system by which underwriters would judge a neighborhood by such standards as “protection from adverse influences,” “freedom from special hazards,” and “appeal.” The FHA Underwriting Manual warned that “older properties in a neighborhood have a tendency to accelerate the rate of transition to lower class occupancy” and suggested that apartment owners should look to the suburbs, preferably a site “set in what amounts to a privately owned and privately controlled park area.”
“The greatest fears of the Federal Housing Administration were reserved for ‘unharmonious racial or nationality groups.’ The alleged danger was that an entire area could lose its investment value if rigid white-black segregation was not maintained. To protect itself against such eventualities, the Underwriting Manual openly recommended ‘enforced zoning, subdivision regulations, and suitable restrictive covenants. In addition, the FHA’s Division of Economics and Statistics compiled detailed reports and maps charting the present and most likely future residential locations of black families.” In a March, 1939, map of Brooklyn, for example, the presence of a single non-white family on any block was sufficient to result in that entire block being marked black. Similarly, very extensive maps of the District of Columbia depicted the spread of the black population and the percentage of dwelling units occupied by persons other than white.”
Beginning in 1936, an inventory was created, largely by those in the real estate industry, and color coded maps were drawn with neighborhoods rated A through D.Case described the system:
“* Grade A neighborhood: Up and coming. In demand. Well planned. Color it green.
“* Grade B: Completely developed. Still good but not what people who can afford more are buying. Blue.
“* Grade C: Buildings aged and obsolete. “Infiltration of lower grade populations.” Experts say “lower grade’,’ citizens were blacks (called ‘Negroes’ by surveyors), Jews and foreign born whites. C neighborhoods ‘lack homogeneity.’ Color them yellow.
“* Grade D: Detrimental influences. Undesirable population. Mostly rented homes with poor maintenance, vandalism, unstable families. This is the red area.”
Jackson noted that “black neighborhoods were invariably rated ‘D.'” These were neighborhoods described with such phrases as “the only hope is for demolition of these buildings and transition of the are into a business district” or “this particular spot is a blight on the surrounding area.”
Secret “residential security maps” were drawn up for every block of a city. These maps were available to lenders and realtors but were kept secret from the general public. Some of these maps, including those for DC, Jackson found to be missing from government archives.
The suburban bias of the FHA was extraordinary. For example, 91% of the homes insured by the agency in metropolitan St. Louis between 1935 and 1939 were in the suburbs. This practice would continue into the 60s and even the 70s. Jackson found that in 1976 the federal government had supplied three dollars in loans for suburban St. Louis for every one dollar to the city itself. Between 1934 and 1960, $559 million was loaned for suburban construction in the St. Louis suburbs but only $94 million for the city itself, a suburban per capita loan in 1961 of $794 vs. an urban one of only $126.
While the housing programs of the Roosevelt and Truman administrations helped to create America’s huge middle class, it also secretly created extraordinary victims, primarily black citizens and the American city. As Jane Jacobs would put it, “Credit blacklisting maps are accurate prophecies because they are self-fulfilling prophecies.”
|“Predetermined and well-defined restrictions are necessary to the life and success of every residential colony and in Glover Park these restrictive standards are steadfastly maintained. Every home owner has the assurance that the newcomers will make desirable neighbors; that his home will be free from undesirable encroachments of any nature and the value of his property will have lasting protection.- 1930 promotional brochure, Glover Park, Washington DC
Rich Benjamin, Alternet – From 1934 to 1962, the Federal Housing Administration underwrote $120 billion in new housing. Less than 2 percent of that went to nonwhites. From 1938 to 1962, the FHA insured the mortgages on nearly one third of all new housing in the United States. Its Underwriting Manuals, however, considered blacks an “adverse influence” on property values and instructed personnel not to insure mortgages on homes unless they were in “racially homogenous” white neighborhoods. Under its eligibility ranking system, the FHA often refused to lend money to or underwrite loans for whites if they moved to areas where people of color lived. Some scholars now call the government’s handiwork a “$120 billion head start” on white home ownership, on white equity, and on whites’ ability to pass along wealth from one generation to the next.