Giving Compass' Take:
- Danielle Browne calls for new policy action to address the lasting and harmful impacts of redlining policies.
- What role can you play in supporting new policies and efforts to address the legacy of redlining?
- Read about an effort to fight for housing justice for Oakland's Black community.
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“All of the wealthy moved away and left only the poor in a socially disastrous state.”
When Dr. Emanuel J. Carter talks about redlining, he doesn’t mince words. The Associate Professor in SUNY-ESF‘s Department of Landscape Architecture grew up in a redlined part of Philadelphia during the 1950s and 1960s.
Then, as compared to now, he recalls, “You had the same thing — low income families, gangs, a sense of anger. The young men and women who looked towards their future and saw nothing there. This was a direct result of redlining. I went to school with kids who were sure they would die before 30 and they were okay with that because they felt they could never fit into the American economy, the American dream.”
A product of policy choices, redlining at the federal level has roots in the Great Depression, when the U.S experienced an unemployment rate of 25.6 percent.
By 1932, Americans were at greater risk of losing their homes: Some 275,000 people lost their homes to foreclosure as home values dropped by 35 percent. Nearly half of all mortgages were in default by 1933.
According to Richard Rothstein’s The Color of Law, In the early 1900s, homebuyers were expected to pay 50 percent down payments with a 5 to 7 year amortization period. If you were buying a house worth $100,000, you would have to pay $50,000 and then pay off the remaining $50,000 within five years. In other words: Those who bought property typically already had a significant amount of money.
President Franklin D. Roosevelt needed to change how mortgages worked. As a part of the New Deal — a series of initiatives to stabilize the economy and more progressively distribute wealth — he proposed the Home Owners’ Loan Act of 1933.
As a result, the country created the Home Owners’ Loan Corporation and the Federal Housing Administration in 1934. Both programs were meant to provide relief to financial institutions and Americans who were unable to afford housing costs, making home financing more accessible and affordable.
In addition to increasing home quality standards and lowering down payment requirements, the bill introduced longer mortgages of over 15 years, allowing more buyers to enter the market. However, like many facets of the New Deal, such relief didn’t apply to everyone.
“Small groups of federal agents were sent out to every metropolitan area in the U.S. where they connected with realtors and bankers. The appraisers then decided who were at ‘high risk’ for defaulting on loans,” explains Dr. Carter.
Read the full article about addressing redlining by Danielle Browne at Inequality.org.