Institutional Discrimination in The United States Housing Market - Federal Housing Administration - Systematic Redlining

Systematic Redlining

The invention of redlining is often credited to the Home Owners Loan Corporation (HOLC), which designed a rating system for neighborhoods. There were four ratings, green, blue, yellow, or red. The neighborhood that received the highest rating, green, were white and middle class, while the lowest rating, red, was used for neighborhoods that were nonwhite or mixed and working-class. The higher the rating equaled higher property values and were seen as good investments, whereas the area that were red, or redlined, were considered to be poor investments. Banks viewed the redlined areas as high risk and would not give loans for the properties in these neighborhoods. This program made it nearly impossible for African Americans to borrow money in order to purchase a home or improve theirs. Due to redlining, minority and black neighborhoods receive less economic assistance than other neighborhoods in terms of loans and mortgage money as economically equal white communities.