What Is Redlining? Redlining Is the Process of Refusing to Insure Mortgages in and Near African-American Neighborhoods

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Edition #3: Redlining

What is Redlining? Redlining is the process of refusing to insure mortgages in and near African-American neighborhoods. It started in the 1930s and has lasting impacts today as segregation of metropolitan areas leads to inequality because it is hard for families to rise economically if they are living in segregated neighborhoods with limited opportunities (Gross). The Federal Housing Administration made color coded maps to indicate safe areas to insure mortgages. Areas where African Americans lived were often colored red to indicate they were not safe to insure mortgages.

These maps show redlining in Chicago. Areas marked red are where lenders were discouraged from issuing mortgages. Historical Background Redlining started in 1934 when the Federal Housing Administration was established to provide housing for Americans during the Great Depression. The FHA contributed to housing segregation by subsidizing builders who mass produced housing units for white people- but mandated that they refuse to sell these homes to African Americans (Gross). The impacts of redlining are still felt today, as African American incomes are on average 60% of the average white American’s incomes, and African American wealth is about 5% of the average white American’s wealth. The Fair Housing Act was passed in 1968, yet housing segregation persisted because although there were no overt housing policies preventing African Americans from buying homes in the suburbs, they lacked the financial equity to afford their own houses. Where- as many white people had gained financial equity from being able to buy homes in earlier years, many African Americans were at a disadvantage of not being able to afford their own home. Using the equity they gained from buying homes with FHA mortgages, many white people were able to send children to college, take care of their parents in old age, and bequeath wealth onto their children. Without home equity from buying homes in the suburbs, most African Americans had a difficult path to rise socioeconomically and many were stuck in a cycle of living in a low economic class. (Gross). Eye opening Facts and Statistics

Redlining does not exist anymore because it was made illegal with the Myth: Fair Housing Act of 1968 and the Community Reinvestment Act of 1977 It may not be legal, but the impacts of Redlining persist and have broadened the wealth gap between blacks and whites. According to the real estate app Redfin, black families have lost out on around $212,000 in personal wealth over the last 40 years because their homes were redlined (Brooks). A yearlong analysis of Home Mortgage Disclosure Act records, based on 31 million records, found that redlining still prevails today. This analysis was completed by Reveal from The Center for Investigative Reporting and confirmed by the Associated Press. It showed that black applicants were turned away from home mortgages at significantly higher rates than whites in 48 cities. The same is true for Latinx people in 25 cities, Asian Americans in nine and Native Americans in three cities. In Washington D.C., all four groups were found to be significantly more likely to be denied a home loan than white Americans. Wealth and financial stability are interconnected with housing opportunity and homeownership (Glantz and Martinez). Denying people of color the opportunity to buy a home is also denying them the opportunity to accumulate wealth and rise above the poverty gap. U.S. Census Bureau reported that the median net worth for an African American family in 2016 was $9,000, Latinx was $12,000, while for whites it was $132,000 (Glantz and Martinez)! A news report from the DC based nonprofit Student Borrower Protection Center (SBPC) conducted a study where they created hypothetical loan applicants with the same background, income, etc. only differing in one area: which college they attended. The report found that major lenders tend to give loans at a much higher interest rate to graduates of Historically Black Colleges and Universities (HBCUs) and Hispanic-Serving Institutions (HSIs) when other criteria for the loan applicant is the same. See the below example (Swaminathan): Personal Impact Researching redlining has opened my eyes to a key way racial inequality persists in our country. Just because there are not laws segregating races today, the effects of redlining have created a divide that makes it challenging for those in the lower socioeconomic class to rise up. Basically, I now see how barriers that prevented or made it more difficult for Americans of races other than Caucasian to seek the opportunity to get a loan to buy a home has allowed many white people to increase their wealth through home equity, and in turn has increased disparity. They can use this equity to send their kids to college, and it is well known the difference in salary between those who have a college degree and those who do not. So it is easy to see how the racial barriers to obtaining mortgages has contributed to racial inequality in our country. Not only that, but it makes it hard for those in lower socioeconomic classes to rise into the middle class. In my own life I have experienced the effects of redlining without even realizing it. The neighborhood I grew up in was almost entirely white, middle class families. My high school and county were diverse, but there were clear areas that were predominantly white, and there were other areas that were dominated by other races. I now better understand the roots of this racial segregation and understand how it persists. I am glad to have researched this issue as I am now more woke to de facto racial segregation. Continuation Questions » Have you seen impacts of redlining in your community? Reflect on the neighborhood you grew up in. How diverse was it? Why do you think this is so? » As individual citizens, what are your thoughts on what we can do to reverse the effects of redlining? » As Coast Guard leaders how can researching and understanding the impacts of redlining help us to anchor ourselves in our core value of respect?

Additional resources Click below for more information

A great NPR Short video and video explaining CBS news article how Redlining on the impact of worked and how Redlining today: it persists:

Article about redlining based off education: Sources

Brooks, Kristopher J. Redlining’s Legacy: Maps Are Gone, but the Problem Hasn’t Dis appeared. 2020, https://www.cbsnews.com/news/redlining-what-is-history-mike- bloomberg-comments/.

Glantz, Aaron, and Emmanuel Martinez. “Modern-Day Redlining: Banks Discriminate in Lending.” Reveal, https://www.revealnews.org/article/for-people-of-color-banks- are-shutting-the-door-to-homeownership/. Accessed 15 Oct. 2020.

Gross, Terry. “A ‘Forgotten History’ Of How The U.S. Government Segregated America.” NPR.Org, May 2017, https://www.npr.org/2017/05/03/526655831/a-forgot ten-history-of-how-the-u-s-government-segregated-america.

Swaminathan, Aarthi. “Educational Redlining”: New Report Alleges Discrimination against Certain Student Loan Borrowers. 8 Feb. 2020, https://sports.yahoo.com/ educational-redlining-discrimination-student-loan-borrowers-164547032.html.