Redlining

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A HOLC 1936 security map of Philadelphia showing redlining of lower income neighborhoods.^[1] Households and businesses in the red zones could not get mortgages or business loans.

Redlining is the practice of denying, or increasing the cost of, services such as banking, insurance, access to jobs,^[2] access to health care,^[3] or even supermarkets^[4] to residents in certain, often racially determined,^[5] areas. The term "redlining" was coined in the late 1960s by community activists in Chicago.^{[citation needed]} It describes the practice of marking a red line on a map to delineate the area where banks would not invest; later the term was applied to discrimination against a particular group of people (usually by race or sex) no matter the geography. During the heyday of redlining, the areas most frequently discriminated against were black inner city neighborhoods. Through at least the 1990s this practice meant that banks would often lend to lower income whites but not to middle or upper income blacks.^[6]

"Reverse redlining" is a term often used to describe situations where a lender or insurer particularly targets minority consumers, not to deny them loans or insurance, but rather to charge them more than would be charged to a similarly situated majority consumer.

[edit] History of the practice

Part of a series of articles on Racial Segregation

Segregation in the US Black Codes Jim Crow laws Redlining Racial steering Blockbusting White flight Black flight Gentrification Sundown towns Proposition 14 Indian Appropriations Indian Reservation Antisemitism Jewish Pale of Settlement May Laws Japanese American internment Italian American internment German American internment Immigration Act of 1924 Separate but equal Ghettos This box: view • talk • edit

Although in the United States informal discrimination and segregation have always existed, the practice called "redlining" began with the National Housing Act of 1934, which established the Federal Housing Administration (FHA).^[7] The federal government contributed to the early decay of inner city neighborhoods by withholding mortgage capital and making it difficult for these neighborhoods to attract and retain families able to purchase homes.^[8] In 1935, the Federal Home Loan Bank Board (FHLBB) asked Home Owners' Loan Corporation (HOLC) to look at 239 cities and create "residential security maps" to indicate the level of security for real-estate investments in each surveyed city. Such maps defined many minority neighborhoods in cities as ineligible to receive financing. The maps were based on assumptions about the community, not accurate assessments of an individual's or household's ability to satisfy standard lending criteria. Since blacks were unwelcome in white neighborhoods, which frequently instituted racial restrictive covenants to keep them out, the policy effectively meant that blacks could not secure mortgage loans at all. At various times the practice also affected other ethnic groups, including Latinos, Asians, and Jews. The assumptions in redlining resulted in a large increase in residential racial segregation and urban decay in the United States. Urban planning historians theorize that the maps were used by private and public entities for years afterwards to deny loans to people in black communities.^[7] However, recent research has indicated that the HOLC did not redline in its own lending activities, and that the racist language reflected the bias of the private sector and experts hired to conduct the appraisals.^[9]

On the maps, the newest areas — those considered desirable for lending purposes — were outlined in blue and known as "Type A". These were typically affluent suburbs on the outskirts of cities. "Type B" neighborhoods were considered "Still Desirable", whereas older "Type C" were labeled "Declining" and outlined in yellow. "Type D" neighborhoods were outlined in red and were considered the most risky for mortgage support. These neighborhoods tended to be the older districts in the center of cities; often they were also black neighborhoods.^[7]

Some redlined maps were also created by private organizations, such as J.M. Brewer's 1934 map of Philadelphia. Private organizations created maps designed to meet the requirements of the Federal Housing Administration's underwriting manual. The lenders had to consider FHA standards if they wanted to receive FHA insurance for their loans. FHA appraisal manuals instructed banks to steer clear of areas with "inharmonious racial groups" and recommended that municipalities enact racially restrictive zoning ordinances, as well as covenants prohibiting black owners.^[10][11]

[edit] Impact

Redlining paralyzed the housing market, lowered property values and further encouraged landlord abandonment. As abandonment increased, the population density became lower. Abandoned buildings would serve as havens for drug dealing and other illegal activity.^[8]

The film Revolution '67 examines the practice of redlining that occurred in Newark, NJ in the 1960s.

[edit] Challenges to redlining

In the United States, the Fair Housing Act of 1968 was passed to fight the practice. It prohibited redlining when the criteria for redlining are based on race, religion, gender, familial status, disability, or ethnic origin. The Community Reinvestment Act of 1977 further required banks to apply the same lending criteria in all communities.^[12] Although open redlining was made illegal in the 70s through community reinvestment legislation, the practice continued in less overt ways.^[8], and many allege that the redlining target group has shifted from African Americans to the LGBT community.^[13]

ShoreBank, a community-development bank in Chicago's South Shore neighborhood, was a part of the private-sector fight against redlining.^[14] Founded in 1973, ShoreBank sought to combat racist lending practices in Chicago's African-American communities by providing financial services, especially mortgage loans, to local residents.^[15] Many sources characterize ShoreBank's efforts as overwhelmingly inspirational and successful.^[16] In a 1992 speech, then-Presidential candidate Bill Clinton called ShoreBank “the most important bank in America.”^[14]

[edit] Contemporary issues

Dan Immergluck writes that in 2002 small businesses in black neighborhoods still received fewer loans, even after accounting for business density, business size, industrial mix, neighborhood income, and the credit quality of local businesses.^[17] Gregory D. Squires wrote in 2003 that it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.^[18] Workers living in American inner cities have a harder time finding jobs than suburban workers.^[19] Redlining has helped preserve segregated living patterns for blacks and whites in the United States, because discrimination motivated by prejudice is often contingent on the racial composition of neighborhoods where the loan is sought and the race of the applicant. Lending institutions^[who?] have been shown to treat black mortgage applicants differently when they are buying homes in white neighborhoods than when buying homes in black neighborhoods.^{[citation needed] [20]} Some^[who?] even think that the Gay community as of 2009, are suffering similar practices that were similar to redlining.^{[citation needed]}

[edit] Retail

Retail redlining is a spatially discriminatory practice among retailers, of not serving certain areas, based on their ethnic-minority composition, rather than on economic criteria, such as the potential profitability of operating in those areas. Consequently, consumers in these areas often find themselves "vulnerable" because no other retailers will serve them. They may be exploited by other, often smaller, retailers who charge them higher prices and/or offer them inferior goods.^[21]

[edit] Credit cards

Credit card redlining is a spatially discriminatory practice among credit card issuers, of providing different amounts of credit to different areas, based on their ethnic-minority composition, rather than on economic criteria, such as the potential profitability of operating in those areas. ^[22] Many believe policies of credit card companies such as American Express that reduce credit lines of individuals that make purchases at retailers frequented by so-called "high-risk" customers to be akin to redlining. ^[23]

[edit] Insurance

Racial profiling or redlining has a long history in the property-insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.^[24] Home-insurance agents are generally able to detect the race of someone who contacts them by telephone. This information affects the services provided to those who inquire about purchasing a home-insurance policy. This type of discrimination is called linguistic profiling.^[25] There have also been concerns raised about redlining in the automotive insurance industry.^[26]

[edit] Student Loans

In December 2007, a class action lawsuit was brought against student loan lending giant Sallie Mae in the United States District Court for the District of Connecticut, alleging that Sallie Mae discriminates against African American and Hispanic private student loan applicants. [2]

The case further alleges that the factors Sallie Mae uses to underwrite private student loans cause a disparate impact on students attending schools with disproportionate minority populations. The suit also alleges that Sallie Mae fails to properly disclose loan terms to private student loan borrowers. The case is in active litigation.

[edit] Environmental racism

Policies related to redlining and urban decay can also act as a form of environmental racism, which in turn have an impact on public health. Urban minority communities may face environmental racism in the form of parks that are smaller, less accessible and of poorer quality than those in more affluent or white areas in some cities.^[27] This may have an indirect impact on health, since young people have fewer places to play and adults have fewer opportunities for exercise.^[27]

Robert Wallace writes that the pattern of the AIDS outbreak during the '80s was affected by the outcomes of a program of 'planned shrinkage' directed at African-American and Hispanic communities. It was implemented through systematic denial of municipal services, particularly fire protection resources, essential to maintain urban levels of population density and ensure community stability.^[28] Institutionalized racism affects general health care as well as the quality of AIDS health intervention and services in minority communities. The overrepresentation of minorities in various disease categories, including AIDS, is partially related to environmental racism. The national response to the AIDS epidemic in minority communities was slow during the '80s and '90s, showing an insensitivity to ethnic diversity in prevention efforts and AIDS health services.^[29]

[edit] Liquorlining

Instead of denial of services to low-income neighborhoods, sometimes the exact opposite can occur as well when it is believed to be the most lucrative option for the service providers. When those services are believed to have adverse effects on a community, that can be considered to be a form of "reverse redlining." The term "liquorlining" is sometimes used^[30] to describe the practice of encouraging very high density of liquor stores and other alcohol outlets in low income and/or minority communities relative to surrounding areas, implicitly by design. This is believed by some^[30] to cause a neighborhood to go downhill in terms of crime and quality of life. However, unlike redlining, this is usually not illegal.

[edit] See also

• Black flight
• Blockbusting
• Computer-assisted reporting
• Community Reinvestment Act
• Housing Segregation
• Inclusionary zoning
• Mortgage Discrimination
• Planned shrinkage
• Racism
• Racial steering
• Urban renewal
• Timeline of Racial Tension in Omaha, Nebraska
• White flight

[edit] References

[edit] External links

• Revolution '67 - Documentary about the Newark, New Jersey race riots of 1967
• Redlining in Philadelphia. Amy Hillier, PhD
• Redlining, and Neighborhood Appraisals in Philadelphia
• Housing Policy History, NC Housing Coalition
• From 'black-balling' to 'marking': the suburban origin of redlining in Canada
• "The Color of Money": Bill Dedman received the Pulitzer Prize in investigative reporting in 1989 for this series of articles, which described racial discrimination in mortgage lending in the Atlanta area.
• Kozmo delivering consumer racism? Investigative probe by MSNBC.com unearths first case of "cyber-redlining."
• Crossney and Bartelt 2005. Residential Security, Risk, and Race: The Home Owners' Loan Corporation and Mortgage Access in Two Cities. Urban Geography
• Crossney and Bartelt. The Legacy of the Home Owners' Loan Corporation. Housing Policy Debate.