Redlining
From Wikipedia, the free encyclopedia
- For the automotive term, see redline.
Redlining is the practice of denying or increasing the cost of services, such as banking or insurance, to residents of certain areas. In the United States, the practice is illegal when the criteria are based on race, religion, gender, familial status (if there are children in a family), disability, or ethnic origin. The US Government has imposed regulations that require all banks to provide a map to anyone who asks showing the locations of home loans they have made so that individuals can ensure that redlining is not taking place. The term "redlining" comes from the practice of marking red lines on a map, which banks would do in order to delineate areas they did not want to lend to.
Redlining began with the Housing Act of 1934 which established the Federal Housing Authority (FHA) to improve housing conditions and standards, and later led to the formation of the Department of Housing and Urban Development (HUD). While it was designed to develop housing for poor residents of urban areas, that act also required cities to target specific areas and neighborhoods for different racial groups, and certain areas of cities were not eligible to receive loans at all. This meant that ethnic minorities could secure mortgages only in certain areas, and it resulted in a large increase in the residential racial segregation in the United States.
Redlining was made illegal under the Community Reinvestment Act of 1977.
[edit] History
As a result of the Housing Act of 1934 the Dade County Florida Home Owners' Loan Corporation (HOLC) developed a rating system for neighborhoods in cities across the US. The maps they created were used for years afterwards to deny loans to people in black communities by private and public entities.
On the maps the most affluent areas that were considered desirable for lending purposes (Type "A") were outlined in blue. Type "B" neighborhoods were less well off and outlined in yellow. All of the black neighborhoods were characterized as Type "D" and were considered to be the worst for lending. Type "D" neighborhoods were outlined in red on the map. (hence the term "redlining")
