Redlining is the practice of denying or increasing the cost of services such as banking, insurance, access to jobs, access to health care, or even supermarkets to residents in certain often racially determined areas. The most devastating form of redlining and the most common use of the term refers to mortgage discrimination in which middle income black and Hispanic residents are denied loans available to lower income whites. The term "redlining" was coined in the late 1960s by community activists in Chicago. 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 these areas were most frequently black inner city neighborhoods. Through at least the 1990s this discrimination involved lending to lower income whites but not to middle or upper income blacks.(ref: Immergluck, Dedman.)
History of the practice
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). 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. 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. 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. 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.
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.
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.
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.
The film Revolution '67 examines the practice of redlining that occurred in Newark, NJ in the 1960s.
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. Although open redlining was made illegal in the 70s through community reinvestment legislation, the practice continued in less overt ways.
ShoreBank, a community-development bank in Chicago's South Shore neighborhood, was a part of the private-sector fight against redlining. 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. Many sources characterize ShoreBank's efforts as overwhelmingly inspirational and successful. In a 1992 speech, then-Presidential candidate Bill Clinton called ShoreBank “the most important bank in America.”
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. 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. Workers living in American inner cities have a harder time finding jobs than suburban workers. 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 have been shown to treat black mortgage applicants differently when they are buying homes in white neighborhoods than when buying homes in black neighborhoods.
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.
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.
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. 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
. There have also been concerns raised about redlining in the automotive insurance
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. This may have an indirect impact on health, since young people have fewer places to play and adults have fewer opportunities for exercise.
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. 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.