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FDR Signing Papers
The Home Owners Loan Corporation was established to allow Americans to stay in their homes.
On April 13th, 1933, President Roosevelt sent a message to Congress requesting legislation that would protect homeowners from foreclosure. In response, Congress rapidly created the Home Owner’s Loan Corporation. The H.O.L.C. provided Americans with money to refinance their homes at a lower, more affordable rate. The maximum loan the H.O.L.C. could give out was $20,000 (ensuring it could only help small homeowners.) In its three years of existence, the H.O.L.C. made over 1 million loans, totally 3.1 Billion dollars in credit.
HOME OWNERS LOAN CORPORATION (HOLC)
Diminished wages, widespread unemployment, and few, if any, refinancing options made it difficult for home owners to meet monthly mortgage payments during the Great Depression. By the spring of 1933, with almost a thousand foreclosures a day, President Franklin D. Roosevelt asked Congress on April 13, 1933, for "legislation to protect small home owners from foreclosure." Lawmakers responded by creating the Home Owners Loan Corporation (HOLC) on June 13, 1933.
The HOLC, which was under the supervision of the Federal Home Loan Bank Board, did not actually lend money to home owners. Instead, the agency purchased and refinanced mortgages in default or foreclosure from financial institutions (lenders). In exchange for mortgages, the HOLC gave lenders government bonds paying 4 percent interest (later reduced to 3 percent). Capitalized with $200 million from the U.S. Treasury, the HOLC was authorized to issue $2 billion in bonds, an amount eventually increased to $4.75 billion. During a peak period in the spring of 1934, it processed over 35,000 loan applications per week and employed almost 21,000 people in 458 offices throughout the country. The law authorizing the HOLC's lending activities expired on June 12, 1936. By that time, the HOLC had made 1,021,587 loans, making it the owner of approximately one-sixth of the urban home mortgage debt in the United States. The HOLC's operations were not officially terminated until February 3, 1954.
The Roosevelt administration credited the HOLC with a restoration of economic morale, a reduction of foreclosure rates, and payment of almost $250 million in delinquent taxes to state and municipal governments. Subsequent scholars have generally agreed with this positive evaluation, asserting that the HOLC was significant because it introduced the long-term, self-amortizing mortgage. Indeed, with HOLC mortgages refinanced at 5 percent interest over fifteen years, home ownership became feasible for those who had been previously unable to afford short-term mortgages at high interest rates.
Some commentators, however, criticized the HOLC's practice of indirectly assisting home owners through programs that directly aided mortgage lenders. The urban reformer Charles Abrams pointed out that, on average, the HOLC refinanced the mortgages it purchased for only 7 percent less than the previous, admittedly inflated, value of the property in question (the value of residential real estate had risen appreciably during the 1920s). The HOLC, for example, might refinance a $10,000 mortgage as if the initial amount loaned to the home owner had been $9,300, but that figure—$9,300—could still be significantly higher than the current deflated market value of the property. Under this arrangement, lenders only had to forego a small part of their capital, plus they received government-backed bonds in place of frozen mortgages. On the other hand, by propping up the face values of its refinanced mortgages, the HOLC compelled home owners to repay inflated 1920s mortgage loans with deflated 1930s wages.
The HOLC also developed a neighborhood mortgage rating system. The lowest rated neighborhoods—those with high concentrations of racial minorities—were "redlined" by the HOLC, a term denoting an area considered too risky for government mortgage assistance. Redlining was adopted not only by private lenders, but also by public agencies, most notably the Federal Housing Administration (FHA), which was part of the National Housing Act of 1934. The FHA, by extending mortgage insurance to lenders, encouraged banks to liberalize financing terms for potential homeowners. Thus, while the HOLC and the FHA assisted some Americans in keeping their homes or in purchasing new ones, they both used redlining to prevent minority groups, especially African Americans, from doing likewise. This practice helped perpetuate and extend the pattern of segregated neighborhoods and suburbs throughout America.
Records of the Federal Home Loan Bank Board [FHLBB]
Established: As an independent agency by the Housing Amendments of 1955 (69 Stat. 640), August 11, 1955.
- Federal Home Loan Bank Board (1932-39)
- FHLBB, Federal Loan Agency (1939-42)
- Federal Home Loan Bank Administration, National Housing Agency (1942-47)
- Home Loan Bank Board (HLBB), Housing and Home Finance Agency (1947-55)
Abolished: Effective October 8, 1989, by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (103 Stat. 354), August 9, 1989. FSLIC abolished, effective immediately, by same authority.
Successor Agencies: Office of Thrift Supervision, Department of the Treasury (FHLBB regulatory and oversight functions) Resolution Trust Corporation (FSLIC failed savings and loan association liquidation functions) Resolution Trust Corporation Oversight Board.
Finding Aids: Forrest R. Holdcamper, comp., "Preliminary Inventory of the Records of the Federal Home Loan Bank System," NC 94 (March 1965) supplement in National Archives microfiche edition of preliminary inventories.
195.2 Records of the Federal Home Loan Bank Board (FHLBB) and its
History: Established as an independent agency by the Federal Home Loan Bank Act (47 Stat. 725), July 22, 1932. FHLBB and its components (Federal Home Loan Bank System, Federal Savings and Loan System, Federal Savings and Loan Insurance Corporation, and Home Owners' Loan Corporation) made part of newly established Federal Loan Agency by Reorganization Plan No. I of 1939, effective July 1, 1939. FHLBB abolished and its functions and components assigned to Federal Home Loan Bank Administration (FHLBA) in newly established National Housing Agency, by EO 9070, February 24, 1942. FHLBA abolished and its functions and components assigned to Home Loan Bank Board (HLBB) in newly created Housing and Home Finance Agency, by Reorganization Plan No. 3 of 1947, effective July 27, 1947. HLBB made an independent agency and redesignated FHLBB, 1955. See 195.1.
195.2.1 General records
Textual Records: Records of FHLBB chairmen, 1943-73 (98 ft.). Correspondence of Chairmen John H. Fahey, 1940-47 William K. Divers, 1947-52 Walter W. McAllister, 1952-56 Albert J. Robertson, 1955-61 Joseph McMurray, 1961-65 John Horne, 1965- 68 Preston Martin, 1969-72 and Carl O. Kamp, 1972-73. Minutes, correspondence, and reports relating to HLBB representation on the Central Housing Committee, 1935-39. Correspondence on financing local banks, 1933-35. Reports of the chief accountant and comptroller, 1933-47. Reports of local economic and financial conditions made by member banks, 1942-45. Records relating to the seizure of the Los Angeles Federal Home Loan Bank and the Long Beach Federal Savings and Loan Association, 1946-60. Speeches and press releases, 1933-72.
Maps: U.S. defense housing communities, 1941 (1 item). See also 195.6.
Sound Recordings: "Federal Home Loan Exhibit," produced by Gardner Displays, Philadelphia, PA, for the Texas Centennial, 1936 (1 item). See also 195.7.
195.2.2 Records of the Office of Economic Research
Textual Records: Microfilm copy of statistical tabulations regarding savings and loan associations, 1960-71 (7 rolls). Microfilm copy of monthly aggregates of balance sheets, flows of savings, and mortgage lending activities of federally insured savings and loan associations, 1960-73 (34 rolls). Microfilm copy of aggregates from the semiannual reports of savings and loan associations, 1967-74 (24 rolls).
195.2.3 Records of the Data Management Division
Machine-Readable Records: Selected financial data on loans for new construction and mortgages submitted by federally insured savings and loans ("Monthly Final History"), 1966-70 (60 data sets), with supporting documentation. Semiannual reports, 1965-71 (12 data sets), with supporting documentation. Monthly mortgage lending reports, 1969-71 (17 data sets), with supporting documentation.
195.3 Records of the Home Owners' Loan Corporation (HOLC)
History: Established as an emergency agency under FHLBB supervision by the Home Owners' Loan Act of 1933 (48 Stat. 128), June 13, 1933. Provided low interest long-term mortgage loans to homeowners unable to procure financing through normal channels. Transferred with FHLBB and its components to Federal Loan Agency by Reorganization Plan No. I of 1939, effective July 1, 1939. Assigned with other components of abolished FHLBB to Federal Home Loan Bank Administration (FHLBA), National Housing Agency, by EO 9070, February 24, 1942. Board of Directors abolished by Reorganization Plan No. 3 of 1947, effective July 27, 1947, and HOLC assigned, for purposes of liquidation, to Home Loan Bank Board, Housing and Home Finance Agency. Terminated by order of Home Loan Bank Board Secretary, effective February 3, 1954, pursuant to an act of June 30, 1953 (67 Stat. 121).
Textual Records: HOLC minutes, 1933-42 and related correspondence, 1933-49. Microfilm copy of general administrative correspondence, chiefly with regional and local offices, 1933-36 (482 rolls). Subject files, 1937-51. Congressional correspondence, 1934-45. Sample general loan correspondence of central and field offices filed under the letter "C," 1933-36. Reports, maps, questionnaires, transcripts of interviews, and working papers from a survey made to determine current and future values of real estate ("HOLC City Survey File"), 1935-40. Property management files, 1941-44. HOLC bulletins, 1942-47. FHLBA orders, 1942-47. FHLBB resolutions, 1935-47. Seneca Nation litigation file, U.S. District Court, Western District of New York, 1939-43.
Maps: City maps showing sought-after versus declining neighborhoods, and locations of black population, 1933-39 (13 items). See also 195.6.
195.4 Records of the Federal Home Building Service Section,
Federal Home Loan Bank System (FHLBS)
History: Federal Home Building Service Plan initiated by FHLBB, September 25, 1936, to promote construction of inexpensive small homes. Administered originally by FHLBB, subsequently by regional banks of FHLBS through the Federal Home Building Service Section (FHBSS) in the Office of Governor, FHLBS. FHBSS abolished, August 16, 1939. Program terminated, February 23, 1942.
Textual Records: Program subject files, 1935-42. Housing brochures, 1935-40. Miscellaneous advertising, trade association participation, and other records, 1935-40.
Architectural and Engineering Plans: Portfolios of standard home designs, 1938-41 (1,200 items). See also 195.6.
195.5 Records of the Federal Savings and Loan Advisory Council
History: Established as an independent advisory body to the FHLBB by the Federal Home Bank Act Amendments of 1935 (49 Stat. 293), May 28, 1935. Abolished by sec. 718 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (103 Stat. 422), August 9, 1989.
Textual Records: Correspondence relating to council members, 1934-62 (170 ft.). Records relating to council meetings, 1934-64.
Sound Recordings: FSLAC meetings, 1961-62 (8 items). See also 195.7.
195.6 Cartographic Records (General)
See Maps under 195.2.1 and 195.3.
See Architectural and Engineering Plans under 195.4.
195.7 Sound Recordings (General) See under 195.2.1 and 195.5.
195.8 Machine-Readable Records (General)
Bibliographic note: Web version based on Guide to Federal Records in the National Archives of the United States. Compiled by Robert B. Matchette et al. Washington, DC: National Archives and Records Administration, 1995.
3 volumes, 2428 pages.
This Web version is updated from time to time to include records processed since 1995.
Home Owners’ Loan Act (1933)
On June 13, 1933, President Roosevelt signed the Home Owners’ Loan Act into law. The purpose of the law was to “provide emergency relief with respect to home mortgage indebtedness, to refinance home mortgages, to extend relief to the owners occupied by them and who are unable to amortize their debt elsewhere…” The law also ordered the creation of a Home Owners’ Loan Corporation (HOLC) to carry out the provisions of the act .
During the 1920s lenders and debtors entered into home mortgage arrangements with “confidence that the burden could be supported without undue difficulty…”, but an enormous real estate bubble arose that badly overextended both banks and home buyers. With the Stock Market Crash of 1929 and the subsequent fall into the Great Depression, “The ability of individual borrowers to meet mortgage payments was reduced by large-scale unemployment and by income reductions generally…This condition quickly led to tax delinquency, mortgage interest default, and ultimately to a wave of foreclosures…[By] March 1933, millions of people faced the loss of their homes, lenders faced heavy investment losses, communities badly in need of funds suffered from an inability to collect property taxes, and the construction industry, which if revived would contribute significantly to general economic recovery, was at a virtual standstill” .
As with other problems during those times, the policies of the Hoover Administration were inadequate and “not designed to give help in cases of emergency distress” . New Deal policymakers were much more aggressive and, through the HOLC, made loans to assist both financial institutions and Americans struggling with delinquent mortgages and property tax arrears, not to mention house insurance and maintenance . HOLC typically acquired distressed mortgages by giving lien holders government insured bonds, then would make new loans to home owners – loans that could be repaid over a longer period of time (15 years or more) and at low interest rates (5% or less) .
The HOLC was authorized to make loans from June 13, 1933 through June 12, 1936. During this period, HOLC made over 1 million loans totaling about $3.1 billion – $575 million of which went to individuals . The average loan size was $3,039 (about $52,000 in 2014 dollars) . The HOLC ceased operations on April 30, 1951 with “a slight profit,” defying expectations that taxpayer money would inevitably be lost in such a venture .
The Home Owners’ Loan Act of 1933 proved to be one of the most successful policies emanating from the first 100 days of the New Deal. Not only did its program of emergency lending rescue hundreds of thousands of home owners and mortgage institutions from loss, it and the Federal Housing Administration (FHA), created a year after HOLC, completely transformed the US mortgage market. It replaced the short-term mortgages and purchase contracts of the 1920s, with their high interest rates and higher risk of default, by long-term (mostly 30 year) mortgages at lower rates of interest backed by the federal government. These reforms greatly expanded home ownership in the post World War II era, from under 50% to almost 70% of American families .
Nevertheless, the lessons of the 1920s were forgotten by the onset of the great property bubble of the 2000s, which burst in 2007-08 and left millions of home buyers in foreclosure or ‘under water’ (mortgages worth more than their houses). Once again, the government had to bail out the financial system but this time it did not step in to provide significant relief to distressed home owners. Contrast this with the New Deal’s, HOLC, whose total lending, in relation to GDP, would be the equivalent of about $700 billion today .
Access to credit––home mortgage and small business loans––is an underpinning of economic inclusion and wealth-building in the U.S. Credit access, however, varies greatly depending on individual creditworthiness, and also on place-based factors like economic conditions of prosperity and growth which shape local credit markets. Another determinant of credit access is the risk associated with lending, which can be mitigated by the value of the collateral. Home mortgage lending credit access is subject to all of these factors, with the property collateralizing the loan. As a consequence, it has a neighborhood-level spatial structure, presenting a geography which can be examined in maps of cities across the country. Redlining––the practice of denying borrowers access to credit based on the location of properties in minority or economically disadvantaged neighborhoods––was widely practiced across the U.S., even in places not commonly associated with “Jim Crow” segregation laws (Rothstein 2017). While overt redlining is illegal today, having been prohibited under the Fair Housing Act of 1968, its enduring effect is still evident in the structure of U.S. cities. Part of the evidence of this enduring structure can be seen in the Home Owners’ Loan Corporation (HOLC) maps created 80 years ago, and the neighborhood economic and racial/ethnic composition today. The maps were created by the HOLC as part of its City Survey Program in the late 1930s. The HOLC deployed examiners across the country to classify neighborhoods by their perceived level of lending risk.
All cities in the study with regional divisions.
HOLC examiners consulted with local bank loan officers, city officials, appraisers, and realtors to create “Residential Security” maps of cities. More than 150 of these maps still exist. The examiners systematically graded neighborhoods based on criteria related to the age and condition of housing, transportation access, closeness to amenities such as parks or disamenities like polluting industries, the economic class and employment status of residents, and their ethnic and racial composition. Neighborhoods were color-coded on maps: green for the “Best,” blue for “Still Desirable,” yellow for “Definitely Declining,” and red for “Hazardous.”
NCRC has taken these maps and compared the grading from 80 years ago with more current economic and demographic status of neighborhoods as low-to-moderate income (LMI), middle-to-upper income (MUI), or majority-minority. To a startling degree, the results reveal a persistent pattern of both economic and racial residential exclusion. They provide evidence that the segregated and exclusionary structures of the past still exist in many U.S. cities.
In 1933, the HOLC was established to assist homeowners who were in default on their mortgages and in foreclosure. The HOLC was one of many “New Deal” programs––policies intended to relieve the worst effects of the Great Depression––leading the way in establishing the modern government-backed mortgage system. In the case of the HOLC, stabilization of the nation’s mortgage lending system was the primary goal. It accomplished this task by purchasing mortgages that were in default, providing better terms for financially struggling families. For example, the HOLC and the Federal Housing Administration (FHA) introduced innovative loan programs, making fully amortized loans available over a 25-year period (Crossney and Bartelt 2005). This replaced the previous private and locally based system in which mortgages were usually made only for 5 to 10 years, at the end of which a “balloon” payment, covering the entirety of the principal, was due. Some scholars have argued that the maps and codification of appraisal practices introduced by the HOLC bolstered “redlining” as a pattern in government mortgage lending (Jackson 1987 Massey and Denton 1993). Others have argued that the maps were confidential documents and an analysis of individual HOLC loans, most of which were made by 1936, before the “residential security maps” were completed, indicates that the agency provided mortgages to both white and minority borrowers (Hillier 2003a, 2003b Crossney and Bartelt 2005). From this evidence it appears that the residential security maps were not used by the HOLC to qualify mortgage refinancing however, it is unclear to what degree the maps may have been used later, by FHA appraisers. Hillier (2003b) found that when conventional loans were made in HOLC red-coded “Hazardous” areas, they had higher interest rates for borrowers, and also found discriminatory practices by the HOLC in allowing brokers to follow local segregation standards in the resale of properties acquired by foreclosure. Greer’s 2014 analysis extends beyond the HOLC maps themselves to encompass later FHA mortgage risk maps of Chicago, finding that those maps directly impacted lending decisions, barring loans over larger sectors of the city. While the ultimate use of the HOLC residential security maps is a subject of debate, it is clear that the HOLC maps compiled the common understanding of local-level lending decision makers of the risk in the neighborhoods of their cities. Consequently, the HOLC maps document which areas were considered lower risk, and therefore preferred for loans, and higher-risk areas where lending was discouraged. The maps document the neighborhood structure of cities and indicate areas which may have been subject to “redlining” by banks when making lending decisions. Since the HOLC maps document the contemporary expert judgement of neighborhood lending risk, they provide an archive of lending risk perception immediately prior to World War II––background material which can help us understand the extensive reconfiguration of the U.S. urban system with the explosion in suburbanization of the post-WWII period.
This study utilizes neighborhood-level grading from the HOLC maps to assess both the economic status and proportion of minorities living in those areas today. Digitized images of the HOLC Residential Security maps for 115 cities were compared with the presence of LMI and MUI income census tracts currently in those areas using 2010 Decennial Census, and 2016 Federal Financial Institutions Examination Council (FFIEC) Census-derived data. This data was compared then statistically analyzed at the national, regional, and city levels. The questions of this analysis concern the persistence of inequality in cities where the structure documented by the HOLC maps has changed the least regional differences between cities and the relationship of neighborhood change and recent gentrification. Specifically, the questions are:
- What proportion of the area on the HOLC maps classified least favorably as “Hazardous” (“D” or colored red) is presently occupied by LMI and minority-majority communities for each city? What proportion classified with the most favorable grade of “Best” (“A” or colored green) is currently non-Hispanic white and MUI?
- Are there regional differences in how the city-level changes took place?
- Do cities with greater persistence of an inequitable structure (more HOLC “Hazardous” or “D” graded areas that are minority-majority and/or LMI) correlate with current indicators of economic inequality and segregation?
- Is there an association between higher levels of gentrification and the change of HOLC “Hazardous” or “D”-graded areas into higher income MUI and majority non-Hispanic white areas?
These questions are approached through the spatial analysis of the HOLC map archive, and the degree to which the old grading corresponds with current neighborhood economic and racial/ethnic status. This is then compared with overall city-level indicators of segregation and economic inequality.
Where To Find Historical “Redlining” Maps Of Your City
During the Depression, the Home Owners’ Loan Corporation, a New Deal agency, refinanced mortgages for over a million struggling homeowners. As part of this work, the agency sent out assessors who rated neighborhoods based on several factors: housing stock, sales and rental rates, physical attributes of the terrain, and “threat of infiltration of foreign-born, negro, or lower grade population.”
In Ta-Nehesi Coates’ powerful Atlantic cover story “The Case for Reparations,” the twentieth-century practice of redlining, or selective denial of home loans based on the assessed desirability of neighborhoods, is central to his argument. The Depression-era HOLC “security” maps, which categorize neighborhoods from “best” to “hazardous,” are some of the most striking visual documents of the long history of racially-based housing discrimination.
It’s important to note that some scholars, most notably the University of Pennsylvania design and urban studies professor Amy Hillier, have argued [PDF] that HOLC maps weren’t necessarily used to redline. Hillier, who looks at uses of HOLC data in Philadelphia, writes that the practice was widespread before and after the New Deal agency sent out its assessors, and that the uses of HOLC maps in actual decision-making aren’t necessarily clear. (“For Hillier, the HOLC maps reflected rather than caused redlining practices,” writes historian Robert K. Nelson—emphasis mine.)
WNYC’s Brian Lehrer Show recently put up a blog post linking to the archive of HOLC maps hosted by Urban Oasis, a site run by Virginia Tech historian LaDale Winling. (That’s where I found this 1934 map of my onetime home, Austin, Texas.) Eventually, Winling and a team of other researchers plan to create a database of hundreds of these maps.
Right now (Friday afternoon), some of the site’s links aren’t working, probably because of the traffic directed its way via WNYC. This made me wonder where else on the Web people could see redline maps. Here are a few options, some of which allow for enhanced viewing with searchable interfaces.
-The National Archives has digitized some HOLC maps from the mid-1930s—for Birmingham, Ala. Miami Richmond, VA New Orleans Atlanta and Providence—and those are available here.
-The University of Richmond’s project Redlining Richmond offers an interactive map of the city’s HOLC data that lets you compare ratings of neighborhoods with information about city poverty rates in the 2000s.
-Last week, the Atlantic’s Alexis Madrigal wrote about T-RACES, a digital project that presents historical HOLC maps of California. Madrigal includes reconfigured T-RACES maps, finessed by data artist Josh Begley, in his post.
-UConn’s libraries have digitized the 1937 HOLC report for Hartford, Conn. and presented it as a GoogleMap overlay, in association with a larger project on Hartford’s historical social geography.
-Amy Hillier and the University of Pennsylvania have digitized HOLC maps of Philadelphia from 1936 and 1937, as well as an earlier, non-HOLC map of “racial concentrations” in the city that was created by a private agent in 1934.
-The Ohio State University has digitized HOLC maps for fourteen Ohio cities, along with supplementary HOLC “area descriptions” for most of those locations.
-A project hosted by the University of North Carolina Libraries, Dividing Durham, uses HOLC data to create an interactive version of Durham, North Carolina’s 1937 HOLC map.
-Thanks to Mitch Fraas for this addition: the Southern Redlining Collection, run by the same group that produces T-RACES, features HOLC data for Asheville, North Carolina, juxtaposed with later data on urban renewal.
-Thanks to Mont Brownlee for this addition: the Johns Hopkins library has made a very large, hi-res TIF of a 1937 HOLC map of Baltimore available on its website.
-Thanks to Vanessa Massaro for this addition: the project Mapping Decline: St. Louis and the American City makes use of HOLC maps, among others.
-Thanks to Johnny Finn for this addition: the project Redlining in Virginia, which uses HOLC maps of Norfolk, Richmond, and Roanoke.
Know of HOLC maps available elsewhere on the Web? Please let me know and I’ll be happy to add them to this roundup.
Newly Released Maps Show How Housing Discrimination Happened
A new online collection of documents shows historical bigotry in banking and real estate.
The maps in this post are part of a grim history. They were created by a government program in the 1930s and played a role in keeping African Americans and other minorities from owning property in American cities, thereby leaving an indelible mark on the racial and economic history of the United States.
Now, for the first time, hundreds of these maps and documents are available online in one place.
The collection, called Mapping Inequality, includes maps and notes from the Home Owners’ Loan Corporation, a federal program established during the Great Depression to shore up the housing market.
The HOLC was tasked with figuring out the investment risks in various cities so banks could determine where to give out loans. To do this, the organization often relied on local real estate agents and lenders, who, in many cases, judged neighborhoods based largely on their racial and socioeconomic makeup. Less affluent neighborhoods and those with significant minority and foreign-born populations got lower ratings and were colored red on the maps, a practice that came to be known as "redlining."
Low ratings from HOLC made it difficult for many minorities and poor whites to take out a loan to buy a house—a legacy of discrimination that’s still being felt today. (Though there’s still some debate among historians over whether HOLC and the maps it produced actually caused housing discrimination, or merely reflected discriminatory practices that were already happening).
The redlined neighborhoods didn’t necessarily have high mortgage default rates to begin with, says Nathan Connolly, an urban historian at Johns Hopkins University and one of the leaders of the effort to digitize the HOLC documents and put them online. But the act of redlining areas meant that homeowners who got in trouble during the Depression wouldn’t be eligible for a bailout. “It became a self-fulfilling prophecy.”
“These residential decisions had decades-long consequences,” Connolly adds. “So much of the wealth inequality that exists in America is driven by inequality in real estate market and the ability to generate equity and pass it down from one generation to the next.”
Some of the documents make plain the racial discrimination at play. In Miami, local assessors working for HOLC described the detrimental influences on one neighborhood as: “Close to dump and Negro area.” In an area near downtown Portland, Oregon, the downsides included “Infiltration of subversive racial elements.”
The 1937 map below depicts a large redlined area in the center of Wichita, Kansas. The notes that accompanied the map (there’s an excerpt at the bottom of this post) reveal some of the reasons. Area D-2, near the center of the map, contains “the heavy Negro population of Wichita,” according to the notes. The assessors described the area’s desirability as “as low as it can be” and predicted that the only reason the population there would increase would be “through lack of birth control among negroes and poor whites.”
The local real estate agents who did the assessments reinforced the racial biases of their time, Connolly says. “The assumption was that any discernable black presence would be undesirable to ‘mainstream buyers,’ which is another way of saying white buyers.” The real estate agents also had significant conflicts of interest: The ratings they issued had a big influence on the value of the properties they were buying and selling.
As a result of redlining, many African Americans had to rent housing, often at exorbitant rates, from landlords who knew they had no choice. And people in white neighborhoods often tried to protect their property values by adding so-called restrictive covenants to real estate contracts. “These are agreements that say, ‘OK, we’ll sell you this house on the condition that you’re never going to build a barn on the property, you’re never going to build a liquor store, and you’re never going to sell it to black people,’” Connolly says.
The HOLC maps and notes have always been open to the public at the National Archives in College Park, Maryland, and some have been put online previously, but this is the first time so many of them have been available to anyone with a computer. Richard Marciano at the University of Maryland, Rob Nelson of the University of Richmond, and LaDale Winling of Virginia Tech spearheaded the project along with Connolly.
On the Mapping Inequality website you can easily find maps of many major cities and click on the neighborhoods defined by HOLC to pull up the corresponding notes (though not all of them have been uploaded yet). There’s also a slider that changes the transparency of the HOLC maps so you can see the modern street grid underneath. Connolly and his colleagues hope the collection will be a valuable resource for historians—professionals and amateurs alike—as well as for ordinary people curious about the history of where they live, or where they came from.
Redlining Show Notes
Jackson, Kenneth, Crabgrass Frontier: The Suburbanization of the United States, New York: Oxford University Press, 1985.
Lipsitz, George, The Possessive Investment in Whiteness: How White People Profit From Identity Politics, Philadelphia: Temple University Press, 2006.
Robinson, Gabrielle, Better Homes of South Bend: An American Story of Courage, Charleson: The History Press, 2015.
Tindall, George and David Shi, America: A Narrative History, New York: W.W. Norton and Company, 2013.
Underwriting Manual: Underwriting and Valuation Procedure Under Title II of the National Housing Act, Washington D.C.: Federal Housing Administration, 1936 accessed Hathai Trust: https://babel.hathitrust.org/cgi/pt?id=mdp.39015018409246&view=1up&seq=5
“Thousands Ask U.S. Home Loans on First Day,” Chicago Tribune, August 2, 1933, p.9.
Mitchell, Bruce and Juan Franco, HOLC “Redlining” Maps: The Persistent Structure of Segregation and Economic Inequality, National Community Reinvestment Coalition, 2018, Accessed: https://ncrc.org/wp-content/uploads/dlm_uploads/2018/02/NCRC-Research-HOLC-10.pdf.
Racial Restrictive Covenants: Neighborhood by Neighborhood Restrictions Across King County, “The Seattle Civil Rights & Labor History Project:” https://depts.washington.edu/civilr/covenants.htm
“T-RACES: a Testbed for the Redlining Archives of California’s Exclusionary Spaces”
R. Marciano, D. Goldberg, C. Hou: http://salt.umd.edu/T-RACES/
The Indiana Historical Bureau. “Better Homes of South Bend” Historical marker file.
From the New Deal, a Way Out of a Mess
THE question of the day seems to be this: Are we in, or heading for, a recession? But so much attention is focused on that question that we may be losing sight of an even greater danger: the possibility that powerful headwinds may prevent a strong recovery from any slowdown.
Most of the potential headwinds stem from the housing slump and related financial crises that began but, unfortunately, did not end with the subprime mortgage debacle. Wounded financial markets are supposed to cure themselves: asset prices fall, bargain hunters rush in and markets return to normal. But so far, that doesn’t seem to be happening much. Instead, house prices keep dropping, the mortgage-foreclosure problem grows and new strains in the financial system keep popping up like a not-very-funny version of Whack-a-Mole.
While the problems are multifaceted, I have several reasons for focusing on just one aspect of the mess: the potential tsunami of home foreclosures. First, it strikes home, literally. Foreclosures throw families some of whom were victims of deception into the streets. They erode home values, damage neighborhoods and reduce the values of other properties, thereby intensifying the decline in housing prices that underlies many of our current problems. And they might even cut into consumer spending, which would really throw us into recession.
A second reason is that reducing the wave of foreclosures would mitigate the closely related financial crises in home mortgages and the alphabet soup of financial creations based on them (M.B.S., S.I.V.’s, C.D.O.’s, etc.). If those markets perked up, other beleaguered credit markets probably would, too.
A third reason for focusing on foreclosures is that we’ve seen this film before. During the Depression, President Franklin D. Roosevelt and Congress dealt with huge impending foreclosures by creating the Home Owners’ Loan Corporation. Now, a small but growing group of academics and public figures, including Senator Christopher J. Dodd, Democrat of Connecticut, is calling for the federal government to bring back something like the HOLC. Count me in.
The HOLC was established in June 1933 to help distressed families avert foreclosures by replacing mortgages that were in or near default with new ones that homeowners could afford. It did so by buying old mortgages from banks most of which were delighted to trade them in for safe government bonds and then issuing new loans to homeowners. The HOLC financed itself by borrowing from capital markets and the Treasury.
The scale of the operation was impressive. Within two years, the HOLC received about 1.9 million applications from distressed homeowners and granted just over a million new mortgages. (Adjusting only for population growth, the corresponding mortgage figure today would be almost 2.5 million.) Nearly one of every five mortgages in America became owned by the HOLC. Its total lending over its lifetime amounted to $3.5 billion a colossal sum equal to 5 percent of a year’s gross domestic product at the time. (The corresponding figure today would be about $750 billion.)
As a public corporation chartered for a public purpose, the HOLC was a patient and even lenient lender. It tried to keep delinquent borrowers on track with debt counseling, budgeting help and even family meetings. But times were tough in the 1930s, and nearly 20 percent of the HOLC’s borrowers defaulted anyway. So the corporation eventually acquired ownership of about 200,000 houses, nearly all of which were sold by 1944. The HOLC closed its books in 1951, or 15 years after its last 1936 mortgage was paid off, with a small profit. It was a heavy lift, but the incredible HOLC lifted it.
To the best of my ability I have redrawn the polygons from the 1937 Baltimore City Residential Security Map. This map was created in ESRI ArcGIS and may be used by anyone. I have added 4 layers also in ESRI ArcGIS, one each for each color: Red, Yellow, Green and Blue for anyone that is interested in studying the red lines or redlining in Baltimore. I also have individual layer files in kmz or shape file formats, if you need them you can email me a request at chamgreen102 at gmail.com . To use the map below one may need to set up a free account with ESRI and click here.
To learn more about these polygons and what they represent one may visit Antero Pietila's site for a short synopsis.. The original 1937 Baltimore Residential Security may be downloaded from the Sheridan library at this link.
The legend for the 1937 map of which I created these polygons is below.
Here is an image of the original map.
The Explanation of the map provided by the Homeowners Loan Corporation, Division of Research and Statistics, is as follows:
Home Owner's Loan Corporation used the George Cram 1935 " Street Map of Baltimore Area" as a base map to overprint the Residential Security Information. At the time of publication, the following information was prepared by the staff of the Home Owners’ Loan Corporation as an explanation for this map: “Prepared by: Division of Research & Statistics With cooperation of the Appraisal Department May 29, 1937. EXPLANATION Baltimore, Maryland The purpose of the Residential Security Map is to graphically reflect the trend of desirability in neighborhoods from a residential view-pint. Four classifications are used as indicated by the legend, namely: First, Second, Third and Fourth grades. The codes letters and colors are A, B, C, and D, and Green, Blue, Yellow and Red respectively. In establishing the grade of an area, such factors as these are considered: intensity of the sale and rental demand percentage of home ownership age and type of building economic stability of the area social status of the population sufficiency of public utilities, accessibility of schools, churches, and business centers transportation methods topography of the area and the restrictions set up to protect the neighborhoods. The price level of homes is not the guiding factor. The First grade of A areas are “hot spots” they are not fully built up. In nearly all instances they are the new well planned sections of the city, and almost synonymous with the area where good mortgage lenders with available funds are willing to make their maximum loans to be amortized over 10-15 year period – perhaps up to 75-80% of the appraisal. They are homogeneous in demand as residential locations in “good times” or “bad” hence on the upgrade. The Second grade or B areas, as a rule, are completely developed. They are like a 1935 automobile – still good, but not what the people are buying today who can afford a new one. They are neighborhoods where good mortgage lenders will have a tendency to hold loan commitments 10-15% under the limit. The Third grade or C areas are characterized by age, obsolescence, and change of style expiring restrictions or lack of them infiltration of a lower grade population the presence of influences with increase sales resistance such as inadequate transportation, insufficient utilities, perhaps heavy tax burdens, poor maintenance of homes etc. “Jerry” built area are included, as well as neighborhoods lacking homogeneity. Generally, these have reached the transition period. Good mortgage lenders are more conservative in the Third grade or C areas and hold loan commitments under the lending ration for the A and B areas. The fourth grade or D area represent those neighborhoods in which the things that are now taking place in the C neighborhoods, have already happened. They are characterized by detrimental influences in a pronounced degree, undesirable population of an infiltration of it. Low percentage of home ownership, very poor maintenance and often vandalism prevail. Unstable incomes of the people and difficult collections are usually prevalent. The areas are broader than the co-called slum districts. Some mortgage lenders may refuse to make loans in these neighborhoods and others will lend only on a conservative basis. These maps and description have been carefully checked with competent local real estate brokers and mortgage lenders, and we believe they represent a fair and composite opinion of the best qualified local people. In using them we do not mean to imply that good mortgages do not exist or cannot be made in the Third and Fourth grade areas, but we do think they should be made as serviced on a different basis than in the First and Second grade areas. The following local persons collaborated with the field agent in the preparation of this map and the area descriptions: Mr. J.J. Requardt, Real Estate Broker, Robert M. Morfort, Real Estate Broker, Mr. Harry B. Wolfe, Real Estate Broker, Mr. A.D. Clemens, Real Estate Broker, Mr. Joseph M. Hisley, Real Estate Broker, Smith Real Estate Company, Real Estate Broker, Mr. George P. Klein, Real Estate Broker, Mr. Lemmon, Chief Evaluator – F.H.A, Mr. Ivan McDougal, Professor Economics and Sociology – Goucher College, Piper and Hill, Real Estate Brokers, Mr. H.W. Irr, Secretary, Pennsylvania Avenue F.S.L.A., Mr. F.W. Brochman, Cashier, West Baltimore Building Association, Dr. Conrad, Home Owners’ Loan Corporation – Towson, Mr. Francis L/ Smoot, State Appraiser, HOLC, Mr. L. Krover, Assistant State Appraiser, HOLC, and Mr. Wm. Martein, R.E. Operator, Baltimore. NOTE: A street index will be found on back of map. The area descriptions were arranged alphabetically according to the code letter and numerically.”
Blogger's comment: The blog owner never appreciated all the hoops she had to jump through because in 1989 when she attempted to purchase her home in a neighborhood that was still red-lined by commercial banks and thus she could not get a traditional mortgage. The blog author still remembers clear-as-day when her own bank manager at Maryland National Bank strongly suggested she "instead buy a house in Glen Burnie". Yuck!
The History of Black Homeownership: An Introduction
The history of Black homeownership is an enduring legacy of inequality. Join Homes.com as we explore this history, and how it still shapes our cities.
The history of Black homeownership is a blended story of hard-fought gains and unfair losses, the legacies of which still persist today. We invite you to join us as we begin a series that highlights the events that have shaped Black homeownership as we know it today, and share helpful resources for those who may still face discrimination.
A Brief Historical Context
After the Civil War, former slaves found themselves “free,” but only in the sense that they were no longer bound to lives of servitude. They still could not vote, hold property, access education, or conduct business affairs. Then, the 13th and 14th amendments lawfully recognized Black persons born in America as citizens, granting the rights, privileges and protections that came with it.
However, in 1883, the Supreme Court ruled that the 14th amendment didn’t give Congress authority to outlaw private affairs (such as selling one’s home) even if they were racially discriminatory. Ultimately, this opened the door for Jim Crow laws, violence toward Black families, and rampant housing discrimination that lasted for almost another century afterward. Legal loopholes meant that racial discrimination could still exist if disguised as economic policy. The history of Black homeownership shows just how pervasive these policies were in perpetuating segregation and racial bias.
Economic Discrimination: A Three-Pronged Approach
While the roots of systemic racism were planted well before the 20th century, it was New Deal programs created in the 1930s that solidified and spread those roots across the nation. There were three main factors in discrimination through economics during this time:
In 1934, the Federal Housing Administration (FHA) was created to help make homeownership more attainable to the average citizen. Private mortgages could now be backed by the government, allowing lenders to offer more mortgages. However, approval for these mortgages depended greatly on where homes were located.
In 1935, The Home Owners’ Loan Corporation (HOLC) graded neighborhoods in over 200 cities from one to four, with four representing the riskiest neighborhoods for mortgage lenders. Areas with Black residents were consistently rated as fours, regardless of how wealthy or educated they may have been. (These areas were indicated in red on risk assessment maps, hence, the term “redlining.”) The FHA steered almost entirely clear of backing loans for homes within these areas, leaving access to homeownership almost exclusively a white enterprise.
During this time, the use of restrictive covenants was widespread in growing communities across the country. These were private, mutual agreements between property owners with each other, and also with their neighborhood associations, promising not to sell their homes to Black buyers.
The Impact of Economic Discrimination
All of these concurrent practices created a trifecta of discrimination against Black families first, with the automatic poor neighborhood grading that was given regardless of incomes second, with the FHA’s reticence to back mortgages within those poorly graded areas and thirdly, ensuring that if prospective Black buyers made it through those first two hurdles, there were still mechanisms in place to keep them out of white-established neighborhoods.
We’ll continue to explore the deeper details of how these practices have shaped neighborhoods as we know them today, but to get started, read this article about how they have affected appraisals and home values.
The Fair Housing Act of 1968
The history of Black homeownership finally gained momentum just half a century ago. In the wake of civil rights leader Martin Luther King, Jr.’s assassination, housing discrimination based on such factors as race, religion, and more, were deemed unconstitutional with the passage of the Fair Housing Act in 1968 . This opened a much wider door for Black families to enter rentership or homeownership, and thus providing the stability for accumulating wealth that had been denied for countless generations.
Where are We Now?
A recent Homes.com survey found that 15% of US consumers have experienced some form of housing discrimination. Of those who disclosed their racial identities, 56% of Black or African American respondents expressed that they have faced housing bias, followed by biracial or multiracial respondents (45%), those of Latino or Hispanic heritage (45%), American Indians or Alaskan Natives (31%) and non-Hispanic whites (12%).
Additionally, 60% indicated that they don’t know how to report Fair Housing law violations or concerns. Almost a third (30%) stated they are unfamiliar with many of the federal housing programs we asked about, including Federal Housing Administration loans and Section 8 housing vouchers. A concerning number considering over half of those respondents reported having annual household incomes of less than $100,000 a year, suggesting a lack of information — or access to that information — for those who need it most.
Homes.com is hard at work assembling more resources and insights to help consumers navigate housing discrimination issues. Check back soon for our latest articles!
Homes.com is a Resource for Fair Housing
To combat the residue of racism and champion fair housing for all, Homes.com has created a Fair Housing webpage, dedicated to providing the latest news in fair housing, guidance on how to submit fair housing concerns, information on existing programs to assist renters and buyers, and more.
Find Homes.com’s Fair Housing page HERE , and make sure to bookmark it, as it is an ongoing project with resources added regularly.
We’ll also continue taking a deeper dive into the historical nuances and landmark events that have shaped the history of Black homeownership as we know it today. We invite you to join us on this special journey, and look forward to sharing it with you.