Government policies and segregation laws have excluded generations of Black families from homeownership and its wealth-building potential.
In 1933 President Franklin Roosevelt signed the Home Owners’ Loan Act and the National Housing Act into law. Home Owners Loan Corporation (HOLC) created maps to assess the risk of mortgage refinancing and set new standards for federal underwriting.
The Federal Housing Administration (FHA) used these maps to determine which areas it would guarantee mortgages. HOLC maps assessed risk based on a neighborhood’s racial composition, designating mostly nonwhite neighborhoods as hazardous, and coloring these areas red.
Redlining, denied people of color—especially Black people—access to mortgage refinancing and federal underwriting. As a result, 98 percent of the $120 billion in FHA loans distributed between 1934 and 1962 went to white families.
Today, approximately 3 in 4 neighborhoods—74 percent—that the HOLC deemed “hazardous” in the 1930s remain low to moderate income, and more than 60 percent are predominantly black and brown communities.
Federal home loan programs allowed households—the majority of them white—to build and transfer assets across generations, contributing to glaring racial disparities in home ownership and wealth.
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