# Redlining Canonical: https://web4.xpay.bi/en/wiki/wp-en-60562/ Language: en Published: 2026-10-26T16:33:45.441Z Updated: 2026-10-26T16:33:45.441Z Redlining is a discriminatory practice from the United States, in which financial services are withheld from neighborhoods that have significant numbers of racial and ethnic minorities. Redlining has mostly been directed against African Americans, as well as Mexican Americans in the Southwestern United States, Jewish Americans, and Italian Americans. The most common examples involve deni ## Key facts ## Overview Redlining is a discriminatory practice from the United States, in which financial services are withheld from neighborhoods that have significant numbers of racial and ethnic minorities. Redlining has mostly been directed against African Americans, as well as Mexican Americans in the Southwestern United States, Jewish Americans, and Italian Americans. The most common examples involve denial of credit and insurance, denial of healthcare, and the development of food deserts in minority neighborhoods. Reverse redlining occurs when a lender or insurer targets majority-minority neighborhood residents with inflated interest rates by taking advantage of the lack of lending competition relative to non-redlined neighborhoods. The effect also emerges when service providers artificially restrict the supply of real estate available for loanable funds to nonwhites, thus providing alternative pretext for higher rates. Neighborhoods which were targeted for blockbusting were also subject to reverse redlining. In the 1960s, sociologist John McKnight originally coined the term to describe the discriminatory practice in Chicago, Illinois of banks classifying certain neighborhoods as "hazardous," or not worthy of investment due to the racial makeup of their residents. In the 1980s, a Pulitzer Prize-winning series of articles by investigative reporter Bill Dedman demonstrated how Atlanta banks would often lend in lower-income white neighborhoods but not in middle-income or even upper-income Black neighborhoods. The documented history of redlining in the United States is a manifestation of the historical systemic racism that has had wide-ranging impacts on American society, two examples being educational and housing inequality across racial groups. Redlining is also an example of spatial inequality and economic inequality. ## History The specific process termed "redlining" in the United States occurred on the background of racial segregation and discrimination against minority populations. It had its origins in sales practices of the National Association of Real Estate Boards and theories about race and property values codified by economists surrounding Richard T. Ely and his Institute for Research in Land Economics and Public Utilities, founded at the University of Wisconsin in 1920. With the National Housing Act of 1934 the federal government began to be involved in the practice and the concurrent establishment of the Federal Housing Administration (FHA). The FHA's formalized redlining process was developed by their Chief Land Economist, Homer Hoyt, as part of an initiative to develop the first underwriting criteria for mortgages. The implementation of this federal policy accelerated the decay and isolation of minority inner-city neighborhoods through withholding of mortgage capital, making it even more difficult for neighborhoods to attract and retain families able to purchase homes. The discriminatory assumptions in redlining exacerbated residential racial segregation and urban decay in the United States. In 1935, the Federal Home Loan Bank Board (FHLBB) asked the 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. On the maps, the newest areas—those considered desirable for lending purposes—were outlined in green and known as "Type A". These were typically affluent suburbs on the outskirts of cities. "Type B" neighborhoods, outlined in blue, 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. While about 85% of the residents of such neighborhoods were white, they included most of the African-American urban households. These neighborhoods tended to be the older districts in the center of cities; often they were also African-American neighborhoods, and only six majority African-American neighborhoods in the entire United States were not evaluated as "Type D." Urban planning historians theorize that the maps were used by private and public entities for years afterward to deny loans to people in black communities, though planners and historians have debated the exact role of HOLC and its maps in redlining. Redlining maps even became prominent under private organizations, such as appraiser 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. Between 1945 and 1959, African Americans received less than 2 percent of all federally insured home loans. Banks and mortgage lenders were not the only private entities to develop redlining practices. Property insurance companies also instituted rigid redlining policies in the post-World War II period. According to urban historian Bench Ansfield, the postwar advent of comprehensive homeowners' insurance was limited to the suburbs and withheld from neighborhoods of color in U.S. cities. One Aetna bulletin from 1964 advised underwriters to "use a red line around questionable areas on territorial maps." The New York Urban Coalition warned in 1978, "A neighborhood without insurance is a neighborhood doomed to death." Following a National Housing Conference in 1973, a group of Chicago community organizations led by The Northwest Community Organization (NCO) formed National People's Action (NPA), to broaden the fight against disinvestment and mortgage redlining in neighborhoods all over the country. This organization, led by Chicago housewife Gale Cincotta and Shel Trapp, a professional community organizer, targeted The Federal Home Loan Bank Board, the governing authority over federally chartered Savings and loan associations (S&L) that held at that time the bulk of the country's home mortgages. NPA embarked on an effort to build a national coalition of urban community organizations to pass a national disclosure regulation or law to require banks to reveal their lending patterns. For many years, urban community organizations had battled neighborhood decay by attacking blockbusting (deceptive encouragement of white flight from neighborhoods in order to buy up real estate at a huge discount and then rent to low-income, usually black tenants), forcing landlords to maintain properties, and requiring cities to board up and tear down abandoned properties. These actions addressed the short-term issues of neighborhood decline. Neighborhood leaders began to learn that these issues and conditions were symptoms of disinvestment that was the true, though hidden, underlying cause of these problems. They changed their strategy as more data was gathered. With the help of NPA, a coalition of loosely affiliated community organizations began to form. At the Third Annual Housing Conference held in Chicago in 1974, eight hundred delegates representing 25 states and 35 cities attended. The strategy focused on the Federal Home Loan Bank Board (FHLBB), which oversaw S&Ls in cities all over the country. In 1974, Chicago's Metropolitan Area Housing Association (MAHA), made up of representatives of local organizations, succeeded in having the Illinois State Legislature pass laws mandating disclosure and outlawing redlining. In Massachusetts, organizers allied with NPA confronted a unique situation. Over 90% of home mortgages were held by state-chartered savings banks. A Jamaica Plain neighborhood organization pushed the disinvestment issue into the statewide gubernatorial race. The Jamaica Plain Banking & Mortgage Committee and its citywide affiliate, The Boston Anti-redlining Coalition (BARC), won a commitment from Democratic candidate Michael S. Dukakis to order statewide disclosure through the Massachusetts State Banking Commission. After Dukakis was elected, his new Banking Commissioner ordered banks to disclose mortgage-lending patterns by ZIP code. The suspected redlining was revealed. Richard W. "Rick" Wise, a former community organizer who led the Boston organizing, has published a novel, Redlined, which gives a somewhat fictionalized account of the anti-redlining campaign. NPA and its affiliates achieved disclosure of lending practices with the passage of The Home Mortgage Disclosure Act of 1975. The required transparency and review of loan practices began to change lending practices. NPA began to work on reinvestment in areas that had been neglected. Their support helped gain passage in 1977 of the Community Reinvestment Act. ## Legislation In the United States, the Fair Housing Act of 1968 was passed to combat the practice of redlining. The Fair Housing Act of 1968 made the discriminatory housing policies linked to redlining illegal. According to the Department of Housing and Urban Development, "The Fair Housing Act makes it unlawful to discriminate in the terms, conditions, or privileges of sale of a dwelling because of race or national origin. The Act also makes it unlawful for any person or entity involved in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race or national origin." The Office of Fair Housing and Equal Opportunity is tasked with administering and enforcing this law. The Equal Credit Opportunity Act (ECOA), codified at 15 U.S.C. § 1691 et seq., was enacted on October 28, 1974. This law makes it unlawful for any creditor to discriminate against any applicant regarding any aspect of a credit transaction based on race, color, religion, national origin, sex, marital status, or age (provided the applicant has the capacity to contract). It also prohibits discrimination based on the applicant's income deriving from a public assistance program or the applicant's good faith exercise of any right under the Consumer Credit Protection Act. The ECOA applies to any person who regularly participates in credit decisions, including banks, retailers, bankcard companies, finance companies, and credit unions. The part of the law that defines its authority and scope is known as Regulation B, referenced as 12 C.F.R. § 1002.1(b) (2017). from the (b) that appears in Title 12 part 1002's official identifier: 12 C.F.R. § 1002.1(b) (2017). Failure to comply with Regulation B can subject a financial institution to civil liability for actual and punitive damages in individual or class actions. Liability for punitive damages can be as much as $10,000 in individual actions and the lesser of $500,000 or 1% of the creditor's net worth in class actions. The Community Reinvestment Act (CRA), passed by Congress in 1977, requires banks to apply the same lending criteria in all communities. ## Regulatory lawsuits In May 2015, the U.S. Department of Housing and Urban Development announced that Associated Bank had agreed to a $200 million settlement over redlining in Chicago and Milwaukee. The three-year HUD observation led to the complaint that the bank purposely rejected mortgage applications from black and Latino applicants. The final settlement required AB to open branches in non-white neighborhoods. New York Attorney General Eric Schneiderman announced a settlement with Evans Bank for $825,000 on September 10, 2015. An investigation had uncovered the erasure of black neighborhoods from mortgage lending maps. According to Schneiderman, of the over 1,100 mortgage applications the bank received between 2009 and 2012, only four were from African Americans. Following this investigation, The Buffalo News reported that more banks could be investigated for the same reasons in the near future. The most notable examples of such DOJ and HUD settlements have focused heavily on community banks in large metropolitan areas, but banks in other regions have been the subject of such orders as well, including First United Security Bank in Thomasville, Alabama, and Community State Bank in Saginaw, Michigan. The United States Department of Justice announced a $33 million settlement with Hudson City Savings Bank, which services New Jersey, New York, and Pennsylvania, on September 24, 2015. The six-year DOJ investigation had proven that the company was intentionally avoiding granting mortgages to Latinos and African Americans and purposely avoided expanding into minority-majority communities. The Justice Department called it the "largest residential mortgage redlining settlement in its history." As a part of the settlement agreement, HCSB was forced to open branches in non-white communities. As U.S. Attorney Paul Fishman explained to Emily Badger for The Washington Post, "\[i\]f you lived in a majority-black or Hispanic neighborhood and you wanted to apply for a mortgage, Hudson City Savings Bank was not the place to go." The enforcement agencies cited additional evidence of discrimination in Hudson City's broker selection practices, noting that the bank received 80 percent of its mortgage applications from mortgage brokers but that the brokers with whom the bank worked were not located in majority African-American and Hispanic areas. On January 12, 2023, City National Bank of California agreed to pay $31,000,000 to resolve allegations of redlining from 2017 to at least 2020, brought by the United States Department of Justice. ## Community organizations 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. In a 1992 speech, then-Presidential candidate Bill Clinton called ShoreBank "the most important bank in America". On August 20, 2010, the bank was declared insolvent, closed by regulators and most of its assets were acquired by Urban Partnership Bank. In the mid-1970s, community organizations, under the banner of the NPA, worked to fight against redlining in South Austin, Illinois. One of these organizations was SACCC (South Austin Coalition Community Council), formed to restore South Austin's neighborhood and to fight against financial institutions accused of propagating redlining. This got the attention of insurance regulators in the Illinois Department of Insurance, as well as federal officers enforcing anti-racial discrimination laws. ## Racial segregation in American cities The United States Federal Government has enacted legislation since the 1970s to reduce the segregation of American cities. While many cities have reduced the amount of segregated neighborhoods, some still have clearly defined racial boundaries. Since 1990, the City of Chicago has been one of the most persistently racially segregated cities, despite efforts to improve mobility and reduce barriers. Other cities like Detroit, Houston, and Atlanta likewise have very pronounced black and white neighborhoods, the same neighborhoods that were originally redlined by financial institutions decades ago. While other cities have made progress, this continued racial segregation has contributed to reduced economic mobility for millions of people. Formerly redlined neighborhoods in places like Los Angeles have been shown to be more likely to have a gang injunction issued against them, as the work of geographer Stefano Bloch and anthropologist Susan A. Phillips shows. ## Racial covenants: current efforts While racist covenants, conditions, and restrictions (CCRs) were ruled "unenforceable" by the U.S. Supreme Court in the landmark 1948 case Shelley v. Kraemer, this decision did not make them illegal; it only prevented courts from enforcing them. It was not until the passage of the federal Fair Housing Act of 1968 that such discriminatory practices were explicitly outlawed. State-Level Legislation California: AB 1466, passed in 2021, requires county recorders to identify and redact discriminatory covenants from property records. This builds on earlier legislation that allowed homeowners to request the removal of such language. Washington: The state passed a law in 2021 that requires all real estate documents to be free from racially restrictive covenants and provides a process for property owners to have them removed. Minnesota: The Minnesota Legislature passed a law in 2019 that enables homeowners to remove racial covenants from their property deeds through a simple process. This law was heavily influenced by the Mapping Prejudice project, which has mapped and documented racial covenants in the Twin Cities. Public awareness and education Historical Research and Documentation: Projects like Mapping Prejudice in Minneapolis and the Seattle Civil Rights and Labor History Project have worked to document and publicize the extent of racial covenants, raising awareness about their historical impact. Digital archives and databases Universities and nonprofits are creating searchable databases of racial covenants to help homeowners and researchers access information about these restrictive clauses. One resource is the Mapping Inequality: Redlining in New Deal America project, a collaborative effort involving the University of Richmond, Virginia Tech, and others. This project focuses on the maps and area descriptions produced by the Home Owners' Loan Corporation (HOLC) in the 1930s. It provides digitized HOLC maps showing redlined areas, detailed descriptions, and analyses of the impact of these practices on urban development. Mapping Inequality helps provide historical context for understanding the systemic nature of housing discrimination. The Seattle Civil Rights & Labor History Project at the University of Washington includes a comprehensive collection of documents related to racial covenants in Seattle. This project offers historical maps, property records, and oral histories documenting the experiences of affected communities. It supports educational initiatives and helps inform public policy on housing equity. Redlining Louisville: Racial Capitalism and Real Estate, a project by the Louisville Metro Government, offers an interactive map showing the impact of redlining and racial covenants. It includes maps, narratives, and data sets that illustrate the long-term effects of these discriminatory practices. ## Race wealth gap The practice of redlining actively helped to create what is now known as the Racial Wealth Gap seen in the United States. According to studies from American Economic Journal , HOLC maps show how deeply those redlining grades shaped neighborhoods over time. Those areas that were labeled as 'D' in the 1930s didn't just struggle then but are continuing to face the following struggles today; lower home values, low number of homeowners, and higher levels of racial segregation for decades. These studies show that inequalities continue to remain seen in today's housing markets. Black families in America earned just $57.30 for every $100 in income earned by white families, according to the Census Bureau's Current Population Survey. For every $100 in white family wealth, black families hold just $5.04. In 2016, the median wealth for black and Hispanic families was $17,600 and $20,700, respectively, compared with white families' median wealth of $171,000. The black-white wealth gap has not recovered from the Great Recession. In 2007, immediately before the Great Recession, the median wealth of blacks was nearly 14 percent that of whites. Although black wealth increased at a faster rate than white wealth in 2016, blacks still owned less than 10 percent of whites' wealth at the median. A multigenerational study of people from five race groups analyzed upward mobility trends in American cities. The study concluded that black men who grew up in racially segregated neighborhoods were substantially less likely to gain upward economic mobility, finding "black children born to parents in the bottom household income quintile have a 2.5% chance of rising to the top quintile of household income, compared with 10.6% for whites." Because of this intergenerational poverty, black households are "stuck in place" and are less able to grow wealth. A 2017 study by Federal Reserve Bank of Chicago economists found that redlining—the practice whereby banks discriminated against the inhabitants of certain neighborhoods—had a persistent adverse impact on the neighborhoods, with redlining affecting homeownership rates, home values and credit scores in 2010. Since many African-Americans could not access conventional home loans, they had to turn to predatory lenders (who charged high interest rates). Due to lower home ownership rates, slumlords were able to rent out apartments that would otherwise be owned. ## 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. The class alleged that Sallie Mae discriminated against African American and Hispanic private student loan applicants. The case alleged that the factors Sallie Mae used to underwrite private student loans caused a disparate impact on students attending schools with higher minority populations. The suit also alleged that Sallie Mae failed to properly disclose loan terms to private student loan borrowers. The lawsuit was settled in 2011. The terms of the settlement included Sallie Mae agreeing to make a $500,000 donation to the United Negro College Fund and the attorneys for the plaintiffs receiving $1.8 million in attorneys' fees. ## 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. Scholars assess certain policies, such as credit card issuers reducing credit lines of individuals with a record of purchases at retailers frequented by so-called "high-risk" customers, to be akin to redlining. ## Banks Much of the economic impacts we find as a result of redlining and the banking system directly impact the African American community. Beginning in the 1960s, there was a large influx of black veterans and their families moving into suburban white communities. As blacks moved in, whites moved out and the market value of these homes dropped dramatically. In observation of said market values, bank lenders were able to keep close track by literally drawing red lines around the neighborhoods on a map. These lines signified areas that they would not invest in. By way of racial redlining, not only banks but savings and loans companies, insurance companies, grocery chains, and even pizza delivery companies thwarted economic vitality in black communities. The severe lacking in civil rights laws in combination with the economic impact led to the passing of the Community Reinvestment Act in 1977. Racial and economic redlining set the people who live in these communities up for failure from the start, so much so that banks would often deny people who came from these areas bank loans or offered them at stricter repayment rates. As a result, there was a very low rate at which people (in particular African Americans) were able to own their homes; opening the door for slum landlords (who could get approved for low interest loans in those communities) to take over and do as they saw fit. ## Insurance Gregory D. Squires wrote in 2003 that data showed that race continues to affect the policies and practices of the insurance industry. 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. Home-insurance agents may try to assess the ethnicity of a potential customer just by telephone, affecting what services they offer to inquiries 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 industry. Reviews of insurance scores based on credit are shown to have unequal results by ethnic group. The Ohio Department of Insurance in the early 21st century allows insurance providers to use maps and collection of demographic data by ZIP code in determining insurance rates. The FHEO Director of Investigations at the Department of Housing and Urban Development, Sara Pratt, wrote: Like other forms of discrimination, the history of insurance redlining began in conscious, overt racial discrimination practiced openly and with significant community support in communities throughout the country. There was documented overt discrimination in practices relating to residential housing—from the appraisal manuals which established an articulated "policy" of preferences based on race, religion and national origin. to lending practices which only made loans available in certain parts of town or to certain borrowers, to the decision-making process in loans and insurance which allowed the insertion of discriminatory assessments into final decisions about either. ## Sources - Redlining · Wikipedia: https://en.wikipedia.org/?curid=60562 Source: Wikipedia contributors — https://en.wikipedia.org/?curid=60562&oldid=1381836411 Licence: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation notice: Reformatted for XPay; the source may be abridged, restructured or translated. Consult the cited revision for the original.