Redlining refers to the practice of denying or limiting financial services, insurance, or other goods to residents of certain geographic areas based on the racial or ethnic composition of those areas rather than the creditworthiness of individual applicants. The term derives from the color-coded maps produced in the 1930s by the Home Owners' Loan Corporation (HOLC), a federal agency, which graded neighborhoods for mortgage lending risk using a system in which areas with significant black or immigrant populations were outlined in red and assigned the lowest rating. The practice was widespread among private lenders, insurance companies, and federal agencies through much of the 20th century, and was formally prohibited by the Fair Housing Act of 1968 and the Equal Credit Opportunity Act of 1974. The Community Reinvestment Act of 1977 imposed affirmative obligations on banks to serve the communities in which they operate.

The HOLC maps, produced between 1935 and 1940, graded residential neighborhoods in hundreds of American cities using four categories: green (“Best”), blue (“Still Desirable”), yellow (“Definitely Declining”), and red (“Hazardous”). Neighborhoods with black residents, recent immigrants, or older housing stock were disproportionately assigned red or yellow grades regardless of the individual financial circumstances of residents. Federal Housing Administration (FHA) underwriting guidelines of the same era explicitly discouraged lending in racially mixed or predominantly minority neighborhoods, and the agency promoted racial covenants in new suburban developments as a condition of mortgage insurance. Private banks and savings institutions adopted similar geographic risk frameworks. The Federal Deposit Insurance Corporation and other federal regulators did not prohibit or penalize these practices until civil rights legislation in the late 1960s and 1970s.

The long-term effects of these policies on wealth accumulation, homeownership rates, and neighborhood investment among black Americans are a subject of ongoing historical and economic research. For a fuller account, see Redlining - History.

Scholars broadly agree that formal redlining as a government-sanctioned practice existed and was racially discriminatory in design and effect. Contested questions include the relative weight of redlining compared to other factors - such as income differences, private discrimination outside the mapping system, and post-war urban policy - in explaining present-day racial wealth gaps and neighborhood segregation. Some economists argue the causal link between historical HOLC maps and current outcomes has been overstated or confounded by selection effects; others maintain the maps had durable, measurable effects on property values and credit access across subsequent generations. The appropriate policy response to historical redlining is among the most actively contested questions in this area, with proposals ranging from targeted lending programs to broader reparations frameworks.

There is broad historical consensus that HOLC and FHA policies in the 1930s-1960s incorporated explicit racial criteria in ways that disadvantaged black and other minority homebuyers. The extent to which this historical practice is the proximate cause of current racial wealth disparities, as opposed to a contributing factor among others, remains debated in economics and sociology. See Redlining - Economics Consensus for a summary of findings on causal claims.

• Redlining as a root cause of racial wealth gaps - This viewpoint holds that federally sanctioned redlining was a primary mechanism by which intergenerational wealth was denied to black Americans, and that its effects persist structurally today. See Structural Harm Viewpoint.

• Redlining as one factor among many - This viewpoint holds that while redlining was a real and discriminatory practice, its independent causal weight on present-day outcomes has been overstated, and that income, culture, policy failures, and private behavior are co-equal or larger contributors to current disparities. See Limited Causation Viewpoint.

• Policy remedies are warranted - Some hold that because redlining was government-directed discrimination, government has a corresponding obligation to remedy its effects through targeted lending, investment, or transfer programs. See Remediation Viewpoint.

• Policy remedies are counterproductive or unjust - Others argue that race-based remediation programs repeat the error of using race as a criterion in policy, distort credit markets, and impose costs on individuals who bear no personal responsibility for historical practices. See Anti-Remediation Viewpoint.

• Redlining - History
• Redlining - Debate
• Redlining - Economics Consensus
• New Deal, Race, and Housing - History
• Fair Housing Act
• Equal Credit Opportunity Act
• Racial Wealth Gap
• Community Reinvestment Act
• Housing Discrimination

1. Home Owners' Loan Corporation, Residential Security Maps, 1935-1940. Records held at the National Archives, Record Group 195. Digitized versions available via the Mapping Inequality project, University of Richmond.
2. Federal Housing Administration, Underwriting Manual: Underwriting and Valuation Procedure Under Title II of the National Housing Act (Washington, D.C.: U.S. Government Printing Office, 1938), §§ 909-937 (neighborhood character and racial homogeneity criteria).
3. Fair Housing Act, Pub. L. 90-284, 82 Stat. 81 (1968).
4. Equal Credit Opportunity Act, Pub. L. 93-495, 88 Stat. 1521 (1974).
5. Community Reinvestment Act, Pub. L. 95-128, 91 Stat. 1147 (1977).
6. Robert K. Nelson et al., “Mapping Inequality: Redlining in New Deal America,” American Panorama (University of Richmond Digital Scholarship Lab, 2023), https://dsl.richmond.edu/panorama/redlining/.
7. Bhashkar Mazumder and Therese McGuire, “Redlining, Race, and the Color of Money,” Federal Reserve Bank of Chicago, Economic Perspectives, 2012. [Citation requires verification before publication.]
8. Price V. Fishback, Jonathan Rose, and Kenneth Snowden, Well Worth Saving: How the New Deal Safeguarded Home Ownership (University of Chicago Press, 2013). (On HOLC operations and outcomes.)
9. Richard Rothstein, The Color of Law: A Forgotten History of How Our Government Segregated America (Liveright, 2017).
10. Jason L. Saving, “Was Redlining Responsible for Today's Wealth Gap?” Federal Reserve Bank of Dallas, Southwest Economy, Q1 2021.