This article traces the historical development of redlining in the United States, from the origins of racially discriminatory lending and housing practices in the early twentieth century through the federal institutionalization of those practices, subsequent legislative challenges, and ongoing scholarly debate about their long-term effects. See also Redlining, redlining-consensus-lending-discrimination-consensus, and New Deal Racial Exclusion - Debate.

Before the federal government formalized mortgage risk assessment in the 1930s, private lenders, real estate associations, and developers in American cities employed a range of instruments to restrict where non-white residents - and particularly black residents - could purchase or rent property. Racial restrictive covenants, clauses written into property deeds prohibiting sale or occupancy to members of specified racial or ethnic groups, spread across northern and midwestern cities during the early decades of the century as part of broader white resistance to black migration from the South.¹⁾ The National Association of Real Estate Boards adopted a code of ethics in 1924 that instructed members not to introduce into a neighborhood members of any race or nationality whose presence would damage property values.²⁾

Segregated neighborhoods were reinforced in some cities by municipal zoning ordinances explicitly designating zones by race. The Supreme Court struck down race-based residential zoning in Buchanan v. Warley (1917), but the decision did not dismantle private covenants or informal industry practices.³⁾

The New Deal restructured American mortgage finance in ways that created lasting federal involvement in residential lending. In response to mass mortgage defaults during the Great Depression, Congress established the Home Owners' Loan Corporation (HOLC) in 1933 to refinance distressed mortgages. The HOLC developed a system of residential security maps for cities across the country, assigning letter grades - A through D - and corresponding colors to neighborhoods based on assessments of mortgage lending risk.⁴⁾

The HOLC maps, produced primarily between 1935 and 1940, used criteria that included the racial and national-origin composition of a neighborhood's residents. Neighborhoods with significant black or immigrant populations were frequently assigned the lowest grade, D, rendered in red on survey maps - the origin of the term “redlining.”⁵⁾ The HOLC employed local real estate agents and lenders as appraisers, incorporating prevailing professional norms about race and property values into federal documents.⁶⁾

The Federal Housing Administration (FHA), established by the National Housing Act of 1934, insured private mortgages under underwriting guidelines that explicitly incorporated neighborhood racial composition as a risk factor. The FHA's 1936 and 1938 Underwriting Manuals instructed appraisers to assess the homogeneity of a neighborhood and to consider the infiltration of inharmonious racial groups as a negative factor affecting property values.⁷⁾ The Veterans Administration, which administered the GI Bill's home loan guarantee program after 1944, adopted comparable standards.⁸⁾

FHA and VA insurance programs facilitated a large-scale expansion of homeownership in the postwar United States, concentrated in newly developed suburban areas. Suburban developments financed with FHA assistance commonly included racial restrictive covenants as a condition of obtaining federal backing. Developer William Levitt, whose Levittown communities in New York and Pennsylvania were built with FHA financing, included deed restrictions prohibiting sale to black buyers.⁹⁾

Urban neighborhoods graded D on HOLC maps, and areas with predominantly black populations more broadly, received little FHA or VA mortgage insurance. Private lenders, following government underwriting standards, similarly declined to issue or insure conventional mortgages in these areas. Contract selling - in which buyers paid installments without accruing equity until the full purchase price was paid and faced immediate forfeiture on default - became widespread in black urban neighborhoods as an alternative to conventional mortgage credit.¹⁰⁾

The Supreme Court ruled in Shelley v. Kraemer (1948) that state courts could not enforce racial restrictive covenants, but did not prohibit the private use of such covenants or alter federal underwriting practices.¹¹⁾

Civil rights organizing and urban unrest in the 1960s produced federal legislative action on housing discrimination. The Civil Rights Act of 1968, also known as the Fair Housing Act, prohibited discrimination in the sale, rental, and financing of housing on the basis of race, color, national origin, and religion.¹²⁾ Enforcement provisions in the original act were limited; subsequent amendments and litigation expanded their scope.

The Equal Credit Opportunity Act of 1974 and the Home Mortgage Disclosure Act (HMDA) of 1975 extended anti-discrimination requirements to credit and required lenders to report mortgage application data by geographic area, enabling analysis of lending patterns.¹³⁾ The Community Reinvestment Act (CRA) of 1977 required federally insured depository institutions to meet the credit needs of the communities they served, including low- and moderate-income neighborhoods.¹⁴⁾

Federal regulatory agencies began conducting systematic examinations of lender compliance with these statutes during the 1980s and 1990s. The Federal Reserve Bank of Boston published a widely cited study in 1992 finding disparities in mortgage denial rates between white and minority applicants in the Boston metropolitan area after controlling for various financial factors.¹⁵⁾

Academic interest in the history of federal housing discrimination intensified in the 1980s and 1990s. Kenneth T. Jackson's Crabgrass Frontier (1985) provided a broadly cited synthesis of suburbanization and federal mortgage policy, documenting the racial content of FHA underwriting guidelines. The digitization of HOLC residential security maps by researchers at the University of Richmond's Digital Scholarship Lab (the “Mapping Inequality” project, launched 2016) made the historical documents widely accessible and generated renewed public and scholarly attention.¹⁶⁾

Economists and historians applied quantitative methods to assess the relationship between HOLC map grades and subsequent neighborhood outcomes, including homeownership rates, property values, racial composition, access to credit, and health and environmental indicators.¹⁷⁾ These studies generally found correlations between D-grade designations and indicators of later disinvestment, though causal interpretation remained debated.

The degree to which HOLC mapping caused subsequent neighborhood disinvestment, as distinct from reflecting or codifying preexisting private discrimination, is contested among historians and economists; see redlining-holc-causation-controversy and New Deal Racial Exclusion - Debate.

Some historians argue that the FHA's underwriting standards were the primary driver of postwar racial residential segregation, while others contend that private real estate industry practices and local zoning were comparably or more significant; see Redlining - Redlining Debate.

The extent to which contemporary racial wealth gaps and neighborhood inequality are attributable to mid-twentieth-century federal housing policy, as opposed to other factors, is a subject of ongoing empirical and interpretive dispute; see New Deal Racial Exclusion - Debate.

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1. Chicago Commission on Race Relations, The Negro in Chicago: A Study of Race Relations and a Race Riot (Chicago: University of Chicago Press, 1922).

2. Rose Helper, Racial Policies and Practices of Real Estate Brokers (Minneapolis: University of Minnesota Press, 1969), 201.

3. Buchanan v. Warley, 245 U.S. 60 (1917).

4. Kenneth T. Jackson, Crabgrass Frontier: The Suburbanization of the United States (New York: Oxford University Press, 1985), 197.

5. Jackson, Crabgrass Frontier, 198.

6. Amy E. Hillier, “Redlining and the Home Owners' Loan Corporation,” Journal of Urban History 29, no. 4 (2003): 394-420.

7. Federal Housing Administration, Underwriting Manual (Washington, DC: FHA, 1938), §§ 909-937.

8. Ira Katznelson, When Affirmative Action Was White: An Untold History of Racial Inequality in Twentieth-Century America (New York: Norton, 2005), 115.

9. David L. Kirp, John P. Dwyer, and Larry A. Rosenthal, Our Town: Race, Housing, and the Soul of Suburbia (New Brunswick: Rutgers University Press, 1995), 4-5.

10. Beryl Satter, Family Properties: Race, Real Estate, and the Exploitation of Black Urban America (New York: Metropolitan Books, 2009), 6-8.

11. Shelley v. Kraemer, 334 U.S. 1 (1948).

12. Civil Rights Act of 1968, Pub. L. 90-284, 82 Stat. 73.

13. Home Mortgage Disclosure Act of 1975, Pub. L. 94-200, 89 Stat. 1125.

14. Community Reinvestment Act of 1977, Pub. L. 95-128, 91 Stat. 1147.

15. Alicia H. Munnell et al., “Mortgage Lending in Boston: Interpreting HMDA Data,” American Economic Review 86, no. 1 (1996): 25-53.

16. Robert K. Nelson et al., “Mapping Inequality,” American Panorama, University of Richmond, https://dsl.richmond.edu/panorama/redlining/.