The basic idea
Redlining is the common name for a pattern of denying or limiting mortgage lending, insurance and other financial services to people in certain neighborhoods, based on the neighborhood’s characteristics rather than on a borrower’s individual finances. In the twentieth-century United States, those characteristics were often tied to the race or ethnicity of residents. The word comes from the red shading used on some historic maps.
Redlining was one part of a larger system of housing discrimination, which also included racially restrictive deed covenants, discrimination by real estate agents and lenders, and exclusionary practices by some builders and communities. It would be inaccurate to credit any one map or program with causing all of the segregation and disinvestment that followed.
The 1930s maps
During the Great Depression, the federal government created agencies to stabilize housing finance. One was the Home Owners’ Loan Corporation, which refinanced mortgages for many struggling homeowners. In the late 1930s, it and associated lenders produced “residential security” maps for many cities across the country, grading neighborhoods on a scale from A to D. The lowest grade, D, was shaded red and described as “hazardous.”
The grading forms and area descriptions that accompanied the maps considered the age and condition of housing, the type of buildings and the occupations and incomes of residents. They also recorded the presence of Black residents, immigrants and other groups, and in many descriptions these were treated as a negative factor. Camden, like many northeastern cities, was among those mapped. Historians and the public can view the digitized maps and descriptions through academic and archival projects, and a careful reader will find the language revealing about the attitudes of the time.
Federal programs
The Federal Housing Administration, created in 1934, insured mortgages from private lenders, which made long-term loans with smaller down payments more common. This helped expand home ownership dramatically after the Second World War. But FHA underwriting guidelines in those years favored new construction in suburban areas, and they included assessments of neighborhood “stability” that encouraged racial homogeneity. After the war, the benefits for veterans in the GI Bill also expanded home buying, though in practice Black veterans often had a much harder time getting loans.
Historians still discuss how much the HOLC maps directly influenced private lending decisions, as opposed to reflecting practices already in place. What is widely agreed is that federal policy and private practice together channeled mortgage credit toward some places and people and away from others. Racial discrimination in housing was not made explicitly illegal at the federal level until the Fair Housing Act of 1968, and enforcement has been uneven since.
Effects on cities
When mortgage credit is hard to get in a neighborhood, fewer people can buy homes, property values tend to stagnate or fall, and owners have less money to maintain buildings. Over time this can contribute to deterioration, vacancy and lower tax revenue. Meanwhile, newer suburban areas received much of the postwar mortgage lending, adding to the movement described in the article on suburban flight.
Black families in particular were often limited in where they could buy, and the homes they could buy often gained less in value than comparable homes elsewhere. Because housing is the main way many American families accumulate wealth, historians and economists have linked these differences to continuing gaps in family wealth. The size of the effect, and how much is due to redlining as opposed to other factors, is studied and debated.
Researchers have found that many areas graded D in the 1930s still tend to differ from other parts of their cities on measures such as income, home ownership and other indicators. Such studies show correlation across many places, and they cannot by themselves explain what happened in any one neighborhood, where local history and later policies also mattered.
How to read the maps responsibly
A few cautions apply when using the historic maps:
- The maps show how lenders and federal appraisers viewed neighborhoods at the time. They do not show that those neighborhoods were poor places to live.
- Grades were assigned to large areas, and conditions varied within them.
- Neighborhood boundaries and names changed. The maps are best used alongside deed records, census records and old atlases of the same period.
- Present-day conditions result from many decades of events, not from the maps alone.
Policy today
Several later laws address lending discrimination, including the Fair Housing Act and the Community Reinvestment Act of 1977, which encourages banks to serve the communities where they are chartered. Debates continue over how well these laws work, over zoning rules that shape what can be built where, and over policy approaches to expanding affordable housing. Readers should consult current official sources for legal details, since this article is a general explanation and not legal advice.