Title: What Is Redlining and How Does It Impact Communities Today? | Ally
Headings: Let’s Talk: What Is Redlining and How Does It Affect the Homeownership Gap Today?
Let’s Talk: What Is Redlining and How Does It Affect the Homeownership Gap Today?
What is redlining?
What’s the history behind redlining laws?
But redlining is illegal now. How does it affect people today?
Let’s Act: How can you help close the homeownership gap?
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Content: So, how did it start? In the 1930s, the Home Owners’ Loan Corporation drew up a series of maps of American cities, classifying neighborhoods based on criteria such as residents’ ethnicity, race, economic class, and employment status. Lenders used this information as an indication of credit risk and would block off (or redline) “high risk” neighborhoods, essentially denying investment or loans within those areas. This actively kept residents from economic and homeownership opportunities — and further segregated white communities and communities of color. Despite the homeownership boom in the 1950s and 1960s, which sent homeownership rates in the U.S. from 30 to 60 percent, 98 percent of the loans approved by the federal government between 1934 and 1968 went to white applicants. Those 34 years occurred during a period of historic economic growth in the U.S. — and homeownership was denied to many people of color for all of that time. But redlining is illegal now. How does it affect people today? Since redlined areas were overtly denied opportunities to develop, it left those neighborhoods and residents falling behind other neighborhoods, where businesses, schools, and housing (including property prices) grew. Even though redlining as a practice has been illegal since the passing of the Fair Housing Act in 1968, the build-up of suppressed growth has made it so communities of color still feel the effects today.