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?
Volunteer
Donate
Learn and Lead
Our Commitment

Content: This is not to be confused with reverse redlining, which is exactly what it sounds like — an illegal predatory lending tactic to target minority communities for loans or credit on unfair terms (think higher prices, rates, or fees). What’s the history behind redlining laws? Historically, the practice of redlining was often used to deny minority customers loans and housing opportunities. It kept those in low income neighborhoods — often people of color — from gaining property (a form of wealth), which limited upward mobility. It also kept those neighborhoods from developing economically through denial of loans to potential business owners in the area. 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.