New Evidence on Redlining by Federal Housing Programs in the 1930s

The Long-Run Effects of the 1930s Redlining Maps on Children

“…Their specific early responsibility was to refinance troubled mortgages, and, by 1935, roughly 1 million had been modified. Previous studies have shown that the HOLC was not discriminatory in their own lending practices (Hillier, 2003, Fishback et al, 2021 Largely after this program was complete, the HOLC was tasked by the FHLBB to create a new appraisal system to help secure the future health of housing markets. As part of this effort, the HOLC drew color-coded residential "security' maps for 239 cities between 1935 and 1940, with grades assigned to neighborhoods between A and D based on their perceived level of riskiness.…”

“…7 Michney (2021) describes several examples of the HOLC maps being shared with private actors as well as with local and regional managers (p. 15-16), although he concludes that the maps were largely kept confidential from private actors. 8 See Light (2010), Woods (2012), Hillier (2013), Michney (2021) and Fishback et al (2021).…”

“…Although the maps were supposed to be confidential (e.g. Hillier, 2003, Fishback et al 2021, there are known examples of breaches in confidentiality (e.g. Michney, 2021), suggesting that policies to prevent their dissemination were not always strictly adhered to.…”

“…Finally, the maps were shared with the Federal Housing Administration (FHA), which drew their own appraisal maps shortly after the HOLC, and the HOLC maps could have influenced FHA activity. The FHA played a critical role in the housing market by deciding whether to insure mortgages and were notorious for following discriminatory practices (Fishback et al 2021). Each of these potential avenues raise the prospect that the content of the HOLC maps, along with the broader use of a government-backed appraisal system, may have either directly or indirectly influenced access to credit for households in many urban neighborhoods.…”

“…As noted earlier, private banks and the FHA drew their own color-coded maps that may have been influenced by the HOLC maps, which were supposed to have been confidential and limited in distribution. Fishback et al (2021) point out that the FHA's discriminatory practices predated the HOLC maps and that the FHA continually updated their maps (which largely no longer exist) over time suggesting that the influence of the HOLC maps may have been minimal. They also find little change in FHA loan insurance provision in three cities during the period in which the HOLC maps were made available to them.…”