It is well-known that redlining, the historically discriminatory lending practice, has had a huge impact on home values in predominantly Black neighborhoods and on residents' ability to obtain loans. But new research is shedding light on this widespread banking policy and is questioning some commonly held beliefs about the famous redlining maps that segmented neighborhoods in Cleveland and other cities.
Research by Todd Michney, associate professor in the School of History and Sociology at Georgia Tech, and other researchers is providing new information about some of the redlining maps that were initially created in the 1930s, but rediscovered in the National Archives in the 1970s.
Michney, the author of Surrogate Suburbs: Black Upward Mobility and Neighborhood Change in Cleveland, 1900–1980, said historians are learning more about the complicated history of redlining and that there were many maps, created by multiple agencies and businesses, which led to redlining of some neighborhoods.
The maps, created by the Home Owners Loan Corporation (HOLC), that many people have seen and commonly associate with redlining practices, however, were never used to deny anyone a mortgage based on race, Michney said.
The maps that researchers speculate were the true origins of the redlining that led to mortgage discrimination were likely created by banking institutions and insurance companies. If they are still being stored, those organizations have not to this point shared those original maps with researchers.
"These are private businesses," Michney said. "They're not under obligation to share these unless it's, you know, in conjunction with a lawsuit."
The Federal Housing Administration (FHA) also likely created and used some of the original redlining maps. Academics and researchers say the agency likely destroyed them during the Nixon administration in late 1960s.
"The FHA destroyed records of the locations of loans it insured," according to the Federal Reserve Bank of Chicago. Those destroyed records may have included maps, according to Michney.
Search our interactive map based on HOLC maps to see how different communities were described. Click on your neighborhood to see the original HOLC description card.
So does this discredit redlining research that used the Home Owners Loan Corporation maps?
Researchers previously believed that FHA's anti-Black policies, which did not insure mortgages for most Black people, were based on the HOLC maps, but new research shows that the FHA developed its own framework based on the racist beliefs common at the time and began discriminating before the creation of the HOLC maps, according to the Federal Reserve report.
Although the HOLC maps were not directly used to deny people mortgages as previously believed, the racial attitudes and beliefs that they capture often justified a larger system of racial discrimination and disinvestment.
That's why researchers have found strong correlations between areas on the HOLC maps that were deemed "hazardous" for mortgage lenders and poor health and educational outcomes for many people who live in those areas today, Michney said.
In recent years, studies have shown that people who live in those historically redlined areas are more likely to have a shorter life expectancy, live in poverty and suffer from chronic diseases like asthma, diabetes, hypertension, obesity and kidney disease.
"That's why I think it's important to get the story absolutely accurate and understand how, even if [the way the maps were used] isn't racist in the way that we thought it was, it's still racist," he said. "And it still was used to lead to these negative outcomes even if it was a more indirect way than we initially imagined."
Rather than undermining the connections between racist policies of the past and current struggles, the new findings show the HOLC redlining maps that exist today were part of a much wider system of belief that caused disinvestment in predominantly Black and immigrant neighborhoods, Michney said.
"If we understand the long history of inequality in the way that people with more political and social power have looked at neighborhoods inhabited by people of color, working-class people, immigrants it all kind of makes sense, Michney said.
The truth about those famous maps
The economy during the 1930s was famously bad. The housing market was imploding as people lost their jobs during the Great Depression.
As part of the New Deal, President Franklin Roosevelt created the organization that eventually drew the now-famous maps that many mistakenly thought were used for redlining. The Home Owners Loan Corporation was launched in 1933 to refinance home mortgages and prevent foreclosures.
In its first two years, HOLC frantically refinanced mortgages — to Black and white homeowners alike, research shows.
"There was no actual systematic racial policy of racial discrimination in the first two years when these loans were being made," Michney said. "In fact, a lot of Black homeowners got loans through HOLC."
The maps were the result of HOLC's attempt to understand what it had already purchased — a project that didn't begin until after it had issued 90% of its mortgages, according to Michney. To make the maps, HOLC interviewed tens of thousands of real estate professionals working in cities across the country.
The maps reflected the attitudes and biases of the mostly white men who were interviewed. These realtors and bankers shared information about the people living in different neighborhoods in their cities, Michney said.
What the HOLC maps do not show is how discriminatory lending was actually practiced by the FHA and private lenders, he said.
By the early 1950s, HOLC had been dissolved and its maps were packed off to the National Archives where they stayed until the 1970s when a historian named Kenneth Jackson rediscovered them and academics began using them to connect the dots between redlining in the past and poor outcomes for people in certain neighborhoods today.
Although HOLC is famous for its maps, other data it collected is equally valuable, Michney said. Because they created their maps after they issued their mortgages, they had the repayment data that proved that race was not a good proxy for risk.
"In some cities, those red neighborhoods actually had the best record of repayment like, for example, in Boston," Michney said.
"So that right there should have told somebody that this entire theory doesn't really have an empirical basis in fact," he said.
In other cities, the green neighborhoods, where mostly white people lived, some were overextended and couldn't make their payments, he pointed out.
"But that didn't stop them because this thinking was so widespread in the profession," he said.
Redlining was a symptom of a widespread belief system
Racist ideas spread in the early 20th century much in the same way they spread today, often with a veneer of scientific respectability.
In 1933, the University of Chicago published a book by one of its doctoral students. "One Hundred Years of Land Values in Chicago" runs more than 500 pages, and includes maps, charts and graphics that analyze real estate value cycles between 1830 and 1933.
Buried in it is a ranking of races and nationalities and their supposed effect on land values.
"Those having the most favorable come first in the list and those exerting the most detrimental effect appear last," it reads.
1. English, Germans, Scotch, Irish, Scandinavians
2. North Italians
3. Bohemians or Czechoslovakians
4. Poles
5. Lithuanians
6. Greeks
7. Russian Jews of the lower class
8. South Italians
9. Negroes
10. Mexicans
Homer Hoyt, the author of the book, headed off to Washington, D.C. the next year to take a job with the federal government, according to his obituary in the New York Times. He took with him nearly a decade's worth of experience working as a real estate broker in Chicago and the idea — apparently, gleaned from a "West Side real estate broker" — that the presence of immigrants and Black people "inevitably" lowered real estate values.
Hoyt's book shows how pervasive these ideas were and how they spread amongst real estate professionals, bankers, those working at federal agencies and members of the public.
"The significance of these racial and national movements upon Chicago land values lies in the fact that certain racial and national groups, because of their lower economic status and their lower standards of living, pay less rent themselves and cause a greater physical deterioration of property than groups higher in the social and economic scale," he wrote. "Land values in areas occupied by such classes are therefore inevitably low."
The job Hoyt took with the federal government was as the principal housing economist for the FHA, which insured mortgages almost exclusively in white neighborhoods and mostly in the suburbs.
Hoyt wasn't the only person responsible for spreading these ideas. The Home Owners Loan Corporation itself also helped spread them, Michney said.
"By working with thousands of [real estate professionals] to gather this information, it was kind of an open secret that the government was doing this," he said. "And the way that the interviews were conducted reinforced this way of thinking and reassured these informants that they were on the right track — that they had the 'right' way of thinking about this."
Hoyt's book also shows he understood that his conclusions were at least partly due to racial prejudice, "which may have no reasonable basis."
"Nevertheless, if the entrance of a colored family into a white neighborhood causes a general exodus of the white people, such dislikes are reflected in property values," he wrote.
These racist beliefs created a kind of self-fulfilling prophecy, Michney said.
"They tried to present it as kind of a scientific law that this is what happens when demographic changes happen," he said. "Whereas really it was their own prejudices that kind of set in place a self-fulfilling prophecy. Because by gaming the system in such a way that once a neighborhood had Black people — stood to have Black people — it would be considered less favorable for investment that kind of put in place the very outcomes that they were fearing in the first place."
