Redlining
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Redlining is the practice of denying or increasing the cost of services, such as banking, insurance, access to jobs,[2] access to health care,[3] or even supermarkets[4] to residents in certain, often racially determined,[5] areas. The most devastating form of redlining, and the most common use of the term, refers to mortgage discrimination, in which middle-income black and Hispanic residents are denied loans that are made available to lower-income whites. The term "redlining" was coined in the late 1960s by community activists in Chicago. It describes the practice of marking a red line on a map to delineate the area where banks would not invest; later the term was applied to discrimination against a particular group of people (usually by race or sex), no matter the geography. During the heyday of redlining these areas were most frequently black inner city neighborhoods. Later, through at least the 1990s, this discrimination involved lending to lower-income whites, but not to middle- or upper-income blacks. {ref: Immergluck, Dedman.)
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[edit] History of the practice
Although in the United States informal discrimination and segregation have always existed, the practice called "redlining" began with the National Housing Act of 1934, which established the Federal Housing Administration (FHA).[6] The federal government contributed to the early decay of inner city neighborhoods by withholding mortgage capital and making it difficult for these neighborhoods to attract and retain families able to purchase homes.[7] In 1935, the Federal Home Loan Bank Board (FHLBB) asked Home Owners' Loan Corporation (HOLC) to look at 239 cities and create "residential security maps" to indicate the level of security for real-estate investments in each surveyed city. Such maps defined many minority neighborhoods in cities as not eligible at all to receive loans. The maps were based on assumptions about the community, not accurate assessments of an individual's or household's ability to satisfy standard lending criteria. Since blacks were unwelcome in white neighborhoods, which frequently instituted racial restrictive covenants to keep them out, the policy effectively meant that blacks could not secure mortgage loans at all. The assumptions in redlining resulted in a large increase in residential racial segregation and urban decay in the United States. Urban planning historians theorize that the maps were used by private and public entities for years afterwards to deny loans to people in black communities.[6] However, recent research has indicated that the HOLC did not redline in its own lending activities, and that the racist language reflected the bias of the private sector and experts hired to conduct the appraisals Crossney and Bartelt 2005 Urban GeographyCrossney and Bartelt 2006 Housing Policy Debate
On the maps, the newest areas — those considered desirable for lending purposes — were outlined in blue and known as "Type A". These were typically affluent suburbs on the outskirts of cities. "Type B" neighborhoods were considered "Still Desirable", whereas older "Type C" were labeled "Declining" and outlined in yellow. "Type D" neighborhoods were outlined in red and were considered the most risky for mortgage support. These neighborhoods tended to be the older districts in the center of cities; often they were also black neighborhoods.[6]
Some redlined maps were also created by private organizations, such as J.M. Brewer's 1934 map of Philadelphia. Private organizations created maps designed to meet the requirements of the Federal Housing Administration's underwriting manual. The lenders had to consider FHA standards if they wanted to receive FHA insurance for their loans. FHA appraisal manuals instructed banks to steer clear of areas with "inharmonious racial groups" and recommended that municipalities enact racially restrictive zoning ordinances, as well as covenants prohibiting black owners.[8][9]
[edit] Impact
Redlining paralyzed the housing market, lowered property values and further encouraged landlord abandonment. As abandonment increased, the population density became lower. Abandoned buildings would serve as havens for drug dealing and other illegal activity.[7]
[edit] Challenges to redlining
In the United States, the Fair Housing Act of 1968 was passed to fight the practice. It prohibited redlining when the criteria for redlining are based on race, religion, gender, familial status, disability, or ethnic origin. The Community Reinvestment Act of 1977 further required banks to apply the same lending criteria in all communities.[10] Although open redlining was made illegal in the 70s through community reinvestment legislation, the practice continued in less overt ways.[7]
ShoreBank, a community-development bank in Chicago's South Shore neighborhood, was a part of the private-sector fight against redlining.[11] Founded in 1973, ShoreBank sought to combat racist lending practices in Chicago's African-American communities by providing financial services, especially mortgage loans, to local residents.[12] Many sources characterize ShoreBank's efforts as overwhelmingly inspirational and successful.[13] In a 1992 speech, then-Presidential candidate Bill Clinton called ShoreBank “the most important bank in America.”[11]
[edit] Contemporary issues
Dan Immergluck writes that in 2002 small businesses in black neighborhoods still received fewer loans, even after accounting for business density, business size, industrial mix, neighborhood income, and the credit quality of local businesses.[14] Gregory D. Squires wrote in 2003 that it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.[15] Workers living in American inner cities have a harder time finding jobs than suburban workers.[16] Redlining has helped preserve segregated living patterns for blacks and whites in the United States, because discrimination motivated by prejudice is often contingent on the racial composition of neighborhoods where the loan is sought and the race of the applicant. Lending institutions have been shown to treat black mortgage applicants differently when they are buying homes in white neighborhoods than when buying homes in black neighborhoods. [17]
[edit] Retail
Retail redlining is a spatially discriminatory practice among retailers, of not serving certain areas, based on their ethnic-minority composition, rather than on economic criteria, such as the potential profitability of operating in those areas. Consequently, consumers in these areas often find themselves "vulnerable" because no other retailers will serve them. They may be exploited by other, often smaller, retailers who charge them higher prices and/or offer them inferior goods.[18]
[edit] Credit cards
Credit card redlining is a spatially discriminatory practice among credit card issuers, of providing different amounts of credit to different areas, based on their ethnic-minority composition, rather than on economic criteria, such as the potential profitability of operating in those areas. [19]
[edit] Insurance
Racial profiling or redlining has a long history in the property-insurance industry in the United States. From a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.[20] Home-insurance agents are generally able to detect the race of someone who contacts them by telephone. This information affects the services provided to those who inquire about purchasing a home-insurance policy. This type of discrimination is called linguistic profiling.[21] There have also been concerns raised about redlining in the automotive insurance industry.[22]
[edit] Environmental racism
- See also: Race and health
Policies related to redlining and urban decay can also act as a form of environmental racism, which in turn have an impact on public health. Urban minority communities may face environmental racism in the form of parks that are smaller, less accessible and of poorer quality than those in more affluent or white areas in some cities.[23] This may have an indirect impact on health, since young people have fewer places to play and adults have fewer opportunities for exercise.[23]
Robert Wallace writes that the pattern of the AIDS outbreak during the 80s was affected by the outcomes of a program of 'planned shrinkage' directed at African-American and Hispanic communities. It was implemented through systematic denial of municipal services, particularly fire protection resources, essential to maintain urban levels of population density and ensure community stability.[24] Institutionalized racism affects general health care as well as the quality of AIDS health intervention and services in minority communities. The overrepresentation of minorities in various disease categories, including AIDS, is partially related to environmental racism. The national response to the AIDS epidemic in minority communities was slow during the 80s and 90s, showing an insensitivity to ethnic diversity in prevention efforts and AIDS health services.[25]
[edit] See also
- Black flight
- Blockbusting
- Computer-assisted reporting
- Community Reinvestment Act
- Inclusionary zoning
- Mortgage Discrimination
- Planned shrinkage
- Racism
- Racial steering
- Urban renewal
- Timeline of Racial Tension in Omaha, Nebraska
- White flight
[edit] External links
- Redlining in Philadelphia. Amy Hillier, PhD
- Redlining, and Neighborhood Appraisals in Philadelphia
- Housing Policy History, NC Housing Coalition
- From 'black-balling' to 'marking': the suburban origin of redlining in Canada
- "The Color of Money": Bill Dedman received the Pulitzer Prize in investigative reporting in 1989 for this series of articles, which described racial discrimination in mortgage lending in the Atlanta area.
- Kozmo delivering consumer racism? Investigative probe by MSNBC.com unearths first case of "cyber-redlining."
- Crossney and Bartelt 2005. Residential Security, Risk, and Race: The Home Owners' Loan Corporation and Mortgage Access in Two Cities. Urban Geography
- Crossney and Bartelt. The Legacy of the Home Owners' Loan Corporation. Housing Policy Debate.
[edit] References
- ^ The HOLC maps are part of the records of the FHLBB (RG195) at the National Archives II.
- ^ Racial Discrimination and Redlining in Cities
- ^ See: Race and health
- ^ In poor health: Supermarket redlining and urban nutrition, Elizabeth Eisenhauer, GeoJournal Volume 53, Number 2 / February, 2001
- ^ How East New York Became a Ghetto by Walter Thabit. ISBN 0814782671. Page 42.
- ^ a b c Jackson, Kenneth T. Crabgrass Frontier: The Suburbanization of the United States. New York: Oxford University Press, 1985.
- ^ a b c When Work Disappears: The World of the New Urban Poor By William Julius Wilson. 1996. ISBN 0679724176
- ^ Principles to Guide Housing Policy at the Beginning of the Millennium, Michael Schill & Susan Wachter, Cityscape
- ^ "Racial" Provisions of FHA Underwriting Manual, 1938
Recommended restrictions should include provision for the following: Prohibition of the occupancy of properties except by the race for which they are intended …Schools should be appropriate to the needs of the new community and they should not be attended in large numbers by inharmonious racial groups. Federal Housing Administration, Underwriting Manual: Underwriting and Valuation Procedure Under Title II of the National Housing Act With Revisions to February, 1938 (Washington, D.C.), Part II, Section 9, Rating of Location.
- ^ Comeback Cities: A Blueprint for Urban Neighborhood Revival By Paul S. Grogan, Tony Proscio. ISBN 0813339529. Published 2002. Page 114.
The goal was not to relax lending restrictions but rather to get banks to apply the same criteria to residents in the inner-city as in the suburbs.
- ^ a b Douthwaite, Richard. "HOW A BANK CAN TRANSFORM A NEIGHBOURHOOD", "Short Circuit". Retrieved on January 8, 2007
- ^ Thomsen, Mark. "ShoreBank Surpasses $1 Billion in Community Development Investment", "Social Funds", 2001-11-1. Retrieved on January 8, 2007.
- ^ Wisniewski, Mary. "Milton Davis, community banking pioneer", "Chicago Sun-Times", 2005-16-2. Retrieved on January 9, 2007.
- ^ Redlining Redux Urban Affairs Review, Vol. 38, No. 1, 22–41 (2002)
- ^ Racial Profiling, Insurance Style: Insurance Redlining and the Uneven Development of Metropolitan Areas Journal of Urban Affairs 25 (4), 391–410.
- ^ Racial Discrimination and Redlining in Cities Yves Zenou and Nicolas Boccard 1999
- ^ Stephen R Holloway (1998) Exploring the Neighborhood Contingency of Race Discrimination in Mortgage Lending in Columbus, Ohio Annals of the Association of American Geographers 88 (2), 252–276.
- ^ Retail Redlining: Definition, Theory, Typology, and Measurement Denver D’Rozario Journal of Macromarketing, Vol. 25, No. 2, 175-186 (2005)
- ^ Cohen-Cole, Ethan, "Credit Card Redlining" (2008). FRB of Boston Quantitative Analysis Unit Working Paper No. QAU08-1 Available at SSRN: http://ssrn.com/abstract=1098403 http://www.bos.frb.org/bankinfo/qau/wp/2008/qau0801.htm
- ^ Gregory D. Squires (2003) Racial Profiling, Insurance Style: Insurance Redlining and the Uneven Development of Metropolitan Areas Journal of Urban Affairs Volume 25 Issue 4 Page 391-410, November 2003
- ^ Linguistic Profiling: A Continuing Tradition of Discrimination in the Home Insurance Industry? Gregory D. Squires Urban Affairs Review, Vol. 41, No. 3, 400-415 (2006)
- ^ Michigan to crack down on uninsured drivers By Karen Bouffard The Detroit News
- ^ a b Minority Communities Need More Parks, Report Says by By Angela Rowen The Berkeley Daily Planet
- ^ Urban desertification, public health and public order: 'planned shrinkage', violent death, substance abuse and AIDS in the Bronx. Wallace R. Soc Sci Med, 1990 - ncbi.nlm.nih.gov
- ^ AIDS and racism in America. Hutchinson J., Journal of the National Medical Association, 1992 Feb;
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