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

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Listed:
  • Fishback, Price
  • Rose, Jonathan
  • Snowden, Kenneth A.
  • Storrs, Thomas

Abstract

We show that the Federal Housing Administration (FHA), from its inception in the 1930s, did not insure mortgages in low income urban neighborhoods where the vast majority of urban Black Americans lived. This pattern emerged before the Home Owners’ Loan Corporation (HOLC) drafted its infamous maps. In contrast, the HOLC itself broadly loaned to core urban neighborhoods and to Black homeowners. We conclude that the mechanisms through which the HOLC's maps could have affected the geographic scope of mortgage lending were likely quite limited. The FHA instead evaluated neighborhoods using block-level information developed in the 1930s and other data, rather than on the basis of the HOLC maps.

Suggested Citation

  • Fishback, Price & Rose, Jonathan & Snowden, Kenneth A. & Storrs, Thomas, 2024. "New Evidence on Redlining by Federal Housing Programs in the 1930s," Journal of Urban Economics, Elsevier, vol. 141(C).
    • Handle: RePEc:eee:juecon:v:141:y:2024:i:c:s0094119022000390
    DOI: 10.1016/j.jue.2022.103462
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    References listed on IDEAS

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    1. Kristen Crossney & David Bartelt, 2005. "The legacy of the home owners’ loan corporation," Housing Policy Debate, Taylor & Francis Journals, vol. 16(3-4), pages 547-574.
    2. Prottoy A. Akbar & Sijie Li & Allison Shertzer & Randall P. Walsh, 2019. "Racial Segregation in Housing Markets and the Erosion of Black Wealth," NBER Working Papers 25805, National Bureau of Economic Research, Inc.
    3. Werner Troesken & Randall Walsh, 2019. "Collective Action, White Flight, and the Origins of Racial Zoning Laws," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 35(2), pages 289-318.
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    Citations

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    Cited by:

    1. Claire Conzelmann & Jeremy Hoffman & Toan Phan & Arianna Salazar-Miranda, 2022. "Long-term Effects of Redlining on Environmental Risk Exposure," Working Paper 22-09R, Federal Reserve Bank of Richmond.
    2. Kulkarni, Nirupama & Malmendier, Ulrike, 2022. "Homeownership segregation," Journal of Monetary Economics, Elsevier, vol. 129(C), pages 123-149.
    3. Scott Markley, 2023. "Tabulating Home Owners’ Loan Corporation area description sheet data," Environment and Planning B, , vol. 50(1), pages 268-280, January.
    4. Alba Miñano-Mañero, 2024. "When are D-graded neighborhoods not degraded? Greening the legacy of redlining," Working Papers REM 2024/0353, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    5. Quincy, Sarah, 2022. "Income shocks and housing spillovers: Evidence from the World War I Veterans’ Bonus," Journal of Urban Economics, Elsevier, vol. 132(C).
    6. Disa M. Hynsjö & Luca Perdoni, 2024. "Mapping Out Institutional Discrimination: The Economic Effects of Federal “Redlining”," CESifo Working Paper Series 11098, CESifo.
    7. Daniel Aaronson & Daniel Hartley & Bhashkar Mazumder & Martha Stinson, 2023. "The Long-Run Effects of the 1930s Redlining Maps on Children," Journal of Economic Literature, American Economic Association, vol. 61(3), pages 846-862, September.
    8. Amine Ouazad & Matthew E. Kahn, 2023. "Mortgage Securitization Dynamics in the Aftermath of Natural Disasters: A Reply," Papers 2305.07179, arXiv.org.

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    More about this item

    Keywords

    Redlining; Housing finance history; Home Owners' Loan Corporation; Federal Housing Administration;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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