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

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  • Price V. Fishback
  • Jonathan D. Rose
  • Kenneth A. Snowden
  • Thomas Storrs

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. The agency evaluated neighborhoods using block-level information collected by New Deal relief programs and the Census in many cities. The FHA's exclusionary pattern predates the advent of the infamous maps later made by the Home Owners' Loan Corporation (HOLC) and shows little change after the drafting of those maps. In contrast, the HOLC itself broadly loaned to such neighborhoods and to Black homeowners. We conclude that the HOLC's redlining maps had little effect on the geographic distribution of either program's mortgage market activity, and that the FHA crafted and implemented its own redlining methodology prior to the HOLC.

Suggested Citation

  • Price V. Fishback & Jonathan D. Rose & Kenneth A. Snowden & Thomas Storrs, 2022. "New Evidence on Redlining by Federal Housing Programs in the 1930s," Working Paper Series 93620, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:93620
    DOI: 10.21033/wp-2022-01
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    References listed on IDEAS

    as
    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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    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. Quincy, Sarah, 2022. "Income shocks and housing spillovers: Evidence from the World War I Veterans’ Bonus," Journal of Urban Economics, Elsevier, vol. 132(C).
    5. Disa M. Hynsjö & Luca Perdoni, 2024. "Mapping Out Institutional Discrimination: The Economic Effects of Federal “Redlining”," CESifo Working Paper Series 11098, CESifo.
    6. 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.
    7. 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; mortgage history;

    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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