Redlining

What Is Redlining?

Redlining is a discriminatory practice in which mortgage lenders restrict services (primarily loans) to a particular neighborhood section—discrimination which is frequently based on the racial traits of the community. Improper and abusive lending terms, plain fraud, and penalties for prepaying loans are all examples of redlining tactics.

Deeper Definition 

In the 1960s, John McKnight, a sociologist, popularized the phrase “redlining,” which refers to how the government and creditors would paint red lines on the map across communities they would not engage in based solely on their characteristics.

The concept was used to describe red lines on maps by loan companies to demarcate mixed-race neighborhoods. Communities in more affluent areas were frequently highlighted in blue or green. This indicated that they were the most deserving of loans.

The disparity was so severe that creditors preferred to borrow to lower-income Whites rather than average- or high-income Black People.

Black Americans who can and want to buy a home are compelled to employ distastefully overpriced housing deals. This dramatically raises the cost of home while giving them no ownership until their final payment.

The term “redlining”  is used to characterize discriminating shopping practices, both in-store and digitally.

The House Owners’ Loan Corporation (established in 1933) and the Federal Housing Administration (launched in 1934) were created by the national government in the 1930s. This was to foster extensive house ownership and suburban growth by making property loans and mortgages widely available. Non-American credit cards, on the other hand, were still regarded as high-risk; therefore, the schemes mentioned earlier were ineffective for blacks and non-Americans in general.

Many additional issues were exacerbated by redlining, including racial discrimination and urban poverty accumulation. Redlining’s legacy may still be seen today in communities across the United States.

Redlining Example

The city’s African-American community and people of color to the United States—mostly Italian and Polish in 1937–were housed in the red neighborhood on the map below. Locations on a red area are an example of how creditors assess the addresses of people who come in for a mortgage to acquire a loan to buy a house, mortgages that they were repeatedly dismissed.