Urban historians frequently point to redlining as one of the causes of urban disinvestment and the decline of central cities during the middle decades of the 20th century. Redlining is the figurative or literal process of drawing red lines around areas to which lenders refuse to make loans, or make loans on less favorable terms. Areas that are home to racial minorities, particularly African Americans, have historically been the target of redlining practices. The word "redlining" was coined in the late 1960s by community activists in Chicago and was made illegal by the Fair Housing Act of 1968. Prior to this landmark legislation, there was little legal protection against redlining, and it was common practice for lenders and federal agencies to collect and map demographic and housing data about local neighborhoods in order to avoid areas they considered high risk.
The Home Owners' Loan Corporation (HOLC), created during the Depression to help homeowners avoid foreclosure, has played a central role in historians' accounts of historical redlining. Between 1933 and 1936, HOLC provided new mortgages to one million homeowners across the country at risk of foreclosure. In 1935, HOLC started surveying 239 cities for its parent organization, the Federal Home Loan Bank Board (FHLBB), and created residential security maps to indicate the level of security for real estate investments for each surveyed city. These maps graded neighborhoods from first to fourth grade and colored fourth grade areasconsidered "hazardous"red. Kenneth Jackson linked these maps to redlining in Crabgrass Frontier, and subsequent research has assumed that HOLC's maps caused redlining.
Recent research has encouraged a new interpretation of HOLC's maps, emphasizing the fact that HOLC's maps were not widely distributed, that areas colored red in Philadelphia still received mortgages, and that HOLC's maps were not the onlyor even most influentialmaps used by lenders during this time period. J.M. Brewer's 1934 map of Philadelphia is one example of a map created by a private organization to inform lending decisions. This recent research also emphasizes the critical role played by the Federal Housing Administration (FHA), created in 1934 to provide insurance to mortgage lenders. FHA's Underwriting Manual established highly racialized neighborhood standards that lenders were encouraged to consider if they wanted to receive FHA insurance. FHA's neighborhood appraisal standards ultimately had a much greater impact on lending patterns in urban communities than HOLC's maps.