Legacy of Redlining

Where did redlining matter? Regional heterogeneity and the uneven distribution of advantage

Xu, W.

Annals of the American Association of Geographers, 113(8), 1939–1959, 2023

This article analyzes the regional variation in outcomes of a seemingly standardized federal neighborhood valuation principle used in home mortgage insurance grading. The objective is to highlight the contingent discriminatory and economic conditions that mediated heterogeneous housing outcomes across different parts of the United States.

How did city and regional economic and demographic growth patterns vary before and during the mortgage insurance program implemented through the Federal Housing Administration (FHA)? How might this have shaped loan guarantee patterns? How does preexisting racial housing discrimination relate to outcomes?

Adopting an orientation that centers on Whiteness and the benefits of mortgage finance for certain groups and neighborhoods, this analysis uses a Bayesian hierarchical framework to investigate the degree of the FHA's influence between 1940 and 1970, here proxied by the Home Owners' Loan Corporation maps, on A or B ("AB") graded neighborhoods versus C graded neighborhoods in different cities. This article studies how home values and homeownership change over time and whether there are regional variations in the influence of these grades. It also studies what longitudinal socioeconomic patterns might explain the persistence or decline of the AB effect over time.

Findings show cities in the West Coast, Southwest, and northern central United States that saw the most housing construction also had the highest proportions of FHA loans to overall dwelling units. There is also a distinctive consistency and persistence of benefit on home value and homeownership to AB graded neighborhoods in these cities, possibly owing to regional shifts in the industrial landscape.

Legacies of institutionalized redlining: a comparison between speculative and implemented mortgage risk maps in Chicago, Illinois

Xu, W.

Housing Policy Debate, 32(2), 249–274, 2022

How did institutionalized discriminatory lending policies implemented under the guidance of the Federal Housing Administration (FHA)'s mortgage risk maps impact neighborhood trajectories? Have these spatially restrictive credit designations influenced home value, homeownership, and racial segregation?

Using the FHA mortgage risk map of Chicago, Illinois, for new loan guarantees as a case study, I measure outcomes between credit zones and compare these risk regions with the Home Owners' Loan Corporation (HOLC) Residential Security Maps, which represent post hoc measures of mortgage risk and were likely not directly used in loan activities.

For areas excluded from FHA loan guarantees, the results suggest a negative impact on home values and homeownership rates and weakly decreased segregation between 1940 and 1980. They also suggest an overcorrection of home values, an undercorrection of homeownership, and an increase in racial segregation in excluded neighborhoods between 1980 and 2010 when these areas may have experienced capital reinvestment.

In comparison with the HOLC map, the effects on tracts in Chicago rated worst by the FHA are clearer and suggest a more significant impact during the period of discriminatory mortgage lending.