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Redlining: A History of Discrimination in Mortgage Lending

Closeup of a Pushpin In a Map of VanderburghRedlining is a term that numerous people have understood but might not see the particulars of. Simply put, redlining is the systematic discrimination of certain groups of people in areas like housing and mortgage lending. This ritual has a prolonged and unsettled history, and it continues to affect minority communities to this day. In this blog post, we will explore redlining, how it works, and its effects on generations of Americans.

What is Redlining?

Redlining is a term that was coined in the 1930s by John McKnight, a sociologist from Northwestern University. He applied the term to describe the practice of banks and other financial institutions drawing lines on maps to explain which areas they believed were too risky to lend money in. These “redlined” areas were naturally neighborhoods that were home to minority groups like African Americans, Latinos, and Asians.

In practice and theory, redlining is discriminatory and illegal. The goal of redlining is to put financial and other services, including loans, mortgages, and insurance, out of reach for certain people in certain areas. This precludes these people from buying homes and owning businesses in these places. The areas to be expected to be redlined are black inner-city neighborhoods and those that are considered “slums” or have a high crime rate. Still, these descriptions are every so often arbitrary and built on outdated or imprecise information.

The History of Redlining

Redlining has its roots in the early 20th century when the US government began to insure loans made by banks. The government did this to boost lending and help people buy homes. Nevertheless, these policies had the inadvertent consequence of granting banks to discriminate against particular groups of people.

In 1934, the Federal Housing Administration (FHA) was created. The FHA’s role was to insure mortgages, which made them much less risky for banks. This authorized banks to lend money to people with lower incomes and credit scores. However, the FHA’s guidelines for lending were based on race. They acknowledged that loans should not be made in “residentially unstable or declining neighborhoods,” more often than not in minority neighborhoods.

Redlining Today

The effects of redlining are still being considered these days. Studies have shown that minorities living in redlined neighborhoods are more expected to be denied loans and insurance and often pay higher interest rates when they can get financing. This has managed to a cycle of disinvestment in these communities, as property values decline and families are forced to move.

Redlining is a complicated issue with a long history, although minority communities across the country are still experiencing its effects. For renters, redlining can make it tough to obtain affordable housing. For homeowners, it can mean higher interest rates and insurance premiums. And for everyone, it can lead to further disinvestment in already-struggling neighborhoods.

If you believe that redlining has upset your ability to find affordable Vanderburgh housing, some organizations can help. The National Fair Housing Alliance is a useful resource for finding housing counselors and legal assistance. Bear in mind, you have rights, and redlining is illegal. With knowledge and resources, you can counterattack this discriminatory practice.


It is also important to rent from a highly regarded company that does not disregard illegal practices like redlining. Real Property Management Results is committed to fair housing and equal opportunity for all renters. We believe that everyone deserves a safe and affordable place to call home. Talk to one of our Vanderburgh property managers to learn more about our properties and how we can help you find the perfect rental home. Or, you can browse our listings online.

We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.

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