REDLINING Flashcards

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1
Q

What is redlining, put most simply?

A

The systematic denial of various services to residents of specific, often racially associated, neighborhoods or communities, either explicitly or through the selective raising of prices.

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2
Q

What is reverse redlining?

A

Reverse redlining is when a lender or insurer targets nonwhite or blockbusted neighborhoods to charge them more than in a non-redlined neighborhood where there is more competition, only to approve loans or insurance to nonwhite borrowers to artificially restrict the supply of real estate available for loanable funds and charge them higher interest rates.

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3
Q

Who coined the term redlining?

A

Sociologist John McKnight

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4
Q

What is redlining known as in academic literature?

A

It falls under the category of credit rationing.

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5
Q

When did redlining begin?

A

When the US passed the National Housing Act of 1934 it came to the fore and was subsequently bolstered by the establishement of the Federal Housing Administration in 1934 as well.

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6
Q

How did the FHA start redlining?

A

It was pioneered by Homer Hoyt, the FHA’s Chief Land Economist, as part of an initiative to develop the first underwriting criteria for mortgages.

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7
Q

What is underwriting?

A

underwriting is the process a lender uses to evaluate the risk of giving credit

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8
Q

What was really the icing on the cake?

A

In 1935, the Federal Home Loan Bank Board asked the Home Owners’ Loan Corporation to look at about 250 cities and create “residential security maps” to indicate the level of securitu for real estte investments in each city.

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9
Q

Was the HOLC doing this intentionally?

A

It didnt look like it was a coordinated effort but rather the Home Owners’ Loan Corporation had to adhere to the private sector’s racism.

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10
Q

How did the FHA explicitly contribute tot the practice of redlining?

A

Private organizations needed to create maps designed to meet the requirements of the FHA’s underwriting manual. The FHA instructed banks to steer clear of areas with “inharmonious racial groups.”

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11
Q

How did the FHA explicitly contribute tot the practice of redlining?

A

Private organizations needed to create maps designed to meet the requirements of the FHA’s underwriting manual. The FHA instructed banks to steer clear of areas with “inharmonious racial groups” and encouraged munipalities to enact racially restricitive zoning ordinances.

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12
Q

How much in federally insured home loans did African Americans receive between 1945 and 1959?

A

2% of all federally insured home loans.

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13
Q

Was it only banks and mortgage lenders who were redlining in the mid 20th century?

A

Property insurance companies were also greatly active in redlining practices after ww2.

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14
Q

What was some action taken in the 70s?

A

The National People’s Action was founded in 1973 to broaden the fight against divestment. and mortgage redlining in neighborhoods all around the country.

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15
Q

Who was targeted by the NPA?

A

The Federal Home Loan Bank Board , the governing authority over federally chartered Savings and loan Associations that held at that time the bulk of the country’s home mortgages.

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16
Q

What is blockbusting?

A

Deceptive encouragement of white flight from neighborhoods in order to buy up real estate at a huge discount and then rent to low-income, usually black tenants.

17
Q

What was the major achievment if the NPA and its affiliates?

A

The disclosure of lending practices with the passage of the Home Mortgage Disclosure Act of 1975. It also managed to, with this new data, to begin working on reinvesting in redlined areas. This helped gain passage of the 1977 Community Reinvestment Act.

18
Q

What was the Fair Housing Act of 1968?

A

It was a piece of legislation which sought to fight the practice of redlining. It made it unlawful to discriminate in teh terms, conditions, or priveleges of sale of a dwelling because of race or national origin.

19
Q

Who enforced Fair Housing Act of 1968?

A

the Office of Fair Housing and Equal Opportunity

20
Q

What is the Equal Credit Opportunity Act?

A

It is a United States law that makes it unlawful for any creditor to discriminate against any applicant , with respect to any aspect of credit transaction, on the basis of race, color, religion, national origin, sex marital status, or age. This law applies to any person who, in the ordinary course of business, regularly participates in a credit decision, including banks, retailers, bankcard companies, finance companies, and credit unions. Liability or punitive damages can be as much as 10,000 in individual actions and the leser of 500000- or 1% of the creditior’s net worth in class actions.

21
Q

What are the most persistently racially segregated communities?

A

City of Chicago, Detroit, Houston, and Atlanta.

22
Q

How much is the racial wealth gap?

A

Black families in america earn $57.30 for every $100 in income by white families, according to the Census Bureau’s Current Population Survey. For every $100 in white family wealth, black families hold just $5.04. In 2016, the median wealth for black and Hispanic families was $17,600 and 20,700 respectively, compared to white families’ median wealth of $171,000

23
Q

What does redlining effect?

A

Homeownership rates, home values and credit scores.