Working Paper: NBER ID: w29244
Authors: Price V. Fishback; Jonathan Rose; Kenneth A. Snowden; Thomas Storrs
Abstract: We show that the Federal Housing Administration (FHA), from its inception in the 1930s, did not insure mortgages in low income urban neighborhoods where the vast majority of urban Black Americans lived. The agency evaluated neighborhoods using block-level information collected by New Deal relief programs and the Census in many cities. The FHA’s exclusionary pattern predates the advent of the infamous maps later made by the Home Owners’ Loan Corporation (HOLC) and shows little change after the drafting of those maps. In contrast, the HOLC itself broadly loaned to such neighborhoods and to Black homeowners. We conclude that the HOLC’s redlining maps had little effect on the geographic distribution of either program’s mortgage market activity, and that the FHA crafted and implemented its own redlining methodology prior to the HOLC.
Keywords: redlining; federal housing programs; FHA; HOLC; mortgage lending
JEL Codes: G21; G22; G28; G5; N22; N42; N92; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| FHA's exclusionary practices (R28) | geographic distribution of loans (G51) |
| FHA's practices (G28) | racial segregation in mortgage markets (R28) |
| HOLC's lending (G21) | neighborhoods with higher proportion of Black homeowners (R21) |
| FHA's targeting of new construction (L74) | predominantly white neighborhoods (R23) |
| HOLC's maps (Y91) | FHA's activities (G28) |