R
edlining was a federal program that encouraged mortgage lenders to approve loans in majority-white neighborhoods and deny them in predominantly Black areas. This practice created lasting racial and economic disparities that persist today. Learn more about home appraisal bias and how to identify discrimination.

    In real estate, redlining refers to when lenders deny loans based on the neighborhood's racial makeup. Although banned by the Fair Housing Act in 1968, its impact still affects communities of color. Redlining was promoted through federal agencies like the Home Owners' Loan Corporation (HOLC) and the Federal Housing Administration (FHA), which developed a rating system that deemed majority-white areas safer investments.

    The HOLC's neighborhood rating system, which used red lines to mark riskier neighborhoods, was adopted by the FHA on a larger scale. This led to favorable loan terms for predominantly white suburban areas, contributing to the housing boom of the 1940s that primarily benefited white residents. The practice persisted until the Fair Housing Act outlawed it in 1968.

    Despite being illegal, redlining's legacy continues to affect communities of color. According to Federal Reserve Economic Data, over 74% of white residents own their homes, compared to just 46.4% of Black residents. Limited access to credit and institutionalized by redlining is a key factor perpetuating this racial homeownership gap.

    Areas that were redlined decades ago are still less likely to have residents with mortgages, according to the National Community Reinvestment Coalition. The racial wealth gap, driven in part by homeownership disparities, has significant consequences for families of color. "Home equity resources can help children purchase their first home and begin building generational wealth," said Tai Christensen, co-founder of Arrive Home.

    Even though redlining is illegal, Black and brown residents still make up a large portion of historically redlined areas. Disinvestment in these communities fuels further disparities in education, employment, and access to financial resources. Addressing this issue requires equitable housing policies and investment in marginalized communities.

    If you believe you've experienced redlining or any form of lending or housing discrimination, you can file a complaint with the U.S. Department of Housing and Urban Development (HUD), your local Fair Housing Alliance agency, or the National Fair Housing Alliance (NFHA).