Redlining began as federal policy. The Home Owners' Loan Corporation, created in 1933, drew maps of more than 200 US cities in the late 1930s that graded neighborhoods by lending risk. Areas with Black residents were usually marked red as "hazardous." The Federal Housing Administration, created in 1934, refused to insure many mortgages in or near Black neighborhoods while backing loans in white suburbs.
The effects are still measurable. A 2018 National Community Reinvestment Coalition study found that 74% of neighborhoods graded "hazardous" are low to moderate income today, and nearly 64% are majority-minority. Formerly redlined areas also tend to be hotter, with less tree cover and more pollution.
The Fair Housing Act of 1968 banned redlining, and the Community Reinvestment Act of 1977 required banks to lend in the communities they serve. But lending gaps persist through practices such as fewer branches in Black neighborhoods and digital redlining. Because home equity is the main source of wealth for most families, redlining is a root of the racial wealth gap.