The Crisis Of The Great Depression, President Franklin D. Roosevelt
“Redlining is the illegal practice of lending institutions of restricting the number of loans or the loan-to-value ratio in certain neighborhoods because of race or ethnic background” (Newell, Santi, Mitchell, 443). During the Great Depression, American federal agencies entered the home mortgage market to bolster the struggling US economy. This is when the U.S. government systematically instituted segregation into the housing market through policies which favored white mortgage applicants over minority mortgage applicants.
In response to this lending crisis of the Great Depression, President Franklin D. Roosevelt signed legislation in 1933 to create the Home Owners’ Loan Corporation (HOLC). The late president’s goal was to create programs to subsidize the cost of mortgages. The HOLC provided Americans with lower interest rates and federally-backed mortgages which offered favorable terms for middle-class homeowners. The government involvement in the private lending prevented millions of hard working Americans from losing their homes during the uncertain financial times that was the Great Depression. Unfortunately, this was only true for qualified Americans. “Eligibility was not neutral on the racial and class composition of homeowners’ neighborhoods, and tied federal funds into supporting and spreading segregation” (Newell, Santi, Mitchell, 440).
Redlining became known as such because lenders would allegedly draw a red line around a neighborhood…