What is Redlining?
Redlining is a term that was coined in the 1930s by John McKnight, a sociologist from Northwestern University. He used the term to describe the practice of banks and other financial institutions drawing lines on maps to portray which areas they regard as too risky to lend money in. These “redlined” areas were typically neighborhoods that were home to minority groups like African Americans, Latinos, and Asians.
In practice and theory, redlining is discriminatory and illegal. The goal of redlining is to put financial and other services, including loans, mortgages, and insurance, out of reach for certain people in certain areas. This helps prevent these people from buying homes and owning businesses in these places. The areas most probably redlined are black inner-city neighborhoods and those that are considered “slums” or have a high crime rate. Though, these terms are often arbitrary and based on outdated or erroneous information.
The History of Redlining
Redlining has its roots in the early 20th century when the US government began to insure loans made by banks. The government did this to encourage lending and help people buy homes. However, these policies had the unintended consequence of allowing banks to discriminate against certain groups of people.
In 1934, the Federal Housing Administration (FHA) was created. The FHA’s job was to insure mortgages, which made them much less risky for banks. This empowered banks to lend money to people with lower incomes and credit scores. However, the FHA’s guidelines for lending were based on race. They openly stated that loans should not be made in “residentially unstable or declining neighborhoods,” typically minority neighborhoods.
Redlining Today
The effects of redlining are still being felt today. Studies have shown that minorities living in redlined neighborhoods are more likely to be denied loans and insurance and often pay higher interest rates when they can get financing. This has led to a cycle of disinvestment in these communities, as property values decline, and families are driven to relocate.
Redlining is a complicated issue with a long history, but minority communities across the country are still feeling its effects. For renters, redlining can make it tricky to find affordable housing. For homeowners, it can mean higher interest rates and insurance premiums. And for everyone, it can lead to further disinvestment in already-struggling neighborhoods.
If you feel that redlining has hurt your ability to find affordable Ballantyne housing, some organizations can help. The National Fair Housing Alliance is a good resource for finding housing counselors and legal assistance. Remember, you have rights, and redlining is illegal. With knowledge and resources, you can fight back against this discriminatory practice.
It is also important to rent from a reputable company that does not condone illegal practices like redlining. Real Property Management Charlotte Metro is committed to fair housing and equal opportunity for all renters. We believe that everyone deserves a safe and affordable place to call home. Talk to one of our Ballantyne property managers to learn more about our properties and how we can help you find the perfect rental home. Or, you can browse our listings online.