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Journal of Urban History
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DOI: 10.1177/0096144211435126
2012 38: 1036 originally published online 9 April 2012Journal of Urban History Louis Lee Woods II 1950−Racial Lending Discrimination, 1921
The Federal Home Loan Bank Board, Redlining, and the National Proliferation of
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DOI: 10.1177/0096144211435126
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435126JUHXXX10.1177/0096144211435126WoodsJournal of Urban History
2012
1Middle Tennessee State University, Murfreesboro, TN, USA
Corresponding Author:
Louis Lee Woods, II, Department of History, Middle Tennessee State University, P.O. Box 23, Murfreesboro, TN 37132
Email: Louis.woods@mtsu.edu
The Federal Home Loan Bank
Board, Redlining, and the National
Proliferation of Racial Lending
Discrimination, 1921–1950
Louis Lee Woods, II1
Abstract
By utilizing the annual reports of the Federal Home Loan Bank Board (FHLBB) and its monthly
journal, the Federal Home Loan Bank Review, this essay argues that the incorporation of the
Home Owners’ Loan Corporation’s appraisal scheme had several detrimental consequences.
By mandating their appraisal analysis as a prerequisite for membership into the federal banking
system, the FHLBB established unified national lending standards designed to evaluate neigh-
borhood demographics as a factor far exceeding the condition of the appraised property itself.
With the inclusion of these “scientific appraisal standards” into their uniform lending policies,
FHLBB officials rated entire residential communities as hazardous bank investments whenever
they were inhabited by undesirable occupants. Ultimately, the standardized lending policies of
the FHLBB systematically disadvantaged low-income and minority city-dwelling residents from
obtaining mortgage financing, and by midcentury they exacerbated the disproportionately sub-
standard urban housing conditions endured by nonwhites in the United States.
Keywords
redlining, neighborhood appraisals, Home Owners’ Loan Corporation, Federal Home Loan
Bank Board
What white Americans have never fully understood—but what the Negro can never
forget—is that white society is deeply implicated in the ghetto. White institutions created
it, white institutions maintain it, and white society condones it.1
A decade before the Great Depression, urban inhabitants witnessed an impressive real estate
construction boom. At the conclusion of World War I, “high employment, income and industrial
production” resulted in increasing housing rentals. From 1921 to 1924, urban rental prices “rose
rapidly to a point where they represented 175 percent of rental values in 1917.”2 Several factors
contributed to this increased demand for urban dwelling units. Between 1921 and 1927, “there
were relatively stable commodity and building material prices, a sharp increase in marriages,
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Woods 1037
a substantial farm-to-city population movement, and continuing high wages.” These factors
“contributed to an extraordinary demand for city dwellings,” which was “reflected in the increased
production of residential units, which grew from 230,000 in 1920 to 935,000” in 1925.3
The stock market collapse and the Great Depression that followed exposed endemic weak-
nesses in the national banking system. Without the necessary liquidity to cover bank deposits and
as a result of a “stampede for cash,” thousands of banks closed. For instance, “from January 1,
1929, to December 31, 1933, there were 9,755 bank suspensions.”4 In 1933 alone, 4,000 banks
closed.5 With economic conditions worsening and “with bank failures and real-estate foreclo-
sures still increasing, the Congress created the Reconstruction Finance Corporation (RFC) to
make commercial credit available for banks and industries.” In an effort to stabilize the financial
crisis, Congress also created the Federal Home Loan Bank System (FHLBS), “and made avail-
able to it a capital of $125,000,000, to provide liquidity for institutions of the savings and loan
type.” In an effort to bolster public confidence in bank deposits, Congress established the Federal
Deposit Insurance Corporation (FDIC), which provided “for insurance of bank deposits.”6 At its
inception, the FDIC “insured the safety of individual investments up to $5,000 in all Federal
savings and loan associations, and in such State chartered associations as apply, qualify, and are
approved for insurance.”7
As banks failed by the thousands, freezing credit markets and increasing unemployment, fore-
closures skyrocketed and threatened to destroy the national housing industry. By 1933, “urban
foreclosures had reached the unprecedented height of nearly 1,000 a day.”8 To address this dire
situation, Congress established the Home Owners’ Loan Corporation (HOLC); this federal
agency assisted distressed home owners. The HOLC refinanced “loans over a period of 15 years
on a monthly repayment basis, in an amount up to 80 percent” of the appraised “value of the
property not exceeding a maximum of $14,000, at a low interest rate of 5 percent per year.” The
HOLC refinancing activities took place for approximately three years, ending on June 12, 1936.9
At the conclusion of their lending operation, the HOLC had loaned “$3,093,451,321 to 1,018,171
struggling homeowners.”10
A provision of the Home Owners Loan Act stipulated that “the Federal Home Loan Bank
Board (FHLBB) was authorized to organize, charter, and supervise Federal savings and loan
associations.” The FHLBB gave “primary consideration to the best practices of local mutual
thrift and home-financing institutions in the United States.”11 While the “federal savings and
loan associations” were “locally owned and managed institutions,” they remained “subject to
FHLBB regulation.”12 In addition, this legislation “designated the FHLBB to act as the Board of
Directors” of the HOLC.13 As the organizational chart reproduced as Figure A1 in the appendix
indicates, the FHLBB ran the entire federal banking system.
A year after the creation of the HOLC, “to renew confidence in savings and loan associations
and further to encourage sound and economical home financing, Congress created the Federal
Savings and Loan Insurance Corporation in 1934” and designated “the members of the Federal
Home Loan Bank Board as its trustees.” The overall result of this series of congressional action
gave the FHLBB “the responsibility of laying an enduring foundation for Nation-wide housing”
that developed “a sound and economical home-financing program.”14 First, this essay examines
the detrimental consequences of the appraisal scheme, initially introduced into federal policy by
the HOLC, and later adopted by the entire federal banking system, that negatively affected
entire residential communities by limiting the lending opportunities available for neighborhoods
deemed undesirable.
The lasting legacy of the HOLC was its emergency lending practices that saved the dwellings
of hundreds of thousands of distressed urban home owners from foreclosure and the residential
appraisal scheme it proliferated.15 The HOLC became the direct lending and appraisal arm of the
FHLBB. It used an appraisal technique that analyzed residential neighborhood composition and
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1038 Journal of Urban History 38(6)
deemed entire neighborhoods dangerous bank investments whenever undesirable residents
inhabited them. The HOLC, under the auspices of the FHLBB, defined undesirable residents as
racial or ethnic minorities, or low-income inhabitants. The incorporation of these new “scientific
appraisal” standards by the FHLBB influenced national lending policy by disadvantaging entire
communities it deemed a hazardous bank investment.
In addition to creating appraisals for its own use, HOLC appraisals were utilized by subsidiary
banking agencies throughout the entire federal banking system. These appraisals were made for
the member banks of the FHLBS, federal savings and loans associations, regional banks that
received federal bank insurance, and other federal agencies. HOLC appraisal techniques were so
influential that by 1937 an “appointed Joint Committee on Appraisal and Mortgage Analysis”
was established in Washington, D.C., “to coordinate the efforts of both government and non-
governmental agencies interested in valuation and mortgage financing.” This “Committee was
composed of six” total representatives that consisted of “three governmental agencies (Farm
Credit Administration, Federal Housing Administration [FHA], and Federal Home Loan Bank
Board)” and “from three private agencies (American Institute of Real Estate Appraisers, National
Association of Housing Officials, and Society of Residential Appraisers).”16 The purpose of this
appraisal bank forum was to share appraisal data throughout all segments of the national lending
industry. The 1938 FHA Underwriting Manual provides evidence of their utilization of the infor-
mation available in this appraisal bank. It asserted that the national FHA “Underwriting Division”
distributed “‘instruction blocks’ containing illustrations of correctly rated cases,” and it was
“expected that members of the Underwriting Staffs will consult the illustrations.” This document
maintained that although these “[r]isk rating illustrations are not regulatory. They represent aids
to judgment.”17 In this way, HOLC appraisal standards influenced FHA underwriting policies by
negatively defining the presence of poor and nonwhites inhabitants in residential communities
seeking federal mortgage insurance. This document described its own redlining practices: “Having
determined the Economic Background Rating for the area, the first step in making Established
Ratings of Locations is to determine ineligible or cautious areas. The Central downtown area can
usually be outlined and considered as ineligible.”18 The profound influence that FHA mortgage
insurance had on national lending is evidenced by the amount of new home construction under-
written by this federal agency by midcentury. During fiscal year 1949, the FHA insured “one of
every three new homes [constructed] in the United States.”19
Second, this essay argues that the HOLC’s appraisals greatly influenced the lending practices
of the FHLBB and relies on the FHLBB Annual Reports and the Federal Home Loan Bank
Review (the Review), a monthly journal published by the FHLBB, in conjunction with the widely
used HOLC security maps. These sources provide insight into the tremendous influence HOLC
appraisals had on the overall lending philosophy of the FHLBB. The cross-referencing of these
three sources provides a window into the inner workings of FHLBB policies with a richness that
rivals the FHA Underwriting Manuals in detail. The Review published a series of articles titled
“Neighborhood Standards as They Affect Investment Risk” that provided painstaking detail
regarding the influence of neighborhood demographics on mortgage finance. The Review was
widely distributed. It was sent to all member institutions including the presidents of the twelve
federal regional banks and provides convincing evidence that the HOLC appraisal scheme was
incorporated into the larger federal banking system.20 The Review and Annual Reports stressed
the importance of the establishment of unified national lending standards and the importance of
scientific appraisals that paid particular attention to demographic neighborhood analysis.
Third, from a macroeconomic perspective, this essay offers a greater appreciation of the
appraisal standards that the HOLC recognized and how these appraisal techniques were incorpo-
rated into the federal banking system. While the HOLC did not create racial and socioeconomic
lending bias, it certainly helped nationalize the practice. Scholars of redlining have long
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Woods 1039
appreciated the correlation between the HOLC’s hazardous bank investment ranking and lending
bias, but what has been less apparent is the national scope of these “scientific appraisal” stan-
dards that were incorporated into every facet of the federal banking system.21 Neighborhood
analysis was a standard practice for all members of both the FHLBB and the FHA. The national
adoption of these appraisal standards by national lending institutions systematically disadvan-
taged African American and low-income urban inhabitants and severely limited their ability to
obtain mortgages. When the HOLC evaluated the residential desirability of urban property, race,
ethnicity, and class were so influential that when analyzing a neighborhood’s desirability, they
surpassed all other appraisal considerations.
Ironically, this profound national disinvestment of certain neighborhoods in urban centers,
which deemed African American and low-income communities too risky to receive all but the
most unattractive home financing terms, occurred during the same time that the federal govern-
ment expanded access to home ownership for millions of Americans.22 While the United States
was expanding the American dream of home ownership to millions of middle-class whites,
African Americans and other racial and ethnic minorities, including low-income individuals,
were barred from full access to home ownership and were trapped in slums with an inadequate
and finite amount of inhabitable space.
The language of the HOLC area descriptions, housing surveys and reports, and the FHLBB
annual reports and the Review indicates that residents’ race and class were major factors, and they
were salient indicators of a neighborhood’s appraisal ranking. Many scholars have rightly accused
the FHA of rampant housing discrimination.23 However, an analysis of the policies of the FHLBB
reveals that lending bias was much more pervasive than previously appreciated. Its insistent utili-
zation of a neighborhood appraisal analysis procedure that routinely rated neighborhoods as haz-
ardous for bank investments was based on the racial and class composition of residential
communities. The type of inhabitant was as important as the condition of the dwelling units under
appraisal scrutiny. Therefore, the post–Great Depression federal intervention into the American
private housing market was fraught with rampant institutional bigotry that nationalized lending
bias to an unprecedented degree.
Finally, this essay discusses the national implications of redlining on African Americans’
housing conditions across the country. Widespread disinvestment in urban neighborhoods, par-
ticularly those populated by African Americans, ultimately contributed to deplorable housing
conditions experienced by that group in most American cities by the mid-twentieth century.
Indeed, by 1950, African Americans disproportionately inhabited the worst dwellings in the
nation—despite the fact that between 1940 and 1950 their annual income tripled.24
The Federal Home Loan Bank Review
In October 1934, the Federal Home Loan Bank Review, a monthly publication published by the
FHLBB, was created for five reasons: (1) to maintain a permanent official record of the current
operations of the four agencies under the board; (2) to provide the board a regular means of
contact with member institutions of the banking system and to give a sense of unity to, and raise
the standards of, the nation’s principal home-financing institutions; (3) to provide a channel for
the dissemination of sound principals and sound techniques for home financing and related
activities; (4) to present through the media of statistical tables, indexes, and charts a factual pic-
ture of current activities in home financing and home construction in the United States; and (5)
to help in correlating the activities of the various federal agencies in the fields of home financ-
ing, home construction, and housing.25 The Review was produced by the Department of the
Director of Public Relations, an agency within the FHLBB that “published and edited the Federal
Home Loan Bank Review.” This publication was broadly distributed and extensively influential.
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By 1936, the FHLBB disseminated “approximately 6,000 copies” of the Review every month,
which “included one to each member of the Federal Home Loan Bank System.” The Review
chronicled “the progress of the four agencies under the Board, and in addition [published] many
articles on current problems of urban housing and finance.”26 A major goal of the Review was
“to provide the Board with a regular means of contact with member institutions of the bank
system and to give a sense of unity to the Nation’s principal home financing institutions.” The
Review was also published “to provide a channel for the dissemination of sound principles and
sound technique for home-financing and related activities.”27 By the late 1930s, the list of the
Review’s subscribers was so extensive that it reached a representative cross section of the national
urban housing industry. The Fifth Annual Report of the FHLBB revealed that “the circulation
list of the Review comprised an extremely representative cross section of the whole field of
urban home-mortgage finance” and “reflected the interests not only of the home-financing institu-
tions but also of appraisers, real-estate dealers, material suppliers, educators, research ana-
lysts, and of the many other people and institutions which require useful and accurate
information upon current trends in the urban home market.”28 Why has a monthly publication
as influential as the Review remained an underappreciated resource for scholars interested in
the housing policy that influenced the American urban housing market? The map reproduced
as Figure A2 shows the distribution of the Review to twelve federal banks, making the national
scope of these banks apparent.
Lessons from the Great Depression:
“Scientific Appraisal Techniques” Needed
In 1934, the Review began publishing a series of articles that highlighted the defects of the
national banking system prior to the Great Depression. In the Review’s first issue, contributing
authors identified eight weaknesses of the pre-Depression national banking system: (1) exclu-
sive emphasis by lending institutions on a wide margin of safety and indifference to the personal
risk factor, to the quality of construction, to the stability of the neighborhood, and to the actual
need for housing; (2) shoestring buying on the part of home owners; (3) faulty appraisals; (4)
the frequent use of short-term funds for long-term financing; (5) the frozen nature of home
mortgages because of the complete lack of organization among home financing institutions and
the consequent lack of a national credit reserve for home financing; (6) the uneven flow of credit
for home financing at different times and in different sections of the country; (7) the lack of
uniformity in practices and in standards for home financing institutions; and (8) the high cost of
home financing principally because of the extralegal second mortgage structure, and the fre-
quently high service charges and the high interest rates for first mortgages.29 In addition to the
faulty banking procedures listed above, an inadequate number of mortgage lending institutions
existed in the nation. For instance, “at the time the Federal Home Loan Bank System was created,
it was estimated that there were more than 1,552 counties out of 3,072 counties in the United
States” where “no thrift and home-financing institution was located.”30 In an effort to correct all
of the aforementioned bank failings, the FHLBB was designed to address these profound short-
comings in the home mortgage financing industry.
Faulty property appraisals were among the most important issues that federal banking offi-
cials determined that had placed the entire national banking system in peril. While an appraisal
profession did exist before the establishment of the federal banking system, the appraisal tech-
niques appraisers utilized were codified in an unprecedented manner. “A foundation for an
American science of appraising had been laid” prior to the creation of the FHLBB and “the
nucleus of a body of professional appraisers formed by the American Institute of Real Estate
Appraisers of the National Association of Real Estate Boards . . . constituted but a small leaven
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Woods 1041
in the country as a whole.”31 When the HOLC began its emergency direct lending activities,
there were not enough trained appraisal professionals to undertake their national appraisal opera-
tions. “The emergency needs of home-owner applicants could not wait upon the development of
a force of appraisers” that were adequately “trained in advance in the technicalities of the work
to be undertaken. Training had to take place along with the processing of loan applications.”32
This training of “appraisal personnel proceeded continuously during the entire 3 years of the
Corporation’s lending program.”33
So massive were the HOLC appraisal procedures that “at the peak of operations, the Corporation
had about 8,500 appraisers, of who some 6,500 were fee appraisers functioning at the expense of
and as the technical agents of applicants seeking loans.” By the end of 1934, “this staff had com-
pleted over a million fee appraisals and a considerably greater number of preliminary apprais-
als.”34 Between 1935 and 1940, the HOLC surveyed 239 cities across the country, creating
security maps and area descriptions that visually evaluated the potential lending risk underwritten
by banks if they approved mortgage funds to inner-city inhabitants.35 Each residential portion of
the urban areas mapped by the HOLC had its property and the neighborhood appraised. By 1944,
when the HOLC officially concluded its unparalleled national appraisal project, more than five
million residential appraisals had been completed.36 The remarkable contribution this made to the
national appraisal industry is undeniable: “[T]he significance of this numerical achievement is
that the [HOLC] has set a value on more than 1 out of every 10 owned nonfarm homes in the
Untied States.”37 With such an ambitious national appraisal agenda, “[i]t is inevitable, therefore,
that the HOLC’s appraisals should exert a major influence in setting values on urban-home prop-
erties throughout the country. The magnitude of the operation insures that this influence shall
be more than temporary, and that the Corporation’s appraisals will affect all property values for
many years.”38
In 1935, the FHLBB corroborated the prominent role the HOLC played in the codification of
nationally respected appraisal standards by insisting that home financing institutions adopt the
“scientific appraisal” techniques employed by the federal banking system. “The private home-
financing institutions of the country will serve their own best interests in insisting upon the type
of scientific appraisal” conducted “by the qualified scientific appraiser which the Home Owners’
Loan Corporation has sought to develop.”39 The Review provided a typical HOLC appraisal form
that listed the socioeconomic and racial neighborhood demographics. The HOLC appraisal form,
which was adopted by the FHLBB, became FHLBB’s standard appraisal document. The docu-
ment reproduced as Figure A3 is an example of FHLBB’s standard appraisal form.
One critical criterion of all HOLC appraisals was the vital importance placed on a neigh-
borhood’s demographic composition. HOLC appraisals stressed the fundamental importance
of neighborhood analysis as a function of lending risk and stated “urban housing standards must
begin with the neighborhood.” HOLC stressed also the importance of connecting the individual
property with holistic neighborhood appraisals. It asserted that “the urban home is not an isolated
thing in itself; it is a cell in an organic whole. Physically, a single dwelling is as dependent upon
its neighborhood as is a single coral on the entire reef.” While “a well-built well-kept home” was
admirable, when located “on a slovenly street it was doomed.” Without an adequate understand-
ing of the influences of neighborhood transition, HOLC appraisers maintained that an accurate
appraisal was impossible. “Unless a good neighborhood is assured, the best design and con-
struction of lot planning” remained “powerless to increase value or protect the investment. The
first consideration in the lender’s mind must, therefore, be the neighborhood in which the home
is located.”40
HOLC appraisers took neighborhood valuations more seriously than property evaluations.
The Review discussed the official FHLBB appraisal policy by stating that “it cannot be too often
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1042 Journal of Urban History 38(6)
repeated that the decadent neighborhood can do more to destroy property values than defects
in the buildings themselves.” HOLC appraisers warned that “the changing character of
neighborhoods constitutes the major risk factor in their considerations.” To guard against these
risk factors, appraisers emphasized that “an exhaustive and scientific analysis of the neighbor-
hood should be the first step in any efficient appraisal.” Not only was a comprehensive neigh-
borhood examination a prerequisite for a “scientific appraisal,” but also residential desirability
was judged based on an assessment of its inhabitants, a fact “that was generally recognized
by leading appraisers, which was evidenced by the inclusion of questions on the neighbor-
hood in model appraisal forms” that standardized a racial residential composition inquiry on all
HOLC appraisal documents.41 The document reproduced as Figure A4 is a copy of the standard
HOLC appraisal form.
Concerned by the increasing presence of blighted areas in American cities, FHLBB policy
makers created lending standards designed to limit their spread. “Our cities and towns,” they
declared, “have huge blighted areas that must be redeemed if city treasuries and taxpayers are to
get relief. Farsighted mortgage institutions through their lending policies can do much to prevent
further extension of blighted areas.” The most effective preventative measure against the expan-
sion of slums was the employment of sound scientific appraisal techniques. “It was believed” by
FHLBB officials “that the periodic appraisal of neighborhoods on the basis of this outline will
pave the way for both greater safety and greater volume of investment by home-financing
institutions.”42
The outline for the effective scientific appraisal analysis of neighborhoods consisted of ten
parts: (1) natural hazards, such as risk of flood and difficulty of drainage; (2) created hazards,
such as incompatible uses, smoke, odor, noise, and unsightly features; (3) location in relation
to places of employment; (4) accessibility, including transportation and highways; (5) popula-
tion trends of the neighborhood; (6) competition from other neighborhoods that are either
better located or more inviting; (7) standard of development for residential purposes; (8) legal
protections of the neighborhood’s present and future; (9) racial and behavioral characteristics
of the residents and racial trends of the neighborhood; and (10) trends and possibilities.43
Many of the above-mentioned appraisal guidelines were either explicitly or implicitly con-
cerned with the demographic characteristics of the residential inhabitants. The explicit demo-
graphic concerns were “population trends, legal protections of neighborhoods, racial behavior
and characteristics,” and the implicit occupancy apprehensions included “incompatible uses,”
which referred both to property structures and occupants. “Competition from other neighbor-
hoods” was said to exist whenever “there was a steady net exodus of owners,” which they
assumed decreased “the stability of the residential investment.” The FHLBB argued that the
predominant factor enticing the original property owners to flee their neighborhoods was “the
encroachment of incompatible uses and loss of character by the community.”44 This indicates
that when middle-class whites moved out of a neighborhood, its desirability and stability auto-
matically decreased.
FHLBB policy makers warned their member banks and financial institutions seeking federal
insurance from the Federal Savings and Loan Insurance Corporation that the presence of any of
the aforementioned neighborhood hazards ruined the desirability of a neighborhood. They
cautioned that the “factors least capable of modification and the presence of which would most
irremediably destroy residential values are considered first.” The FLBB contended that “this is
logical, since the presence of any such destructive factor would render unnecessary any further
analysis of a neighborhood,” thus destroying the desirability of virtually every property located
within these problematic residential communities.45 The presence of any of the above-mentioned
neighborhood risks would render the entire neighborhood a “hazardous” bank investment.
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Woods 1043
In addition to drastically limiting the investment appeal of large cross sections of urban cen-
ters, the FHLBB, like the FHA, established policy procedures that protected a neighborhood’s
present and future stability. This section of neighborhood analysis contained three components:
(1) zoning, (2) deed restrictions, and (3) community organization.46 In this way, middle-class
white residents had a vested interest in “protecting” their residential communities from any and
all threats to the desirability of their neighborhoods. FHLBB officials discussed the importance
of urban communities experiencing competition from suburban enclaves that had “neighborhood
characteristics and which are peopled by those who escape from destroyed intown neighbor-
hoods.” They warned that the question “is not whether the neighborhood shall survive but how
to revive and maintain intown neighborhoods” and to ensure the protection of “suburban neigh-
borhoods against ultimate destruction.” Thus, this policy implied that the infiltration of undesir-
able residents destroyed property values of an entire neighborhood and rendered them hazardous
bank investments. FHLBB officials cautioned that when urban neighborhoods were abandoned
that “an undesirable area soon becomes a blighted area.”47 They asserted that “the instability of
America’s home neighborhoods constitute[d] the major risk in the financing of America’s
homes.”48 Thus, these policy makers indicated that properties located in deteriorating neighbor-
hoods were poor investment risks.
So vital to the risk assessment was a thorough neighborhood analysis that FHLBB policy mak-
ers asserted, “The neighborhood factors deserve special weight in measuring risk, for a dwelling
is primarily at the mercy of its surroundings.” There were several factors that influenced a neigh-
borhood’s desirability, including “the neighborhoods equipment, desirability, accessibility, com-
munity organization and consciousness, and protection from adverse influences all combine to
forecast its stability.” FHLBB policy makers maintained that “a lending institution should analyze
each residential neighborhood in which it makes loans just as thoroughly as it analyzes the spe-
cific property.” They implored lending institutions to “analyze each residential neighborhood in
which it makes loans just as thoroughly as it analyzes the specific property.” These federal offi-
cials determined that incorporating this analysis into their lending policy would “determine the
degree of risk imposed by the neighborhood on a particular loan.”49 A portion of the FHLBB’s
lending policy required that balance sheets of lending institutions “must be supplemented by a
security map of the institution’s lending area. Such a map would grade each neighborhood accord-
ing to the degree of risk it imposes on an investment.” Therefore, there existed a relationship
between the HOLC security maps and FHLBB lending policies. These federal officials stated that
“the best method of grading residential neighborhoods as lending areas is to make a scientific
analysis of the entire community and of each neighborhood within it” to determine the degree of
lending risk experienced in underwriting mortgage loans.50
With the creation of citywide security map analysis, “a home-financing institution would
have a solid basis for determining the desirability and risk of investment in every neighbor-
hood.” The FHLBB widely distributed the instructions necessary for creating this critical
appraisal material throughout the national lending industry. The Mortgage Rehabilitation
Division of the FHLBB “has prepared simple instructions for making the security maps of resi-
dential neighborhoods” available “to any experienced mortgage lender.” The Rehabilitation
Division of the FHLBB “recognize[d] four broad categories of lending areas, ranging from
most desirable to least desirable. Each category was represented by a different color, so that
the map could be read at a glance.”51 These four categories were identical to those created by
the HOLC. The following provides an explanation of the four categories: (1) green was the
“best,” (2) blue was “still desirable,” (3) yellow was “definitely declining,” and (4) red was
“hazardous.”52 The FHLBB policy makers described the “best” area as a highly sought-after
residential enclave, a place where “real estate men” refer to “as ‘hot spots,’ are just as clear in
$5,000 neighborhoods as they are in $25,000 neighborhoods.” Their explanation of “best”
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1044 Journal of Urban History 38(6)
areas stated that these neighborhoods were “comparatively new, well-located, uniformly
developed; construction is sound and the pride of ownership is evidenced by the well-main-
tained properties; the type of dwellings is modern.”53 In other words, they were attractive
communities inhabited by the most desirable residents.
The “still desirable” areas were described as somewhat older residential communities and
slightly detrimentally affected by “the encroachment of business or infiltration of a less desirable
class of people, these areas begin to change their character.” When “the original occupants begin
to move out to other areas,” then “the area was definitely declining in desirability and should be
classified” as such. The “still desirable” areas “are districts in which a mortgage lender would
make a substantial long-term loan.”54 “In almost every city” FHLBB officials reminded their
member banks “there are areas only 5 or 6 years old that may be classified as declining” and “the
depreciation of this type of property is rapid.”55 These federal officials asserted that “a study of the
characteristics of buyers” in this type of declining neighborhood would “reveal that they are not
what we would consider stable purchasers.”56 This was partially the result of low income: “[W]
here there is a definite trend in type of population to a lower grade, areas should also be classed as
‘Definitely Declining’ regions.” While FHLBB policy makers did not completely rule out making
loans in these declining areas, they did exhibit considerable apprehension in that regard. Only “if
proper precautions are taken” could potential safe mortgages be underwritten, and these strict
conditions where “safe loans can probably be made in such [definitely declining] areas.”57
Finally, in Hazardous residential communities were “more inclusive than so-called slum
areas” and generally consisted of “older sections of town.”58 “These are the areas” defined as
usually being “affected by detrimental influences” and contained “an undesirable element.”
FHLBB officials begrudgingly conceded that underwriting selected loans in these areas could
occasionally be condoned, but only for mortgage loans under the most conservative terms. They
also acknowledged that “there are certain [Hazardous] areas, especially in slum areas, in which
a good mortgage man would probably not consider any loans at all.”59 In addition to highlighting
widespread lending bias, the FHLBB also contended that sound appraisals were “the cornerstone
of successful building and loan practice.”60 They asserted that long-term mortgage loans and the
introduction of variable interest rates heightened the necessity of establishing accurate and “uni-
form appraisal policies.”61 The “soundness of appraisal demands,” they warned, “now as never
before, the truly professional standard.”62 FHLBB incorporated the HOLC appraisal standards
and insisted that they be used as the national “professional standard” that would become the
“uniform appraisal policies” that governed the lending activities of all federal banks across the
country and their member lending institutions.
These FHLBB appraisal standards automatically made the presence of undesirable residential
demographics unattractive bank investments. Oftentimes residential communities populated by
low-income native-born whites received the same access to mortgage lending as neighborhoods
inhabited by the most educated African Americans. When appraising residential areas dispropor-
tionately occupied by African Americans, the HOLC appraisers disregarded the socioeconomic
considerations that they held in such high regard in white neighborhoods. For instance, the
Watkins Park neighborhood of Nashville, Tennessee, received a hazardous rating; this area was
inhabited by “industrial works, laboring class of fair and poor types” and was “largely composed
of Negroes.” Despite the facts that this “section included Fisk University and Meharry Medical
School,” two prestigious historically black colleges, and was occupied by “a very good type of
negro population adjacent to these schools” and that the property values remained stable adjacent
to the colleges, HOLC appraisers rated this neighborhood with its lowest possible ranking. The
HOLC appraisers were not persuaded to improve their assessment of this neighborhood despite
the presence of two nationally recognized African American institutions of higher learning. In
reference to the neighborhood surrounding Fisk and Meharry, HOLC appraisers stated,
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In this area are located the cheapest type of Negro dwelling as well as the highest type.
The location of the colored colleges in this section means that Negroes will concentrate
here, and the major spread of the Negro population will therefore be in this area. . . . It
adjoins the business section of the city and the expansion here will come more or less from
the whites moving to other areas and Negroes taking up their old places.63
Although African American college and medical students and their professors occupied this
neighborhood, it still warranted for HOLC appraisers only the most miniscule amount of
mortgage funds on the least desirable lending terms. HOLC appraisers asserted, “The influ-
ence of the state prison farm, the manufacturing plants” as well as the “Negro schools and poor
type of population is predominant,” making this area deserving of only a hazardous rating.64
In a predominantly white community, the presence of highly educated residential inhabitants
would improve that area’s neighborhood appraisal rating. But in the Watkins Park section of
Nashville the presence of African American MD and PhD residents still warranted only the
lowest appraisal rating. Consequently, this black neighborhood received an inferior risk valu-
ation that undermined the ability of even its most affluent residents to receive the most favor-
able lending terms available. This negative neighborhood appraisal was a form of punishment
that, in many respects, made the prospect of home ownership more difficult for professional
blacks, who were deemed unstable credit risks because of their race and the racial demo-
graphics of the neighborhoods they inhabited.65 In this respect, African American doctors
were not afforded the same lending opportunities enjoyed by their white socioeconomic
counterparts across town.
In the residential communities surrounding the campuses of Belmont University and
Vanderbilt University, well-educated white professors and their neighbors were afforded the
appraisal designation that their socioeconomic status warranted. In the Sunset Park section of the
city that included the West End section of town, HOLC appraisal officials generously rated this
section as “still desirable.” These federal officials stated that this section has “developed rather
rapidly and practically all of the better class property has been occupied.” Although they
contended that this area “has reached its peak, it will continue to be stable and desirable for
many years.” Even though many of the inhabitants of this residential community were not affili-
ated with either university, “the influences of the colleges” was not “detrimental to residential
properties in this area.”66 When white neighborhoods surrounded predominantly white institu-
tions of higher learning, these areas were afforded more access to mortgage lending than their
black counterparts. Thus, neighborhoods near predominantly white universities were consid-
ered to be places for sound bank investments, but residential communities close to historically
black universities were deemed hazardous investment risks.
The results of this unequal access to mortgage finance are evident in the racial disparities in
midcentury housing conditions in Nashville. In 1950, “of the 49,800 Nashville residents who
lived in owner-occupied dwelling units,” whites owned a “total of 43,400” dwelling units “compared
to 6,400 owned by nonwhites.” During the decade between 1940 and 1950, “the percentage of
owner-occupied units” dramatically increased “from 32 to 49 percent,” and barely moved for
African Americans “from 6 to 7 percent for nonwhites respectively.”67 By 1950, the implications
of lending bias in Nashville were undeniable. Throughout the city, “29 percent of all dwelling
units were dilapidated or had no running water, for the nonwhite population that proportion was
much higher at 70 percent.”68 However, the process of redlining was not limited to Tennessee.
Institutionalized disinvestment of urban centers was a national phenomenon. An examination of
HOLC appraisals in Los Angeles provides another tangible example of how entire neighbor-
hoods of cities were evaluated based on neighborhood demographics.
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1046 Journal of Urban History 38(6)
HOLC Appraises Los Angeles:
Scientific Neighborhood Analysis and Redlining
In a 1939 housing report, the Security Area Map of Metropolitan Los Angeles, California, enu-
merated one important factor that devalued residential communities: “the absence of adequate
deed restrictions in large sections of the area.” The HOLC considered adequately enforced racially
restrictive covenants as an effective mechanism for maintaining the residential desirability and
protecting the property value of the better neighborhoods. Neighborhoods were appraised lower
in “areas in which restrictions had expired or were about to expire.”69 Like the FHA, the entire
federal banking system validated the usage of racially restrictive covenants as a mechanism
for maintaining the preferred racial homogeneity of residential neighborhoods. By rewarding
individual property owners who utilized racially restrictive covenants with an enhanced resi-
dential rating, the HOLC’s national neighborhood appraisal scheme encouraged the incorpo-
ration of racial deed restrictions and provided them with the full weight of the federal banking
system.
The Los Angeles HOLC property appraisers exhibited apprehension regarding the racial and
ethnic diversity in many residential communities. These federal policy makers expressed consid-
erable ambivalence toward racially mixed communities and expressed it by asserting that “neigh-
borhood homogeneity is rare except in the best sections.” Convinced of both the methodical
analysis and accuracy represented in their report, the LA HOLC appraisal officers commented
on the usefulness of the information provided in their residential appraisal. They stated, “As a
result of these painstaking efforts, it is felt that the completed map and area descriptions are
accurate to the highest degree and embody all the salient neighborhood information required for
the intelligent operation of mortgage lending activities or the handling of owned real estate
throughout the metropolitan area of Los Angeles.”70 Confident in their unbiased appraisal of
metropolitan LA, HOLC officials pronounced this area description as an asset for accurately
assessing mortgage investment risk for either federal agencies or member banking institutions
interested in lending in the area. A key component of their risk analysis was the assumption that
a neighborhood’s credit rating and desirability were endangered by the threat of infiltration of
racial, ethnic, or low-income inhabitants.
No other section of Los Angeles better reflected this anxiety regarding the potential for a
heterogeneous neighborhood than a residential community in Beverly Hills. In the “shifting or
infiltration” section of this area description, HOLC officials describe a “slight infiltration of
Jewish people,” but the anxiety that an influx of this population could cause was mitigated by an
explanation of other positive attributes of the neighborhood. The LA appraisers reminded mort-
gage investors that “the area [was] highly protected by deed restrictions and the zoning ordi-
nances of the City of Beverly Hills are also considered highly protected.” The mortgage funds
recommended to investors for this region were around $10,000, a considerable amount of money
in 1939.71 This HOLC map of Los Angeles, California, is reproduced as Figure A5.
In direct opposition to the plentiful mortgage funds recommended for Beverly Hills, Pasadena,
a region of Los Angeles, was suggested to receive far less mortgage funding by HOLC appraisal
agents. In the Pasadena area description, HOLC appraisal officers described the area as declining
in residential desirability because the “servant class” was spreading and their “constant infiltra-
tion into other sections as deed restrictions expired has created a real menace” to property owners
in the area.72 They described the homes as the “shack variety” and the residential population as
“occupied by Negroes and other subversive racial elements.”73 The corporation’s appraisal divi-
sion positively described a neighboring residential community as containing “all neighborhood
conveniences” and “no construction hazards or flood threats.”74 Despite these positive attributes
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of Pasadena, the appraisers maintained that “this area [was] favorably located but [was] detri-
mentally affected by 10 owner occupant Negro families.” The mere presence of this small num-
ber of black families undermined the property value and investment desirability of the entire
neighborhood. “Although the Negroes are said to be of the better class,” the HOLC appraisers
continued, “their presence has caused a wave of selling in the area and it seems inevitable that
ownership and property values will drift to lower levels.”75 Despite the fact that the African
American families mentioned above were considered “of the better class,” they still received a
hazardous rating that warranted lending in only a “limited” capacity. In this area, HOLC officials
recommended that a “limited” amount of mortgage funds be lent.
The presence of African American residents was not the only factor that contributed to a lower
HOLC appraisal ranking. When other ethnicities entered a residential community, their pres-
ence also negatively affected the HOLC rating. Considered one of the “melting pot” areas, Boyle
Heights had very diverse residential demographics. It contained “Russian, Polish, Armenian
Jews, Slavs, Greeks, and Italian” immigrants and “American Mexicans, Japanese, and African
Americans”; this diverse group was considered the expansion of a “subversive racial element.”
HOLC appraisers described the racial and ethnic diversity of the area as being
literally honeycombed with diverse and subversive racial elements. It is seriously doubted
whether there is a single block in the area which does not contain detrimental racial ele-
ments, and there are very few districts which are not hopelessly heterogeneous.76
Although a series of conveniently located amenities made this residential community favorable, its
“heterogeneous” racial population made it a “hazardous” bank investment that in the eyes of HOLC
appraisers constituted a recommendation for only a “limited” amount of mortgage funding.77
The racial and ethnic diversity that characterized the Los Angeles area confounded HOLC
appraisers, who were inclined to negatively label neighborhoods with large nonwhite demo-
graphics. For instance, the corporation’s appraisal agents branded the residential community of
San Gabriel Wash & Whittier Way as “an extremely old Mexican shack district, which has been
‘as is’ for many generations.”78 Appraisal agents depicted the influx of an undesirable entirely
Mexican population as threatening the residential stability of the entire area, and they noted that
an infiltration “of goats, rabbits and dark skinned babies” significantly devalued all real estate in
their vicinity. The area was described as containing characteristics “[l]ike the ‘Army mule,’ it has
no pride of ancestry nor hope of posterity. It is a typical semi tropical countryside ‘slum.’ The area
is generously accorded a ‘low red’ grade.” Although no African American inhabitants were pres-
ent in this neighborhood, HOLC appraisal officers explicitly connected this section of Los Angeles
to what they believed resembled stereotypical images of a developing country. Their description
of this area as “a typical semi tropical slum” and being akin to an infertile “army mule” and the
infiltration of “goats, rabbits and dark skinned babies” likened the population to subhuman ani-
mals. It is not surprising that this “low red grade” area was considered a “hazardous” bank invest-
ment risk that was recommended for no mortgage funds.79 Thus, for HOLC officials, the “heavy
concentration” of people of Mexican ancestry, like an infestation of termites, seemed to erode the
foundation of an entire neighborhood’s property values. The implications for the incorporation of
this type of neighborhood appraisal analysis by the FHLBB were devastating.
FHLBB Neighborhood Appraisals
and Its National Impact on Nonwhite Housing
For a three-year period during a national emergency, the HOLC directly lent money through-
out nearly every county in the country. “When its lending activities closed June 12,
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1048 Journal of Urban History 38(6)
1936,” the HOLC had acquired mortgage borrowers that were “scattered through all but 64
of the 3,072 counties of the United States” that “were in distress.”80 The scope of HOLC
property holdings was so massive that they encompassed nearly every region of the country.
This federal agency saved “more than 800,000 American families” from what was undoubtedly
the greatest “emergency program on record in support of home ownership.”81 The aftermath
of this emergency, and the subsequent scientific neighborhood appraisals that followed, sud-
denly defined these same residential communities initially eligible for direct mortgage assis-
tance, as hazardous bank investments entitled to only the least desirable available home
financing terms.
Twenty years after HOLC officials began their national security map program, lending in
“hazardous” regions of the country was severely curtailed. In a 1954 address, Dr. Frank S. Horne,
the assistant to the administrator of the Housing and Home Finance Agency (HHFA), stated,
“[B]etween 1940 and 1950, annual earning of nonwhite workers tripled. In 1939, 3.7 percent of
Negro families earned between $3,000–5,000 a year; in 1950, the percentage had risen to 17.8
percent.”82 The massive national increase in African American workers’ salaries did not trans-
late into improved living conditions, in large part because of the national scope of lending bias.
Dr. Horne asserted, “The simple truth is that the nation’s urban whites have resisted giving their
cities’ new Negro populations as much living space as their money would buy. Only 5.5 percent
of the nation’s city and rural nonfarm dwellers live in overcrowded conditions, but 18 percent
of Negroes do.”83
Lending biases prohibited entire segments of the nation from taking full advantage of the
housing opportunity that their socioeconomic status should have provided. For at least a genera-
tion after its inception, the unprecedented amount of national appraisals undertaken by the
HOLC, combined with their ubiquitous distribution after their adoption by the FHLBB, prepared
the federal banking system to make redlining a national lending policy. For instance, by the
spring of 1946, FHLBB policy makers maintained that a property’s age was not an accurate
explanation for a neighborhood’s decay. “Age alone,” they mused, “is not necessarily an indica-
tor of decline. Many dwellings and neighborhoods,” these federal officials argued, were “well
over 30 years old are still pleasant and satisfactory places to live, and some newer ones are nearly
slums.”84 Frequently, neighborhoods decline because “the infiltration of lower income families,
and the remedy implied is to keep such families out.”85 Because of the utilization of these exclu-
sionary lending policies that defined lower socioeconomic statuses and racial minority residents
as hazardous bank investments, the FHLBB exerted “a very considerable influence upon the
procedure and standards in home financing” and especially “in the case of appraisal.”86 “Through
this process” of incorporating scientific HOLC appraisal techniques into its policy, the FHLBB
created “certain standards of eligibility” that developed into lending policies that were adminis-
tered “with uniformity throughout the Nation.”87 This federal lending policy uniformity had
tremendous national implications. By 1937, “the institutions which are actually members or
eligible for membership” in the FHLBB managed lending institutions within the “Federal Home
Loan Bank System held about 85 percent of the total volume of home-mortgage loans held by
all institutions” in the United States.88 Ultimately, these mortgage lending policies resulted in
the entrapment of low-income inhabitants and racial and ethnic minorities in financially
deprived urban residential slums that too often were devoid of the mortgage funding necessary
to purchase homes.
These race- and class-based discriminatory lending policies created disproportionately
deplorable housing conditions for nonwhite residential occupancy. By midcentury, the housing
conditions endured by nonwhites were bleak. According to a 1952 national housing study con-
ducted by the HHFA, nonwhites lived in overcrowded units (with more than 1.5 persons per
room) at a rate four times greater than their white counterparts. For nonfarm dwellings inhabited
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by nonwhites, “about 18 percent were” overcrowded “compared with only something over 4
percent of such units occupied by whites.”89 They were forced to double-up (in households that
contained, in addition to the head of household, one or more married couples) at a rate “two and
a half times as high as among whites.”90 Perhaps more troubling than the statistics presented
above is the fact that “between 1940 and 1950 doubling had decreased proportionately for
whites in all areas of residence, but among nonwhites it had actually increased both numerically
and proportionately.”91 The number of nonfarm nonwhite households living doubled-up “rose
from 274,000 or 13.8 percent in 1940, to 339,000 or 15.1 percent in 1950.”92 The rate of African
Americans living in dilapidated homes was “five times higher than that among whites.” For
example, “in 1950, 27 percent of homes of nonwhites in nonfarm areas as compared with 5
percent of whites were dilapidated.”93 And the rate of residence in “homes lacking in one or
more of piped running water, private flush toilet, private bathtub or shower was twice as high
among nonwhites as among whites.”94 These terrible living conditions characteristic of midcen-
tury nonwhite urban housing were aggravated by FHLBB financial policies that nationalized
lending bias.
The aforementioned racial disparity in housing statistics cannot exclusively be explained by
income since the “nonfarm incomes for nonwhites were probably nearer three times higher in
1949 than in 1939.”95 The decade concluding in 1950 did witness an increase in nonwhite home
ownership. In 1940, “23.9 percent of nonwhites were homeowners, compared with 42.7 percent
of whites.”96 By 1950, that number grew for both demographics. During that year, the home
ownership rate was “35.2 for nonwhites and 54.9 percent for whites.”97 Ultimately, there are
several factors that created this racial disparity in home ownership rates; however, the national
proliferation of the demographic appraisal standards mentioned above undoubtedly contributed
to this phenomenon.98 In addition, the HHFA study was cautiously optimistic regarding the
improved home ownership rates for nonwhites as it pertained to their enhanced access to mort-
gage lending. The study further stated that “it should be observed that although these data indi-
cate improvement in the availability of mortgage financing to nonwhites during this decade
mortgage financing is still less readily available to nonwhites than to whites.”99 An array of
exclusionary lending barriers endured by nonwhites caused them to be confined in “dispropor-
tionately large numbers to blighted and slum neighborhoods” consisting primarily of “old and
run-down, low-amenity properties left behind by white families.”100 Since these horrific housing
conditions cannot be explained by racial income disparities alone, this study provides compel-
ling evidence that the neighborhood appraisal standards created by the HOLC, and incorporated
into the lending policies of the FHLBB, contributed to the severely limited access of nonwhites
to mortgage funding. It is apparent that despite a dramatic nationwide rise in nonwhite annual
incomes, several statistical indicators suggest that the urban housing conditions endured by non-
whites were either stagnant or worsening at a rate disproportionate to their improved economic
conditions throughout the United States.
These disparate substandard nonwhite housing conditions were exacerbated by the FHLBB
lending policy that required a scientific appraisal standard that defined the infiltration of undesir-
able residents as a greater threat than the physical deterioration of the evaluated property itself.
FHLBB policy makers created a national lending policy that elevated the residential demograph-
ics of entire neighborhoods above any other prerequisites for approving the financing of mort-
gages. The uniform implementation of this national appraisal standard fundamentally altered the
lending policies for all entities under the jurisdiction of the FHLBB. This transformation of the
loaning practices of nearly four thousand federal and state member banks ultimately generation-
ally biased these lending institutions against neighborhoods inhabited by lower socioeconomic
and racial minority residents.
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Figure A4. This is an official neighborhood appraisal form initially constructed by the Home Owner’s
Loan Corporation
The emphasis on demographic analysis of neighborhoods was later adopted by the entire Federal Home Loan Bank
Board.
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1054 Journal of Urban History 38(6)
Figure A5. This is a residential security map prepared by the Division of Research and Statistics of
the Federal Home Loan Bank Board, with the cooperation of the Appraisal Department of the Home
Owners’ Loan Corporation, October 10, 1939
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Woods 1055
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or pub-
lication of this article.
Funding
The research for this manuscript was supported by the Faculty Research and Creative Activity Committee
(FRCAC), a competitive summer research granted graciously awarded the author by the supportive admin-
istration at Middle Tennessee State University.
Notes
1. James A. Colaiaco, Martin Luther King, Jr.: Apostle of Militant Nonviolence (New York: St. Martin’s,
1988), 183. This quote is an excerpt from the 1968 Kerner Commission, which was charged by
Lyndon B. Johnson to investigate the causes of urban riots, to ensure that these violent eruptions did
not become reoccurring phenomena.
2. Fifth Annual Report of the Federal Home Loan Bank Board covering the operations of the Federal
Home Loan Banks, the Home Owners’ Loan Corporation, the Savings and Loan Division, and the
Federal Savings and Loan Insurance Corporation for the period July 1, 1936, to June 30, 1937, 1 (hereafter
Fifth Annual Report, FHLBB, 1936–1937). The Federal Research Archival System for Economic
Research made all of the FHLBB annual reports, from 1933 until 1952, available for researchers in
PDF files. Their website is http://fraser.stlouisfed.org/publications/holc/.
3. Fifth Annual Report, FHLBB, 1936–1937, 1.
4. Ibid., 3.
5. Thomas B. Marvell, The Federal Home Loan Bank Board (New York: Praeger, 1969), 18.
6. Fifth Annual Report, FHLBB, 1936–1937, 4.
7. Fourteenth Annual Report of the Federal Home Loan Bank Administration covering reports of all
its constituent units, the Federal Home Loan Bank System, the Federal Savings and Loan Insurance
Corporation, the Home Owners’ Loan Corporation, and the United States Housing Corporation for the
Fiscal Year 1946, 6.
8. Fifth Annual Report, FHLBB, 1936–1937, 4.
9. Ibid.; Federal Home Loan Bank Review 1, no. 3 (December 1934), issued by the FHLBB, Washington,
DC, 69 (hereafter FHLBR, December 1934, 69.
10. Tenth Annual Report of the Federal Home Loan Bank Board covering the operations of the Federal
Home Loan Banks, the Home Owners’ Loan Corporation, the Savings and Loan Division, and the Fed-
eral Savings and Loan Insurance Corporation for the period July 1, 1941, to June 30, 1942, 32; Fifth
Annual Report, FHLBB, 1936–1937, 32; Harris, Lowell C. History of Policies of the Home Owner’s
Loan Corporation. New York: National Bureau of Economic Research, 1951, 18.
11. Fifth Annual Report, FHLBB, 1936–1937, 4-5.
12. Ibid., 5.
13. Ibid., 4.
14. Ibid., 5.
15. The appraisal standards embraced by the Home Owners’ Loan Corporation (HOLC) were not created
by this federal agency. For earlier works on the link among socioeconomic status, race, ethnicity, and
neighborhood desirability, see Richard M. Hurd, Principles of City Land Values (New York: Record
and Guide, 1905); Stanley McMichael, McMichael’s Appraising Manual (New York: Prentice Hall,
1931); Frederick Babcock, The Valuation of Real Estate (New York: McGraw-Hill, 1932). For a supe-
rior analysis of this early version of demographic neighborhood analysis, which predated the estab-
lishment of the HOLC, see Kenneth Jackson, Crabgrass Frontier: The Suburbanization of the United
States (New York: Oxford University Press, 1985), 198-203.
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1056 Journal of Urban History 38(6)
16. Federal Home Loan Bank Review 4, no. 3 (December 1937), issued by the FHLBB, Washington, DC, 85.
17. Earlier versions of the FHA Underwriting Manual explicitly stated the usage of “maps and illus-
trations,” which were made available to this federal agency by the HOLC. Underwriting Manual:
Underwriting and Valuation Procedure Under Title II of the National Housing Act, Federal Housing
Administration (Washington, DC: Government Printing Office, 1938), pt. 2, sec. 6, “Methods of Mort-
gage Risk Rating,” 637-38.
18. Ibid., pt. 2, sec. 9, “Rating of Location,” 911.
19. “Sixteenth Annual Report of the Federal Housing Administration, Year Ending December 31, 1949”
(Washington, DC: Government Printing Office, 1950), 39.
20. The Federal Home Loan Bank Review was published monthly from October 1934 until June 1947.
Their website is http://fraser.stlouisfed.org/publications/holc/.
21. Amy Hillier, “Redlining and the Home Owners’ Loan Corporation,” Journal of Urban History 29
(2003): 394-420; Amy Hillier, “Residential Security Maps and Neighborhood Appraisals: The Home
Owners’ Loan Corporation and the Case of Philadelphia,” Social Science History 29(2005): 207-33;
Amy Hillier, “Who Received Loans? Home Owners’ Loan Corporation Lending and Discrimination
in Philadelphia in the 1930s,” Journal of Planning History 2 (2003): 3-24. Amy Hillier argues that
the security maps were not widely distributed and were received only by high-ranking officials of the
FHLBB, the backbone of the nation’s post–Great Depression banking system, HOLC staff members
in the national and regional offices, and several government agencies including the Federal Housing
Administration (FHA). Hillier asserts that only “sixty copies of Philadelphia’s security map” were
ever authorized and posits that only a small fraction of local lenders had access to its contents. Her
analysis places more of the blame on the FHA Underwriting Manual than on HOLC security maps
for the national proliferation of redlining. The problem with focusing attention on one singular city is
that one’s assertions, while accurate in one specific region of the country, may be far from representa-
tive. According to the Federal Home Loan Bank Review, at least six thousand copies of this publica-
tion were widely distributed and communicated the lending policies throughout the country. Jackson,
Crabgrass Frontier, 198-203, 209-15.
22. HOLC appraisal officials did articulate that a neighborhood that received a hazardous appraisal rank-
ing could receive mortgage financing. However, since the entire community’s credit rating was down-
graded, the credit that was made available usually occurred at substantially higher interest rates.
23. For examples of the FHA’s role in the national spread of housing segregation that denied African
Americans home ownership, see Charles Abrams, Forbidden Neighbors: A Study of Prejudice in
Housing (New York: Harper, 1955), 158-63, 211-30; Jackson, Crabgrass Frontier, 203-18; Charles
M. Lamb, Housing Segregation in Suburban America since 1960: Presidential and Judicial Politics
(New York: Cambridge University Press, 2005), 12-13, 199-201; Douglas S. Massey and Nancy A.
Denton, American Apartheid: Segregation and the Making of the Underclass (Cambridge, MA: Har-
vard University Press, 1993), 52-55; Stephen Grant Meyer, As Long as They Don’t Move Next Door:
Segregation and Racial Conflict in American Neighborhoods (Lanham, MD: Rowman & Littlefield,
2000), 53-54, 62-67, 96-97; Thomas J. Sugrue, The Origins of the Urban Crisis: Race and Inequality
in Postwar Detroit (Princeton, NJ: Princeton University Press, 1996), 60-63; Robert C. Weaver, The
Negro Ghetto (New York: Harcourt Brace, 1948), 70-73, 148-53.
24. “Housing of the Nonwhite Population, 1940 to 1950, Housing and Home Finance Agency” (Washing-
ton, DC: Government Printing Office, 1952), 10, RG31, Records of the FHA, Commissioner’s Cor-
respondence and Subject File, 1938–1958, box 4, folder: Minority Group Housing—Printed Material,
Speeches, Field Letters, Etc., 1940–1950, College Park, MD, National Archives II (hereafter “Housing
the Nonwhite Population”). In this report, the Housing and Home Finance Agency defined the non-
white population as 96 percent African American.
25. Fifth Annual Report, FHLBB, 1936–1937, 19-20.
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26. Fourth Annual Report of the Federal Home Loan Bank Board, covering operations of the Federal
Home Loan Banks, Savings and Loan Division, The Home Owners’ Loan Corporation, Federal Sav-
ings and Loan Insurance Corporation, for the period July 1, 1935, through June 30, 1936, Washington,
D.C.: United States Printing Office, 1937, 11.
27. Federal Home Loan Bank Review, Volume 1, No. 1, October 1934, Issued by the Federal Home Loan
Bank Board, Washington, D.C., p. 18.
28. Fifth Annual Report, FHLBB, 1936–1937, 20.
29. FHLBR, October 1934, 6-7.
30. Fifth Annual Report, FHLBB, 1936–1937, 12.
31. Federal Home Loan Bank Review 1, no. 4 (January 1935), issued by the FHLBB, Washington, DC,
119 (hereafter FHLBR, January 1935).
32. Third Annual Report of the Federal Home Loan Bank Board, covering operations of the Federal Home
Loan Banks, Savings and Loan Division, The Home Owners’ Loan Corporation, for the period January
1, through June 30, 1935, and the Federal Savings and Loan Insurance Corporation, from the date of
its creation through June 30, 1935, Washington, D.C.: United States Printing Office, 1936, p. 57.
33. Fourth Annual Report of the Federal Home Loan Bank Board, covering operations of the Federal
Home Loan Banks, Savings and Loan Division, The Home Owners’ Loan Corporation, Federal Sav-
ings and Loan Insurance Corporation, for the period July 1, 1935, through June 30, 1936, Washington,
D.C.: United States Printing Office, 1937, p. 31.
34. FHLBR, January 1935, 121.
35. Hillier, “Redlining and the Home Owners’ Loan Corporation,” 394; Hillier, “Residential Security
Maps and Neighborhood Appraisals,” 207.
36. Housing and Home Finance Agency, Home Loan Bank Board, “Final Report to the Congress of the United
States Relating to the Home Owners’ Loan Corporation, 1933–1951” (Washington, DC, 1952), v.
37. FHLBR, January 1935, 121.
38. Ibid., 119.
39. Ibid., 122.
40. Federal Home Loan Bank Review 1, no. 10 (July 1935), issued by the FHLBB, Washington, DC, 365.
41. Federal Home Loan Bank Review 1, no. 11 (August 1935), issued by the FHLBB, Washington, DC,
404 (hereafter FHLBR, August 1935).
42. Ibid., 404.
43. Ibid., 404-5.
44. Federal Home Loan Bank Review 2, no. 1 (October 1935), issued by the FHLBB, Washington, DC, 7
(hereafter FHLBR, October 1935).
45. FHLBR, August 1935, 404-5.
46. FHLBR, August 1935, 405.
47. Federal Home Loan Bank Review 2, no. 2 (November 1935), issued by the FHLBB, Washington, DC, 42 .
48. From Federal Home Loan Bank Review 2, no. 3 (December 1935), issued by the FHLBB,
Washington, DC, 75.
49. Federal Home Loan Bank Review 2, no. 8 (May 1936), issued by the FHLBB, Washington, DC, 275.
50. Federal Home Loan Bank Review 2, no. 11 (August 1936), issued by the FHLBB, Washington, DC, 389.
51. Ibid., 390.
52. Ibid., 390-91.
53. Ibid., 390.
54. Ibid.
55. Ibid., 390-91.
56. Ibid., 391.
57. Ibid.
58. Ibid.
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1058 Journal of Urban History 38(6)
59. Ibid.
60. Federal Home Loan Bank Review 3, no. 2 (November 1936), issued by the FHLBB, Washington, DC, 35.
61. Ibid.
62. Ibid., 36.
63. S. R. Cook, field agent, “Confidential Report of a Survey in Nashville, Tennessee, for the Mortgage
Rehabilitation Division, Home Owners’ Loan Corporation” (Washington, DC, January 18, 1936), 2,
box 153, Tennessee, Texas Records Relating to the City Survey File, 1935–1940, Home Owners’ Loan
Corporation, Records of the FHLBB, RG195, National Archives II, College Park, MD, 10-11.
64. Ibid, 13.
65. FHLBB Regional Bank 5 was located in Cincinnati, Ohio, and serviced loans for the states of Ken-
tucky, Ohio, and Tennessee. In August 1946, the state of Tennessee had 1,661 savings and loan asso-
ciations, 1,151 insurance companies, 2,805 banks and trust companies, and 6,330 other mortgagers
servicing the state’s mortgage loan needs. If these banks desired federally issued insurance from the
Federal Savings Insurance Corporation, they also had to abide by the demographic neighborhood
appraisal standards nationalized by the FHLBB. See Federal Home Loan Bank Review 13, no. 1
(October 1946), issued by the FHLBB, Washington, DC, 29.
66. NARAII, RG195, FHLBB, HOLC, box 153, Nashville, 11-12.
67. “Housing Characteristics of the Nashville, Tenn. Standard Metropolitan Area, April 1950” (Washing-
ton, DC: U.S. Department of Commerce, Census of Housing: Preliminary Reports, August 2, 1951), 7,
Metropolitan Archives, Nashville, TN.
68. Ibid., 9.
69. “Area Description of Metropolitan Los Angeles, California, Housing Survey,” 1, folder: Metropolitan
Los Angeles, California, Security Map and Area Description vol. 1(2), box 78, New York, California,
Records Relating to the City Survey File, 1935–1940, Home Owner’s Loan Corporation, RG195,
Records of the FHLBB, National Archives II, College Park, MD.
70. Ibid.
71. Ibid., A-37.
72. Ibid, D-6.
73. Ibid.
74. Ibid, D-7.
75. Ibid.
76. Ibid, D-53.
77. Ibid.
78. Ibid, D-57.
79. Ibid.
80. Fifth Annual Report, FHLBB, 1936–1937, 27-28.
81. Twelfth Annual Report of the Federal Home Loan Bank Administration, for the Period July 1, 1943,
through June 30, 1944, Covering the Operations of the Federal Home Loan Banks, the Federal Sav-
ings and Loan Associations, the Federal Savings and Loan Insurance Corporation, the Home Owners’
Loan Corporation, and the United States Housing Corporation (Washington, DC: Government Print-
ing Office, 1945), 26.
82. “What Now in the Housing of Minorities? An Address Delivered by Dr. Frank S. Horne, Assistant to
the Administrator, Housing and Home Finance Agency, April 28, 1954,” 4, Papers of the NAACP, Part
5: The Campaign Against Residential Segregation, 1914–1955, reel 8, frame 660, Auburn University
of Montgomery, Montgomery, AL.
83. Ibid., reel 8, frame 661.
84. Federal Home Loan Bank Review 12, no. 6 (March 1946), issued by the FHLBB, Washington, DC, 172.
85. Ibid.
86. Fourth Annual Report, FHLBB, 1935–1936, 7.
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Woods 1059
87. Fourth Annual Report, FHLBB, 1935–1936, 42-43.
88. Fifth Annual Report, FHLBB, 1936–1937, 8.
89. “Housing the Nonwhite Population,” 10, RG31, box 4, folder: Minority Group Housing, NAII.
90. Ibid., 1-2.
91. Ibid., 2.
92. Ibid., 10.
93. Ibid., 12.
94. Ibid., 2.
95. Ibid., 11.
96. Ibid., 13.
97. Ibid.
98. For excellent analysis of the racially discriminatory lending policies of the FHA, see Abrams, Forbid-
den Neighbors, 158-63, 211-30; Christopher Bonastia, Knocking on the Door: The Federal Govern-
ment’s Attempt to Desegregate the Suburbs (Princeton, NJ: Princeton University Press, 2006), 63-64,
76-77, 97-98, 121-22, 131-35; Jackson, Crabgrass Frontier, 203-18; Lamb, Housing Segregation,
12-13, 199-201; Sugrue, Origins of the Urban Crisis, 60-64. On the racially exclusionary implementa-
tion of all four components of the Servicemen’s Readjustment Act of 1944, commonly known as the GI
Bill, see David H. Onkst, “‘First a Negro . . . Incidentally a Veteran’: Black World War Two Veterans
and the G.I. Bill of Rights in the Deep South, 1944–1948,” Journal of Social History 31, no. 3 (Spring
1998): 517-43. For the racial and gender discrimination in GI Bill benefits, see Lizabeth Cohen, A
Consumers’ Republic: The Politics of Mass Consumption in Postwar America (New York: Vintage,
2003), 166-73. For the racial discrimination of the educational GI Bill provisions, see “White Veterans
Only,” in Ira Katznelson’s When Affirmative Action Was White: An Untold History of Racial Inequality
in Twentieth-Century America (New York: Norton, 2005). For an insightful examination of the imple-
mentation of the GI Bill benefits and racial disparities in this process, see Kathleen J. Frydl, The GI Bill
(New York: Cambridge University Press, 2009), 24, 223, 237-38. For a discussion of the importance
of Levittown as a suburban archetype and to the racially exclusive postwar suburban housing boom,
see Herbert J. Gans, The Levittowners: Ways of Life and Politics in a New Suburban Community (New
York: Columbia University Press, 1967), 173-74, 377-78, 380-83, 427-28; David Kushner, Levittown:
Two Families, One Tycoon, and the Fight for Civil Rights in America’s Legendary Suburb (New York:
Walker, 2009), 43-45, 64-71, 75-76, 79-80, 185-88.
99. “Housing the Nonwhite Population,” 14, RG31, box 4, folder: Minority Group Housing, NAII.
100. Ibid., 15.
Bio
Louis Lee Woods, II is an assistant professor of U.S. and African American history in the History
Department at Middle Tennessee State University. In an attempt to better understand the institutional
impediments endured by nonwhite World War II veterans attempting to fully access the housing component
of their GI Bill rights, he has embarked on an intensive study of the housing policy of several federal agen-
cies. These include the Federal Housing Administration, the Veteran’s Administration, the Home Owners’
Loan Corporation, and the federal banking system under the supervision of the Federal Home Loan Bank
Board. He received his BA degree in Africana studies from the State University of New York at Stony
Brook, graduating cum laude and Phi Beta Kappa. He obtained his MA and PhD in U.S. and African
American history from Howard University.
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