Neighborhood Redlining, Racial Segregation, and Homeownership

Diego Mendez-Carbajo

Page One Economics Newsletter, 2021

Abstract: Redlining was the practice of selectively classifying neighborhoods as most likely to default on repayment of a mortgage loan. Houses in redlined neighborhoods held little value as collateral, and lenders would only offer mortgage loans for these houses at above-average interest rates. Over time, these neighborhoods had the largest concentrations of African Americans. The September 2021 issue of Page One Economics explains how residents in redlined neighborhoods could not afford to become homeowners and accumulate wealth at the rates other groups did. It also points out how only when the federal government passed laws banning discrimination in housing and banking did the segregation of African Americans to specific neighborhoods start to ease up.

Keywords: asset; collateral; default; depression; liquidity; mortgage; wealth; redlining; racial segregation; homeownership (search for similar items in EconPapers)
Date: 2021
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