The Home Owners’ Loan Corporation (HOLC), established in the US during the Great Depression to provide relief to a failing housing market, had a lasting effect through institutionalising the segregationist practice of denying mortgages to communities of colour. Over subsequent decades, ‘redlining’ funnelled billions of US dollars away from minority neighbourhoods and shaped segregation patterns – constituting perhaps the most influential example of institutional intervention in the hierarchy of places. This history of racialised exclusion via the process of ‘spatial marking’ is reflected in contemporary housing inequality, which remains one of the most severe sites of racial stratification. This article combines newly-digitised archival data with data describing recent mortgage outcomes to investigate the role of institutional classification of place in the persistence of housing finance inequality. I show that borrowers in the 21st century were at a severe disadvantage when pursuing mortgages in neighbourhoods redlined by HOLC appraisers in the early 20th century. Such applicants were more likely to be denied loans and to receive subprime loans net of measures of selection and ecological disadvantage. This article shows that the geographical patterns of exclusion and exploitation are remarkably stable, and highlights the role of persistent institutional marginalisation in replicating racial and spatial inequalities.
AaronsonDHartleyDMazumderB (2017) The effects of the 1930s HOLC ‘redlining’ maps. Working Paper 2017-12. Chicago, IL: Federal Reserve Bank of Chicago.
2.
AnanatEO (2011) The wrong side(s) of the tracks: The causal effects of racial segregation on urban poverty and inequality. American Economic Journal: Applied Economics3(2): 34–66.
3.
AndersonE (1992) Streetwise: Race, Class, and Change in an Urban Community. Chicago, IL: University of Chicago Press.
4.
AndersonE (1999) Code of the Street. New York: Norton.
5.
BaderMDKrysanM (2015) Community attraction and avoidance in Chicago: What’s race got to do with it?Annals of the American Academy of Political and Social Science660(1): 261–281.
6.
BeenVEllenIMadarJ (2008) The high cost of segregation: Exploring racial disparities in high-cost lending. Fordham Urban Law Journal36(3): 361–385.
7.
BertrandMDufloE (2017) Field experiments on discrimination. In: BanerjeeAVDufloE (eds) Handbook of Economic Field Experiments. Vol. 1. Amsterdam: Elsevier, pp. 309–393.
8.
BesbrisMFaberJW (2017) Investigating the relationship between real estate agents, segregation, and house prices: Steering and upselling in New York State. Sociological Forum32(4): 850–873.
9.
BesbrisMFaberJWRichP, et al. (2015) Effect of neighborhood stigma on economic transactions. Proceedings of the National Academy of Sciences of the United States of America112(16): 4994–4998.
10.
BhuttaNPopperJRingoD (2015) The 2014 home mortgage disclosure act data. Federal Reserve Bulletin101(4): 1–32.
11.
BischoffK (2008) School district fragmentation and racial residential segregation: How do boundaries matter?Urban Affairs Review44(2): 182–217.
12.
BondCWilliamsR (2007) Residential segregation and the transformation of home mortgage lending. Social Forces86(2): 671–698.
13.
Burdick-WillJ (2018) School location, social ties, and perceived neighborhood boundaries. City and Community17(2): 418–437.
14.
ChanSGedalMBeenV, et al. (2013) The role of neighborhood characteristics in mortgage default risk: Evidence from New York City. Journal of Housing Economics22(2): 100–118.
15.
CharlesCZ (2006) Won’t You Be My Neighbor? Race, Class, and Residence in Los Angeles. New York: Russell Sage Foundation.
16.
CollinsWMargoR (2011) Race and home ownership from the end of the civil war to the present. The American Economic Review101(3): 355–359.
17.
ConnollyNDB (2014) A World More Concrete: Real Estate and the Remaking of Jim Crow South Florida. Chicago, IL: University of Chicago Press.
18.
CrossneyKBBarteltDW (2005) The legacy of the Home Owners’ Loan Corporation. Housing Policy Debate16(3–4): 547–574.
19.
CrowderKPaisJSouthS (2012) Neighborhood diversity, metropolitan constraints, and household migration. American Sociological Review77(3): 325–353.
20.
CrumpJNewmanKBelskyES, et al. (2008) Cities destroyed (again) for cash: Forum on the U.S. foreclosure crisis. Urban Geography29(8): 745–784.
21.
DoleacJSteinL (2013) The visible hand: Race and online market outcomes. Economic Journal123(572): 469–492.
22.
DymskiG (2006) Discrimination in the credit and housing markets: Findings and challenges. In: RodgersWM (ed.) Handbook on the Economics of Discrimination. Cheltenham: Edward Elgar Publishing, pp. 129–169.
23.
DymskiG (2012) The reinvention of banking and the subprime crisis. In: AalbersM (ed.) Subprime Cities: The Political Economy of Mortgage Markets. John Wiley & Sons, pp. 151–184.
24.
EllenIG (2000) Sharing America’s Neighborhoods. Cambridge, MA: Harvard University Press.
25.
FaberJW (2013) Racial dynamics of subprime mortgage lending at the peak. Housing Policy Debate23(2): 328–349.
26.
FaberJW (2018) Segregation and the geography of creditworthiness: Racial inequality in a recovered mortgage market. Housing Policy Debate28(2): 215–247.
27.
FaberJWEllenIG (2016) Race and the housing cycle: Differences in home equity trends among long-term homeowners. Housing Policy Debate26(3): 456–473.
28.
FishmanR (1987) Bourgeois Utopias: The Rise and Fall of Suburbia. New York: Basic Books.
29.
FlippenC (2004) Unequal returns to housing investments? A study of real housing appreciation among black, white, and Hispanic households. Social Forces82(4): 1523–1551.
30.
GramlichEM (2007) Subprime Mortgages: America’s Latest Boom and Bust. Washington, DC: The Urban Institute.
31.
HallMCrowderKSpringA (2015) Neighborhood foreclosures, racial/ethnic transitions, and residential segregation. American Sociological Review80(3): 526–549.
32.
HansonAHawleyZMartinH, et al. (2016) Discrimination in mortgage lending: Evidence from a correspondence experiment. Journal of Urban Economics92: 48–65.
33.
HernandezJ (2012) Redlining revisited: Mortgage lending patterns in Sacramento 1930–2004. In: AalbersMB (ed.) Subprime Cities: The Political Economy of Mortgage Markets. Malden, MA: Blackwell Publishing, pp. 187–218.
34.
HillierAE (2005) Residential security maps and neighborhood appraisals: The Home Owners’ Loan Corporation and the case of Philadelphia. Social Science History29(2): 207–233.
35.
HirschA (1983) Making the Second Ghetto: Race and Housing in Chicago 1940–1960. Chicago, IL: University of Chicago Press.
36.
HirtS (2015) Zoned in the USA: The Origins and Implications of American Land-Use Regulation. Ithaca, NY: Cornell University Press.
37.
HollowaySR (1998) Exploring the neighborhood contingency of race discrimination in mortgage lending in Columbus, Ohio. Annals of the Association of American Geographers88(2): 252–276.
38.
HwangJHankinsonMBrownKS, et al. (2015) Racial and spatial targeting: Segregation and subprime lending within and across metropolitan areas. Social Forces93(3): 1081–1108.
39.
HyraDSSquiresGDRennerRN, et al. (2013) Metropolitan segregation and the subprime lending crisis. Housing Policy Debate23(March): 37–41.
40.
JacksonK (1985) Crabgrass Frontier: The Suburbanization of the United States. Oxford: Oxford University Press.
41.
JonesNJacksonC (2012) ‘You just don’t go down there’: Learning to avoid the Ghetto in San Francisco. In: HutchinsonRHaynesBD (eds) The Ghetto: Contemporary Global Issues and Controversies. Boulder, CO: Westview Press, pp. 83–110.
42.
KendiIX (2016) Stamped from the Beginning: The Definitive History of Racist Ideas in America. New York: Nation Books.
43.
KrivoLKaufmanR (2004) Housing and wealth inequality: Racial-ethnic differences in home equity in the United States. Demography41(3): 585–605.
44.
KrysanMCrowderK (2017) Cycle of Segregation: Social Processes and Residential Stratification. New York: Russell Sage Foundation.
45.
KrysanMFarleyR (2002) The residential preferences of blacks: Do they explain persistent segregation?Social Forces80(3): 937–980.
46.
LeeSLinJ (2018) Natural amenities, neighbourhood dynamics, and persistence in the spatial distribution of income. Review of Economic Studies85(1): 663–694.
47.
LipsitzG (1998) The Possessive Investment in Whiteness: How White People Profit from Identity Politics. Philadelphia, PA: Temple University Press.
48.
LipsitzG (2011) How Racism Takes Place. Philadelphia, PA: Temple University Press.
49.
LoganJ (2016) As long as there are neighborhoods. City and Community15(1): 23–28.
50.
LoganJMolotchHL (1987) Urban Fortunes: The Political Economy of Place. Berkeley, CA: University of California Press.
51.
LoganJStultsB (2011) The persistence of segregation in the metropolis: New findings from the 2010 census. Census Brief prepared for Project US2010. Available at: http://www.S4.Brown.Edu/Us2010 (accessed 11 August 2020).
52.
LoganJXuZStultsB (2014) Interpolating U.S. decennial census tract data from as early as 1970 to 2010: A longitudinal tract database. The Professional Geographer: The Journal of the Association of American Geographers66(3): 1–9.
53.
LoganJR (1978) Growth, politics, and the stratification of places. American Journal of Sociology 84(2): 404–416.
54.
MasseyD (2005) Racial discrimination in housing: A moving target. Social Problems52(2): 148–151.
55.
MasseyD (2007) Categorically Unequal. New York: Russell Sage Foundation.
56.
MasseyDDentonN (1993) American Apartheid: Segregation and the Making of the Underclass. Cambridge, MA: Harvard University Press.
57.
MasseyDRughJSteilJ, et al. (2016) Riding the stagecoach to hell: A qualitative analysis of racial discrimination in mortgage lending. City and Community15(2): 118–136.
58.
Minnesota Population Center (2011) National Historical Geographic Information System: Version 2.0. University of Minnesota. Available at: www.nhgis.org (accessed 23 February 2020).
59.
MunnellATootellGBrowneL, et al. (1996) Mortgage lending in Boston: Interpreting HMDA data. American Economic Review86(1): 25–53.
PagerD (2008) Marked: Race, Crime, and Finding Work in an Era of Mass Incarceration. Chicago, IL: University of Chicago Press.
62.
PagerDShepherdH (2008) The sociology of discrimination: Racial discrimination in employment, housing, credit, and consumer markets. Annual Review of Sociology34: 181–209.
63.
PettitKDroeschA (2008) A Guide to Home Mortgage Disclosure Act Data. Washington, DC: The Urban Institute Press.
64.
QuillianL (2002) Why is black–white residential segregation so persistent? Evidence on three theories from migration data. Social Science Research31(2): 197–229.
65.
RossSYingerJ (2002) The Color of Credit: Mortgage Discrimination, Research Methodology, and Fair-Lending Enforcement. Cambridge, MA: The MIT Press.
66.
RothsteinR (2017) The Color of Law: A Forgotten History of How Our Government Segregated America. New York: Liveright.
67.
RughJ (2015) Double jeopardy: Why Latinos were hit hardest by the US foreclosure crisis. Social Forces93(3): 1139–1184.
68.
RughJMasseyD (2010) Racial segregation and the American foreclosure crisis. American Sociological Review75(5): 629–651.
69.
RughJAlbrightLMasseyD (2015) Race, space, and cumulative disadvantage: A case study of the subprime lending collapse. Social Problems62(2): 186–218.
70.
SampsonRSharkeyP (2008) Neighborhood selection and the social reproduction of concentrated racial inequality. Demography45(1): 1–29.
71.
SharkeyP (2008) The intergenerational transmission of context. American Journal of Sociology113(4): 931–969.
72.
SharkeyP (2013) Stuck in Place: Urban Neighborhoods and the End of Progress toward Racial Equality. Chicago, IL: University of Chicago Press.
73.
SharkeyPFaberJW (2014) Where, when, why, and for whom do residential contexts matter? Moving away from the dichotomous understanding of neighborhood effects. Annual Review of Sociology40(1): 559–579.
74.
SlaterT (2013) Your life chances affect where you live: A critique of the ‘cottage industry’ of neighbourhood effects research. International Journal of Urban and Regional Research37(2): 367–387.
75.
SmithNCarisPWylyE (2001) The ‘Camden syndrome’ and the menace of suburban decline: Residential disinvestment Camden county, New Jersey. Urban Affairs Review36(4): 497–531.
76.
SouthSCrowderKD (1998) Leaving the ’hood: Residential mobility between black, white, and integrated neighborhoods. American Sociological Review63(1): 17–26.
77.
SquiresGD (2003) Racial profiling, insurance style: Insurance redlining and the uneven development of metropolitan areas. Journal of Urban Affairs25(4): 391–410.
78.
SquiresGD (2004) The new redlining. In: SquiresGD (ed.) Why the Poor Pay More: How to Stop Predatory Lending. Westport, CT: Greenwood Publishing Group, pp. 1–23.
79.
SugrueT (1996) The Origins of the Urban Crisis: Race and Inequality in Postwar Detroit. Princeton, NJ: Princeton University Press.
ThurstonCN (2018) At the Boundaries of Homeownership: Credit, Discrimination, and the American State. Cambridge: Cambridge University Press.
82.
TillyC (1998) Durable Inequality. Berkeley, CA, and Los Angeles, CA: University of California Press.
83.
TorcheF (2011) Is a college degree still the great equalizer? Intergenerational mobility across levels of schooling in the United States. American Journal of Sociology117(3): 763–807.
WacquantL (2008) Urban Outcasts: A Comparative Sociology of Advanced Marginality. Cambridge: Polity.
87.
WilliamsRNesibaRMcConnellED (2005) The changing face of inequality in home mortgage lending. Social Problems52(2): 181–208.
88.
YingerJ (1995) Closed Doors, Opportunities Lost. New York: Russell Sage Foundation.
Supplementary Material
Please find the following supplemental material available below.
For Open Access articles published under a Creative Commons License, all supplemental material carries the same license as the article it is associated with.
For non-Open Access articles published, all supplemental material carries a non-exclusive license, and permission requests for re-use of supplemental material or any part of supplemental material shall be sent directly to the copyright owner as specified in the copyright notice associated with the article.
