Redlining and the Home Owners' Loan Corporation

Abstract

This article analyzes the impact of the residential security maps created by the Home Owners' Loan Corporation (HOLC) during the 1930s on residential mortgages in Philadelphia. Researchers have consistently argued that HOLC caused redlining and disinvestment in U.S. cities by sharing its color-coded maps. Geographic information systems and spatial statistical models were used to analyze address-level mortgage data from Philadelphia to determine if areas with worse grades actually had less access to residential mortgage credit as a result. Findings indicate that the grades on HOLC's map do not explain differences in lending patterns with the exception of interest rates, which were higher in areas colored red. Archival material and journal articles from the 1930s also reveal that lenders were avoiding areas colored red before HOLC made its maps, that HOLC's maps were not widely distributed, and that lenders had other sources of information about real estate risk levels.