Or consider public housing, which began as a segregated service with different complexes designated for white and black workers. But by the 1950s, public housing became mostly populated by black Philadelphians, and so the location of the sites almost perfectly correlates with the areas of the city that HOLC rated D and colored red. Of the over 60 public housing sites in Philadelphia mostly built by the government in the years between the issuance of HOLC maps and 1967, only six rose outside the D-rated sections of the city. In the entire 51 square miles of Northeast Philadelphia
, largely developed after World War II and overwhelmingly white until the 1990s, there is only one small neighborhood that was given a D rating. It is this exact tiny area where the Northeast’s only public housing complex lies.
But if there is only correlation, and not causation, between the HOLC maps and Philadelphia’s hypersegregation, there is no such ambiguity about the role of the era’s other major housing agency. The Federal Housing Administration was profoundly biased against neighborhoods like the sections of the city graded D in the HOLC maps, areas like Peay’s North Philadelphia.
HOW THE FEDERAL HOUSING ADMINISTRATION (REALLY, REALLY) SEGREGATED PHILADELPHIA, AND AMERICA
Although comprehensive FHA maps do not survive in the way that HOLC’s do, the agency did leave other materials behind. In its 1939 “Underwriting Manual,” appraisers are warned that neighborhood property values are reliant upon consistency in “social and racial occupancy.” A particularly helpful way to conduct healthier lending, the book notes, is to insure white neighborhoods that are separated from black or mixed-race areas by physical impediments like waterways or railroad tracks.
“Natural or antically established barriers will prove effective in protecting a neighborhood … from adverse influences,” reads the manual. These barriers aid in “the prevention of the infiltration of … lower class occupancy and inharmonious racial groups.”
The monumental power of the FHA is hard to exaggerate. The FHA’s policies set the standard for mortgage lending in America. When the nascent Department of Veterans Affairs (VA) started insuring mortgages for those returning from World War II, it simply adopted the FHA’s preexisting model. By 1950, half of all new mortgages in America were insured by the two federal agencies.
A drumbeat of negative stories about the agency’s practices appeared in the black press, but the FHA did not fundamentally change its practices until forced by a 1968 act of Congress. Until then, they could be devastatingly petty in the enforcement of their discriminatory standards. Richard Rothstein’s book “The Color of Law” recounts a story from 1958 in which a white school teacher got an FHA-backed mortgage but couldn’t move in immediately. In the interim, he rented the house to an African-American friend. The FBI ended up investigating how the tenant managed to live in an all-white neighborhood, and the FHA blacklisted the white buyer from ever again obtaining a government-backed mortgage.
To Peay, in North Philadelphia, the inability of many African-Americans to obtain mortgages in the mid-20th century still hampers the community today.
“It was hard for black residents to buy houses in this neighborhood because all the lenders were redlining,” says Peay. “That affects the equity wealth and property ownership of black Philadelphians today. If your parents and your grandparents never owned a house, well, there’s a huge lack of ownership to this day because in history we didn’t get access to it.”
Black neighborhoods like the part of North Philadelphia where Peay lives weren’t the only ones slighted by the FHA. Racially mixed neighborhoods, or even just white neighborhoods adjacent to black populations were considered a bad risk.
The FHA’s bias also ran against urban areas in general. The 1939 underwriting manual warned against “crowded neighborhoods,” smoky environments and even single-family houses that could be used as a commercial property. Instead the agency preferred detached, single-family homes separated from commercial or industrial buildings. During the 1950s, in comparison to multifamily dwellings, they insured these kind of classic suburban homes at a rate of seven to one.
But there wasn’t an equivalency between the housing discrimination visited upon urban white communities and black city neighborhoods. White residents had an out: the suburbs.
WHITELINING IN THE SUBURBS
“Redlining is just a small part of a much bigger story of segregation in urban areas like Philadelphia,” says Rothstein. “Levittown isn’t on a HOLC map. The biggest effect of these midcentury government policies was to give white families single-family homes with low-cost mortgages in suburban neighborhoods. [The FHA and VA] gave them an investment with value that appreciated for the next three or four decades.”
Rothstein argues that the FHA’s greatest contribution to the hypersegregation that defines American metropolitan areas today is the agency’s guaranteeing of massive loans to suburban developers like William Levitt. The plans and designs for the famed Long Island development, and its sister in the Philadelphia suburb of Bucks County, had to be submitted to the FHA for approval so he could then secure low-interest bank loans. One of the necessities for FHA approval was that Levitt and the dozens of other suburban developers like him, agree to not sell their new homes to African-Americans. Today, Pennsylvania’s Levittown is still overwhelmingly white
“A government offering such bounty to builders and lenders could have required compliance with a nondiscrimination policy,” wrote Charles Abrams, in his 1955 book “Forbidden Neighbors.” “Instead, the FHA adopted a racial policy that could well have been culled from the Nuremberg laws. From its inception FHA set itself up as the protector of the all white neighborhood.”
Government-sponsored suburban developments like Levittown explain a big part of why public housing ended up being mostly African-American. The housing prices were so low in the FHA-insured suburbs that the monthly mortgage payments were often less than the rent in public housing, especially if a white family received veterans’ benefits.
THE IMPACT OF REDLINING IN TODAY’S CITIES
The discriminatory practices of the FHA were outlawed in the last great civil rights law of the 1960s, the Fair Housing Act of 1968. But by then it was too late. The federal government’s appetite for investing in urban housing would soon radically diminish. (HOLC had been disbanded in the early 1950s, and nothing like it would be created during the Great Recession, while Richard Nixon would soon end the construction of new public housing units.)
By that time many of the industrial jobs that had drawn black Southerners to Philadelphia had vanished, especially from areas like North Philadelphia.
“They kept a lot of black residents from buying houses outside black neighborhoods,” Peay says. “That’s the other part of housing discrimination. A lot of the jobs around that time moved out, and it was hard for us to get those jobs outside the city because we couldn’t get housing outside the city. With no jobs, there’s no money. That means crime increases, drug abuse, all that.”
Residents of areas like North Philadelphia were trapped. Housing stock had deteriorated because loans for home repair or home purchase were so hard to come by. That led to a predatory rental market, where rents were jacked up for those who struggled to move elsewhere. Small business corridors fell apart for similar reasons, and because of the conflagrations of the 1960s and the movement of upwardly mobile African-Americans into new parts of the city and surrounding suburbs.
Predatory alternative mortgage products targeted the old redlined areas and newer African-American neighborhoods as well. Those who wanted to purchase homes had to go beyond the bounds of FHA-secured mortgages, and utilized more treacherous financial products. Even as the African-American population moved into surrounding white neighborhoods and beyond the areas delineated by the old HOLC maps, speculators and other housing predators followed them across West Philadelphia and north into Nicetown, Olney and West Oak Lane. Whites subsequently fled. These newly segregated areas, and the old African-American neighborhoods of the mid-20th century, were heavily targeted by subprime lenders before the recent Great Recession.
For all of these reasons and more, areas like North Philadelphia have languished, sprouting blighted properties and weedy lots. Conditions spawned of federally sponsored segregation breed fresh evils, and make it hard to attract new investment and new residents. Even heroin-wracked Kensington is experiencing more development than much of North Philadelphia, despite the latter area’s closer geographic proximity to transit and the jobs of Center City.
The city of Philadelphia has tried to help where it can. Recent efforts include the city’s land bank, created in 2013 to try and take control of the tens of thousands of vacant buildings and lots that have proliferated in the most divested corners of the city. This year, City Council is beginning to steer $100 million toward the Basic Systems Repair Program, which is meant to help low-income people fix their homes, and a loan program designed to offer a safe alternative to populations that cannot access traditional lending. An inclusionary zoning effort, promoted as a means to create mixed-income housing, is underway as well. But the city’s ability to reverse these trends is extremely limited, given its resource constraints and the long retreat of the federal government from urban affairs.
For Peay, at least, North Philadelphia’s problems can begin to be addressed if more people know about them and how things got to be so hard.
“Redlining and all that is an issue that no one knows about now,” says Peay. “It’s good we’re talking about this.”
This article originally appeared on Next City as part of the Philadelphia in Flux series supported by the William Penn Foundation.
Join Next City, Little Giant and WHYY for a free public discussion of redlining in Philadelphia on Saturday, Dec. 9 at WHYY. The panel discussion is part of Next City’s Philadelphia in Flux series and the launch event of Little Giant’s A Dream Deferred project.