MEMPHIS, Tenn. — Homeownership is the bedrock of the American dream but it’s a dream that wasn’t available for many black and brown communities because of redlining.
The federal policy was rooted in racism and that many of the effects of redlining are still present nearly 90 years later, according to experts.
“This is one of the areas where you know you have a very strong homeowner community. They take pride in their, you know, maintaining their homes. They look out for each other,” said Rasheedah Jones, DreamTeam Realty Co. broker and owner.
Real estate agent and investor Rasheedah Jones is flipping an old, rundown home into a new opportunity.
She can see the potential in this North Memphis neighborhood. Many say it’s the potential that was stripped away almost a century ago when this community wasn’t just a location on a map, it was a color, Jones said.
“Kind of think of it like a traffic light: green means go, yellow means exercise caution and maybe stop and red means definitely stop,” said Dr. Robert Nelson who is the director of the University of Richmond’s Digital Scholarship Lab.
In the 1930s, the federal government created hundreds of Residential Security maps indicating risk levels for long-term real estate investment.
The practice is known as redlining.
Memphis as a city was geographically much smaller in the 1930s but the colors on the map represent the landscape for decades of racial inequity.
“These are federal documents. This is not like private banks, or private homeowners making discriminatory decisions about who they’re selling their house to,” said Dr. Nelson. “This is the federal government saying like, ‘We want you to discriminate. Discrimination is the best thing for the industry and we’re totally behind this in the marketplace.’”
Nelson’s team at the Digital Scholarship Lab digitized many of the redlining maps from the 1930s including the one for the city of Memphis.
“They channeled money, channeled capital into white families through homeownership, and then they use homeownership to build wealth over generations and made it really difficult for black families to do the same,” said Nelson. “They just couldn’t get mortgages, and if you can’t get a mortgage, you can’t buy a house, and if you can’t buy a house, you’re not benefiting from the appreciation that happens in the ’40, ’50, ’60s, where home values became the place where people had their wealth.”
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But Rhodes College Health Equity Program Director Dr. Kendra Hotz said redlining goes beyond housing. She said it’s part of its own trinity of discriminatory housing, transportation, and lending policies and practices.
“Redlining ensured that white families were able to build intergenerational wealth and where that money went, city amenities went, so when you got concerned poverty and an incapacity to build intergenerational wealth you also begin to get things like defunding public education, defunding public transportation,” said Hotz. “You know once people become car-dependent, they’re less willing to invest in public resources and public transportation, that becomes a significant burden for low-income families.”
Redlining shaped some of the racial geography that still exists today, experts said.
For example, Chickasaw Gardens is one of the city’s upper-class neighborhoods where some homes are worth a half-million dollars or more.
Less than half a mile away is Orange Mound, one of the nation’s first neighborhoods created by and for African Americans. Orange Mound was a redlined community in the 1930s and today, property values have plummeted over the last decade.
“Segregation had already created the conditions where it’s easy to identify the neighborhoods that you would want to disinvest if you’re motivated by racism. And I think that we can name a lot of other policy considerations going on in that period and in our own, but it’s worth naming that the root condition there is what people call America’s original sin, which is racism,” said Dr.Hotz, Rhodes College health equity program director.
The Fair Housing Act of 1968 made redlining illegal, but Dr. Hotz said those discriminatory lending practices never really ended. She said that’s evident in a series of lawsuits involving banks in Memphis.
In 2012, Wells Fargo settled for $432.5 million after the city and county accused the bank of targeting black neighborhoods for predatory lending.
In 2016, BancorpSouth settled for $10.6 million after regulators alleged the bank deliberately avoided building branches in minority neighborhoods in Memphis, along with denying more loans to black applicants.
During that same year, Memphis-based First Tennessee Bank settled for $1.9 million following allegations the bank denied loans to African American and Hispanic applicants and failed to put bank branches in minority neighborhoods in Memphis, Knoxville, Chattanooga, and Nashville.
“People who are living in these historically redlined neighborhoods didn’t have access to those loans even when they were well qualified, so the lawsuits were because black families were getting pushed into subprime mortgages even when they were well qualified for conventional mortgages,” said Dr. Hotz.
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Despite the policy changes and the multimillion-dollar settlements, Jones believes redlining still exists.
She said she still faces barriers as a minority investor which she calls signs of redlining’s damaging legacy.
“It’s very difficult to get insurance as an investor of property in communities that have historically been identified as hazardous.
Redrawing the lines of nearly 90 years of discrimination, devaluation and disinvestment isn’t simple but Dr. Hotz said it’s possible and there’s already a potential roadmap.
“If we think about the pieces that got pulled apart, education funding, transportation funding, housing funding [and] if we manage to put those things back together with targeted investments in the neighborhoods that were targeted for disinvestment that’s the way we learn to reserve these things,” said Dr. Hotz.