(Image Credit: The 1936 Underwriting Manual)
“The FHA played a significant role in the legalization and institutionalization of racism and segregation.”
-The Fair Housing Center of Greater Boston, an organization with the aim to eliminate housing discrimination
The Federal Housing Administration assisted white Americans’ purchases of homes during and after the Great Depression, but it segregated neighborhoods and refused homes to people of color.
“The Federal Housing Administration refused to insure houses in African-American neighborhoods.” 
(Image Credit: Huffington Post)
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The FHA provided loans at lower interest rates to banks for builders who denied housing to people of color and financed subdivision developers on the condition that they would only sell to white Americans. This discrimination and segregation led to the creation of suburbs throughout America, such as Levittown and Daly City.
“This was not an implicit program...There was nothing secret about it.” However, even if black homeowners bought houses privately, they still needed mortgages, which were insured by the FHA.
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“[The] FHA exhorted segregation and enshrined it as public policy.”
-Kenneth T. Jackson, author of Crabgrass Frontier
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In order to further segregate the newly established suburbs, the FHA provided white families with lower interest rates as incentives to move into all-white neighborhoods. Black Americans were stuck living in urban public housing, segregating neighborhoods, which according to the author of The Color of Law and a housing policy expert, Richard Rothstein, created "ghettos."
“The Valuator should investigate areas surrounding the location to determine whether or not incompatible racial and social groups are present.” |
“So many African-Americans ended up living in ghettos as a result of a century of public policy, on the local and federal levels, designed to isolate African-Americans from white people.” (Audio Credit: Richard Rothstein, "Historian Says Don't 'Sanitize' How Our Government Created Ghettos")
The FHA thoroughly evaluated all-white neighborhoods to guarantee that black families weren’t moving in.
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The publicly available 1936 FHA Underwriting Manual encouraged discrimination and included instructions that explained how to discriminate against people of color.
“The Underwriting Manual established the FHA’s mortgage lending requirements, ultimately institutionalizing racism and segregation within the housing industry.” “Natural or artificially established barriers will prove effective in protecting a neighborhood and the locations within it from adverse influences.” |
(Image Credit: The 1936 Underwriting Manual)
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Due to the FHA’s dominance over the housing industry, their racially discriminatory policies significantly impacted black homeownership rates.
(Image Credit: FHA.com)
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“[The] FHA has written mortgage insurance on more than 5,000,000 homes... It is estimated that only some 200,000 dwelling units for Negroes have been built with FHA assistance.” |