HOLC color-coded neighborhoods within the United States, grading them into four “quality” or “security” categories: “A” (green), “B” (blue), “C” (yellow), and “D” (red). “A” received the highest rating and “D” received the lowest rating, also known as being “redlined.” These categories corresponded to a neighborhood’s level of “invasion” or “infiltration” by an “undesirable population,” or, in other words, by persons of color.
To obtain a government rating of “A,” a neighborhood had to be“homogeneous” and consist of “American business and professional men,” where “American” presumably meant white and often, U.S.-born. “B”-rated areas had “reached their peak”, but were “still desirable” and could be “expected to remain stable”. “C”-rated areas were described as “definitely declining.” Finally, “D” or “red” neighborhoods were described as “undesirable populations” that, having declined, were insecure, volatile, dangerous, hazardous, and unstable. “D”-rated or redlined communities were flagged as unsuitable for federal loans and subsidies. These redlined neighborhoods were predominantly black. For instance, in Detroit, every neighborhood with a black-American population, however small, was rated “D” or “hazardous.”
Race was an important driver of the HOLC’s ratings. “Notions of racial and ethnic worth . . . on an unprecedented scale” informed the HOLC’s neighborhood ratings.46 Racial and ethnic groups were ranked in order of the most desirable to the least desirable, with the least desirable rankings having the most adverse effect on property values.47 Racial and ethnic groups were ranked in the following way:
(1) English, Germans, Scotch, Irish, Scandinavians (2) North Italians (3) Bohemians or Czechs (4) Poles (5) Lithuanians (6) Greeks (7) Russians, Jews (lower class) (8) South Italians (9) Negroes; and (10) Mexicans.
Stability, security, safety, and property value were thus attributed to “white”-American communities, whereas black neighborhoods—or even neighborhoods with only a handful of black occupants —were defined as hazardous homes and hazardous investment. In this way, race and the worth that the federal government attributed to a neighborhood’s racial composition principally drove the HOLC’s ratings.
The government determined the value of a dwelling based on racial composition, alleged worth, and “infiltration” of a neighborhood, where infiltration reflected racial diversity or the increase in persons of color within a neighborhood. Race was more important than the property’s structural characteristics, the community’s economic class, or foreseeable mortgage default rates. In St. Louis, for example, a community known as Lincoln Terrace was originally intended for middle class white families. The neighborhood developed into a black neighborhood, but, despite the fact that the homes were relatively new and of good quality, the HOLC gave the area a “D” rating in 1937 and 1940, asserting that the houses had “little or no value today, having suffered a tremendous decline in value due to the colored elements now controlling the district.” In Detroit, although the black West Side housed wealthy black-Americans and expensive homes, the neighborhood was rated “D” or “red” by the HOLC. Moreover, data indicates that default rates on loans were actually lower in lower-grade, minority homes, indicating that the government’s classification of minority neighborhoods as financially volatile was subjective, inaccurate, and discriminatory.