Welcome to Stuff you missed in History Class from how Stuff Works dot com. Hello, and welcome to the podcast I Am Training. We answer a lot of questions on our Facebook and our Twitter. Some of them are about the show, some of them are about specific episode. Sometimes they're about articles that we post from other sources because we think they're interesting or relevant. And every once in a while, usually when we've posted something that's about discrimination in some way, I have a conversation with somebody that starts with them saying, explain to me why, in like a really angry way, And a lot of times that conversation plays out in a way that makes it clear the person did not actually want an explanation. They were kind of demanding an explanation, but really thinking that we were gonna say, oh no, you're totally right, and that's absolutely a valid reason to discriminate against these people. Uh. It's never how it goes. That's neber what we're gonna do. Uh. And but sometimes somebody demands that I explain something to them, and it turns out they actually genuinely did want to know. Uh. So I keep explaining to people why when they demand explain to me why, even though most of the time, that's not how it works out. Today's podcast is a two parter that was inspired by one of these conversations, and it's about the history of redlining, which is a word that's now used to describe a lot of different patterns of economic discrimination, but in this episode's context, it's about the Great Depression, and it's specifically about buying houses. Like I said, we're tackling the story in two parts, and first we were going to talk about the Great Depression itself and one of its lesser known effects, which was changes in the housing market and the way loans to buy houses actually work. We're also going to talk about the Homeowner's Loan Corporation, which was created by the federal government to try to save people's homes during the Great Depression. And then in part two, we will talk about the darker side of this whole story, how the maps that the Homeowners Loan Corporation made and the trends that those maps were documenting were used to discriminate against people based on their race. So it is no big secret. I think most listeners probably know that there was a massive stock market crash on October and that crash sparked the very long, extreme financial downturn that we refer to as the Great Depression. This was an enormous economic crisis in which about half of the banks in the United States actually failed. The Great depressions height in ninety three, about one quarter of Americans were unemployed, and the effects of this event were really quite global, particularly in Europe. Financial times were difficult all over the world. A lot of history class discussions of out the Great Depression, especially at like the K through twelve level, focus on homelessness, breadlines and soup kitchens, shanty towns that were called Hooverville's Franklin D. Roosevelt's New Deal, which was a set of government policies, projects, and programs that were meant to put people back to work and also shore up the economy. Lessons on the New Deal often stick primarily to the Works Progress Administration, which later became the Work Projects Administration, and the Civilian Conservation Corps, which put unemployed people to work on the nation's infrastructure, building things like bridges, highways, schools, and parks. As a side note, I worked at one of those parks uh all of the summers that I was in college. These projects and their real world impact in terms of government involvement and job availability are really easy to visualize. It's much easier to imagine previously out of work people getting jobs building schools than it is to kind of get an imaginary sense of the abstraction of a stock market crash, and a lot of new deal policies set the stage for later government relief programs and services that still exist today, especially that are the ones related to helping people that are in financial distress, and for these reasons. All of this is usually what's front and center when people talk about the Great Depression and its aftermath, But a lot of government policies and programs that attempted to end the Great Depression weren't quite as tangible. For example, changes that were made to mortgage lending, just like in the United States more recent housing market crisis, during the Great Depression, a lot of homeowners were at risk of defaulting on their mortgages, going into foreclosure, and losing their homes. Obviously, lots of houses falling into foreclosure is bad for the economy on multiple levels. Homeowners lose all the money that they've invested into their homes, along with any future returns they would have gotten as their home increased in value. The values of the homes in the s rounding area decline as the market is flooded with foreclosures that can be purchased for cheap. The effects then trickled down to other industries like construction and renovation, which slowed down significantly, and a ripple effect spreads through the rest of the economy. Plus, the trauma of losing a home in the financial strain of having to find new housing and relocate when already in a state of financial distress directly and negatively affects the families who were living in those houses. So the Great Depression obviously a lot of people lost their jobs or they had to take lower paying jobs than consequently could not pay their regular mortgage payment. But then compounding this issue in the nineteen thirties was the fact that at the time, most mortgages were what's referred to as balloon loans. After repaying the mortgage for three to five years at one monthly repayment rate, borrowers had to pay off the entire rest of the loan, which was generally for not more than half of the of the home's value in one lumps some There was also one of the reasons why only about of people own their homes before the Great Depression. That was a lot of money to get together for a down payment, and that balloon payment at the end was a scary thought. Even for borrowers who did take that plunge. Most of the time they couldn't actually afford this final balloon payment, so people had to refinance their homes before that payment came due. But thanks to unemployment and the bank failures and all of the other economic stresses that were going on as part of the Great Depression, people who needed to refinance before their balloon payment was due either couldn't qualify for a new mortgage or they couldn't find a lender to work with. There were also issues with people who were in good standing and could afford their payments, but whose mortgage lenders had failed. And then there were the folks who had just lost their jobs and couldn't afford their payments at all. So, just as happened after the United States housing markets started its downward slide much more recently in two thousand and seven, the government stepped in new programs and policies were put into place during the Great depression that were meant to help homeowners save their homes and help new buyers afford their first homes. In y three, the federal government created the Homeowners Loan Corporation or h o l C, which was funded to help existing homeowners refinance their mortgages to an affordable rates they could save their houses. The Federal Housing Administration or f h A was created a year later and was focused on affordable mortgages for borrowers who wanted to buy a home, as well as overall standards for mortgage lending. Our main focus for this two parter is the h O l C, and we're going to talk about that more in detail after we have a brief word from one of the sponsors that keeps this show going. So to understand redlining, you have to have a clear sense of how a mortgage works from all of the aspects, including the buyer and the bank. So we're going to talk about some mortgage basics for the many of our list sceners who probably have never bought a house in the United States. So, a mortgage loan is a loan used to buy a house. This is a secured loan, meaning that the borrower has some kind of collateral against the value of the loan, and in the case of a mortgage, that collateral is the house that you're purchasing. If you fail to pay back a secured loan, the lender can, as repayment, take that collateral instead. So in other words, if you default on your mortgage, the bank can take your house. Home ownership is generally considered to be an investment for buyers. The idea is that you buy a house and the value of the house increases over time, so that when you sell the house you make money, or when you die, you can leave your house to your heirs and they inherit a piece of property that has significant value. This is definitely not always true, as we have seen in the more recent mortgage crisis that we have been referencing, but that's how it's supposed to work. The whole system of home buying and the real estate industry rests on the idea that houses increase in value over time and are a long term investment. It's also an investment for the bank thanks to the significant amount of interest charged with a conventional loan, and banks take a lot of steps to try to make sure they are making a wise investment. When you purchase a house, you have to get an appraisal to determine how much the house is worth, and that way, if you default on your mortgage, the bank doesn't end up with a house that's worth a whole lot less than the money that you still owe them. Borrowers also have to prove that they will be able to repay their loan. Most of the time this involves a credit history and a credit score, although there are some programs now for first time and underprivileged homebuyers who haven't had the opportunity to build a reliable credit history yet, and these programs like at other factors. Instead, they might look at say a person's reliability and paying their rent, or their ability to save the difference between their current rent payment and how much their mortgage payment would be. There are also lots of other pieces to this in modern homebuying, but those are the parts that are most relevant to what we're talking about, and this two parter. So during the Great Depression, when borrowers approached the Homeowners Loan Corporation, they were trying to save their homes, and the h o l c's job was not only to refinance loans that were in jeopardy, but also to make sure that the government didn't suffer financially as a consequence. Federal funding was going into this program, and the borrowers were people who had already defaulted meeting. They were considered risky right out of the gate, so there was a big focus on making sure borrowers could reliably pay back the money even in the midst of this ongoing financial crisis. Mortgage and underwriting manuals, policies, rules, and a lot of other documentation went into this which got bigger and more convoluted over time. A lot of these are things that anyone who is black the house and recognized the day. You know, I'm having like such flashbacks as we discussed this. Yeah, you and I have both bought homes and we have in through all the rigamarole, uh and seeing sort of what mortgage loans evolved into over this whole process, which is usually a much longer term than three to five years with a giant balloon payment at then. So here is how history and Policies of the Homeowners Loan Corporation describes these particular loans. H o l C loans were restricted to mortgages and default or mortgages held by financial institutions in distress and secured by non farm properties with dwelling space for not more than four families and appraised that not more than twenty thousand dollars by the h o l C. No loans could exceed eight percent of h o l C appraisal, nor could any loan exceed fourteen thousand dollars. Loans were to bear not over five percent interest and were to be amortized by monthly payments during their fifteen year life, so insummation. You had to be in financial distress. You're house couldn't be worth more than twenty thous dollars, and you couldn't need more than fourteen thousand dollars. Your home also couldn't be a farm or part of a building with more than four living units. There were to be clear, also some different aid programs in place to help farmers, but they were different from the standard homeowners assistants. Yeah, because h OLC refinancing also looks a lot more like a normal mortgage loan today, like it's fifteen years, which as a whole lot longer. It's a stable interest rate. People still do get adjustable rate interest loans, but like a conventional mortgage is a lot more often like a fixed rate loan. So this is sort of setting the model for home buying as it exists today, and there was an enormous demand for the h o LC's help. The four hundred field offices that were set up were flooded with almost two million requests for aid, with a grand total of six point to billion dollars requested. Applicants had to get credit report and the house had to be appraised, although the h o l c s appraisal formula generally came up with numbers that were above the market value. The same book estimates that a full fifth of the nation's homeowners who were living in their own homes and not living on a farm applied for h o LC refinancing. Applications came in for Of all the properties that qualified for the program, only about half of these were approved, though, with the rest being withdrawn or rejected. About ten percent of owner occupied non farm homes that were in one to four unit buildings got h o LC help. In terms of the rejections, some of them were just not eligible they were farms, or the owners weren't actually in financial distress or the home was part of a bigger building more than four units than was allowed. But the single biggest cause for rejection, according to later analysis of the available documentation, was quote inadequate security. This meant that, in one way or another, the home that needed to be refinanced was not sufficient. But for about half that were approved, the h o l C and by extension, the federal government, we're backing loans for a lot of houses. With all those houses as collateral, the h o LC became a major force in the world of mortgage lending. Also, loans weren't due to be paid off for fifteen years, so that was, again, as Tracy said, much longer than the three to five years that had been common up to this point, and much closer to the way mortgages continue to work today. So the government had some concerns about making sure that the homes that it held as collateral were worth the money that was owed on them. These concerns were legitimate thanks to default on the refinanced mortgages and voluntary surrenders from people who were facing default. The h o LC owned more than two hundred thousand houses by nineteen thirty seven in the interest of protecting its investment, the Federal Home Loan Bank Board, which is above the h o l C in the federal chain of command, asked it to evaluate trends in home ownership in American cities. As a result, the h o LC launched the City Survey Program in nineteen thirty five. It worked with lenders and real estate agents in order to assess more than two hundred major US cities, evaluate the neighborhoods and make color coded graded maps documenting each neighborhood's desirability. To do this, assessors all over the United States looked at all kinds of factors for each community. Mckep in mind, this was five The communities that they were looking at were heavily segregated, and race definitely played a factor in these assessments. So kind of wrap up what we've talked about so far. The government was wanting to protect its investments in all of these houses that it was refinancing, and to that end put a bunch of people to work making maps to make sure that the neighborhoods were appropriate. We're gonna talk about how those maths are created after a brief sponsor break, So whenever we talk about segregation as it persists today. People point out that folks like to live around people who are similar to them, so it's easy to see why immigrants from one particular nation might, for example, all settle in the same neighborhood, or why neighborhoods can diverge from one another along racial lines. And this is true. It's also simultaneously true that, for roughly a century after the abolition of slavery, neighborhood segregation was legally enforced regardless of whether people wanted to live near other people who were similar to them. The law made it next to impossible to live anywhere else for a lot of social and economic reasons. A lot of those patterns that used to be legally enforced still exists today, even though segregation itself is illegal. Originally, racially specific zoning laws were used to enforce neighborhood segregation. Cities and states would have zoning laws that specified, for example, that a black person couldn't live in a majority white neighborhood. But in nineteen seventeen, zoning based on race was declared unconstitutional by the Supreme Court. This decision was called Buchanan versus Warley. Warley a black man from Louisville, Kentucky, had bought a house from Buchanan, a white man. However, Louisville's zoning laws prevented a black person from living on a block where the majority of the residents were white, and this was the case on Buchanan's block. The Supreme Court ruled that this was unconstitutional. However, the decision applied only to legal statutes. It did not pertain to private agreements or two issues that were not enforced by the states. This led to two changes. First, the zoning laws themselves were revised so that instead of specifying what race could live where, they prevented the construction of smaller, affordable homes that lower income families, most of whom were black or another acial or ethnic minority, could afford to buy. And racially restrictive covenants, especially in majority white neighborhoods, took the place of zoning to keep the neighborhoods explicitly segregated. So to explain what that actually is. Racially restrictive covenants were clauses in the deeds to people's homes, primarily in white neighborhoods, that prevented white homeowners from selling their property to black buyers. African Americans are not the only people who have been targeted by racially restrictive covenants, but they were the most common inclusion, and they're what's relevant to what we're talking about in these episodes. Although racially restrictive covenants are illegal today, they do still exist in some deeds from properties that have been passed down through inheritance rather than having been resold. So when the city survey program started, the assessors were going into deeply segregated neighborhoods to document everything about them, including the races and ethnicities of people who were living there. But it started with stuff that was a lot more basic than that. The first thing was to describe the terrain. The instruction said, quote describe or give word picture of uh quote lay of the land, I e. Level, rolling, hilly, mentioned physical features like slopes, bluffs, fills, gullies, streams from their assessors described favorable and unfavorable influences. Favorable influences might be parks, good schools, churches, recreation centers, good traffic, and various nice amenities that a neighborhood might have. Detrimental influences might be traffic that is not good, noise, graffiti, proximity to manufacturing facilities or slaughter houses, the presence of apartments, flood risk, and to quote from the instructions, quote infiltrations of lower grade population or different racial groups. Then assess there's looked at the types of dwellings and the neighborhood, who lived there, what they did for a living, how much money they made, how the population was or wasn't shifting include to include more minorities, whether people owned or rented. It really went on and on and After assessing all these factors, with all these elements, a lot of which really are pretty objective and related to whether a neighborhood might be considered a nice neighborhood, all that data would go into a map, and the map would sort each neighborhood into four categories. And those categories were best, still desirable, definitely, declining, and hazardous. The hazardous neighborhoods, almost a hundred percent of the time, had one thing in common, regardless of what its buildings were like, how much money it's residents made, what they did for a living, or anything else. Almost always their residents were predominantly black. So in the nineteen thirties, the City Survey Program, which was a project of the United States federal government, was creating maps of all of the nation's major cities and color coding all the places where black people lived as hazardous. Which is where we are going to pause this episode. Next time, we're going to talk about some specific examples from these maps, how and where the maps were used, and how the practice of redlining, which these maps either started or simply documented, depending on who you ask, still exists today. Tracy, do you always also have a little bit of listener mail that's maybe not quite so uh intense, But I do, and it's it's not it's not quite so intense. I have. First, I'm gonna call this an anti correction. Okay, we have gotten so many emails about this that I feel like I feel compelled to clarify even though the emails that we've been getting are not correct. So in our Child Migrant Program episode, we read from Prime Minister Kevin Red's apology speech to the child migrants, and this was an apology for them having been removed from the settings that were familiar to them and then denied appropriate care once they got to Australia. We've gotten quite a few letters from people telling us that that apology was not for the Child Migrant Program, that it was for the Stolen Generation, which were Aboriginal children who were taken from their homes and put into residential schools to try to force them to assimilate into white society. So those were two different speeches, both of them delivered by Prime Minister Kevin Rud. We've gotten a whole bunch of emails from people who have said that apology didn't have anything to do with the Child Migrant Program. I double checked. We definitely read from the Child Migrant Program apology speech and the Stolen Generation apology speech was a separate thing, all so delivered by Prime Minister Kevin Rudd. So thanks to all the folks who have written in. I definitely double checked. There were definitely two different speeches. That's the thing. One thing, too, is an actual correction. It's from David on our Facebook and he says in the last episode, at least until yesterday, that I think you said that Mexico obtained its independence in eighteen twenty one, although the quote is not totally bias. The Mexican War of Independence ended on September one, I doubt you will characterize the United States obtained its independence in eighteen seventy three as the Revolutionary War ended September three of that year. No, the US independence is counted from the day was declared July four, seventeen seventy six. With the same tone, I would urge you to mention that Mexico obtained its independence in eighteen ten as independence was declared on September sixteenth, eighteen ten. And that was from David. And I'm not completely sure whether that one was related to our pastry war Epis Stowed or our battle of our Siege of Behart episode. It could have been either, but that's a valid point that I had not thought about at all. Um, and I have a feeling we have said that about other nations as well, that they obtained their independence on a particular date, but generally, like the day that's considered to be the nation's origin is the day that it's independence was declared, if you know, the if the war that often follows that uh ended in the new nations favor. I had never thought of that before, So thank you for your note, David. UM if you would like to write to us about this or any other subject where at history podcast at how stuff works dot com. We're also on Facebook at facebook dot com slash miss in history and on Twitter at miss in History. Our tumbler is miss in history dot tumbler dot com. We're also on pentterrist at pentriest dot com slash miss in history, and on Instagram at miss in history. If you would like to go to our parent companies website, which is how stuff works dot um, you will find all sorts of information about the mortgage industry that exists today and all of the various tax and legal things that come along with find a house. You can also come to our website, which is missed in history dot com, where you will find show notes for this and all of our other episodes, lots of cool links, an archive of episodes, every episode that we've ever done. So you can do all that and a whole lot more at how stuff works dot com or missing history dot com. For more on this and thousands of other topics, is it how stuff works dot com.

Welcome to Stuff you missed in History Class from how Stuff Works dot com. Hello, and welcome to the podcast I Am Training. We answer a lot of questions on our Facebook and our Twitter. Some of them are about the show, some of them are about specific episode. Sometimes they're about articles that we post from other sources because we think they're interesting or relevant. And every once in a while, usually when we've posted something that's about discrimination in some way, I have a conversation with somebody that starts with them saying, explain to me why, in like a really angry way, And a lot of times that conversation plays out in a way that makes it clear the person did not actually want an explanation. They were kind of demanding an explanation, but really thinking that we were gonna say, oh no, you're totally right, and that's absolutely a valid reason to discriminate against these people. Uh. It's never how it goes. That's neber what we're gonna do. Uh. And but sometimes somebody demands that I explain something to them, and it turns out they actually genuinely did want to know. Uh. So I keep explaining to people why when they demand explain to me why, even though most of the time, that's not how it works out. Today's podcast is a two parter that was inspired by one of these conversations, and it's about the history of redlining, which is a word that's now used to describe a lot of different patterns of economic discrimination, but in this episode's context, it's about the Great Depression, and it's specifically about buying houses. Like I said, we're tackling the story in two parts, and first we were going to talk about the Great Depression itself and one of its lesser known effects, which was changes in the housing market and the way loans to buy houses actually work. We're also going to talk about the Homeowner's Loan Corporation, which was created by the federal government to try to save people's homes during the Great Depression. And then in part two, we will talk about the darker side of this whole story, how the maps that the Homeowners Loan Corporation made and the trends that those maps were documenting were used to discriminate against people based on their race. So it is no big secret. I think most listeners probably know that there was a massive stock market crash on October and that crash sparked the very long, extreme financial downturn that we refer to as the Great Depression. This was an enormous economic crisis in which about half of the banks in the United States actually failed. The Great depressions height in ninety three, about one quarter of Americans were unemployed, and the effects of this event were really quite global, particularly in Europe. Financial times were difficult all over the world. A lot of history class discussions of out the Great Depression, especially at like the K through twelve level, focus on homelessness, breadlines and soup kitchens, shanty towns that were called Hooverville's Franklin D. Roosevelt's New Deal, which was a set of government policies, projects, and programs that were meant to put people back to work and also shore up the economy. Lessons on the New Deal often stick primarily to the Works Progress Administration, which later became the Work Projects Administration, and the Civilian Conservation Corps, which put unemployed people to work on the nation's infrastructure, building things like bridges, highways, schools, and parks. As a side note, I worked at one of those parks uh all of the summers that I was in college. These projects and their real world impact in terms of government involvement and job availability are really easy to visualize. It's much easier to imagine previously out of work people getting jobs building schools than it is to kind of get an imaginary sense of the abstraction of a stock market crash, and a lot of new deal policies set the stage for later government relief programs and services that still exist today, especially that are the ones related to helping people that are in financial distress, and for these reasons. All of this is usually what's front and center when people talk about the Great Depression and its aftermath, But a lot of government policies and programs that attempted to end the Great Depression weren't quite as tangible. For example, changes that were made to mortgage lending, just like in the United States more recent housing market crisis, during the Great Depression, a lot of homeowners were at risk of defaulting on their mortgages, going into foreclosure, and losing their homes. Obviously, lots of houses falling into foreclosure is bad for the economy on multiple levels. Homeowners lose all the money that they've invested into their homes, along with any future returns they would have gotten as their home increased in value. The values of the homes in the s rounding area decline as the market is flooded with foreclosures that can be purchased for cheap. The effects then trickled down to other industries like construction and renovation, which slowed down significantly, and a ripple effect spreads through the rest of the economy. Plus, the trauma of losing a home in the financial strain of having to find new housing and relocate when already in a state of financial distress directly and negatively affects the families who were living in those houses. So the Great Depression obviously a lot of people lost their jobs or they had to take lower paying jobs than consequently could not pay their regular mortgage payment. But then compounding this issue in the nineteen thirties was the fact that at the time, most mortgages were what's referred to as balloon loans. After repaying the mortgage for three to five years at one monthly repayment rate, borrowers had to pay off the entire rest of the loan, which was generally for not more than half of the of the home's value in one lumps some There was also one of the reasons why only about of people own their homes before the Great Depression. That was a lot of money to get together for a down payment, and that balloon payment at the end was a scary thought. Even for borrowers who did take that plunge. Most of the time they couldn't actually afford this final balloon payment, so people had to refinance their homes before that payment came due. But thanks to unemployment and the bank failures and all of the other economic stresses that were going on as part of the Great Depression, people who needed to refinance before their balloon payment was due either couldn't qualify for a new mortgage or they couldn't find a lender to work with. There were also issues with people who were in good standing and could afford their payments, but whose mortgage lenders had failed. And then there were the folks who had just lost their jobs and couldn't afford their payments at all. So, just as happened after the United States housing markets started its downward slide much more recently in two thousand and seven, the government stepped in new programs and policies were put into place during the Great depression that were meant to help homeowners save their homes and help new buyers afford their first homes. In y three, the federal government created the Homeowners Loan Corporation or h o l C, which was funded to help existing homeowners refinance their mortgages to an affordable rates they could save their houses. The Federal Housing Administration or f h A was created a year later and was focused on affordable mortgages for borrowers who wanted to buy a home, as well as overall standards for mortgage lending. Our main focus for this two parter is the h O l C, and we're going to talk about that more in detail after we have a brief word from one of the sponsors that keeps this show going. So to understand redlining, you have to have a clear sense of how a mortgage works from all of the aspects, including the buyer and the bank. So we're going to talk about some mortgage basics for the many of our list sceners who probably have never bought a house in the United States. So, a mortgage loan is a loan used to buy a house. This is a secured loan, meaning that the borrower has some kind of collateral against the value of the loan, and in the case of a mortgage, that collateral is the house that you're purchasing. If you fail to pay back a secured loan, the lender can, as repayment, take that collateral instead. So in other words, if you default on your mortgage, the bank can take your house. Home ownership is generally considered to be an investment for buyers. The idea is that you buy a house and the value of the house increases over time, so that when you sell the house you make money, or when you die, you can leave your house to your heirs and they inherit a piece of property that has significant value. This is definitely not always true, as we have seen in the more recent mortgage crisis that we have been referencing, but that's how it's supposed to work. The whole system of home buying and the real estate industry rests on the idea that houses increase in value over time and are a long term investment. It's also an investment for the bank thanks to the significant amount of interest charged with a conventional loan, and banks take a lot of steps to try to make sure they are making a wise investment. When you purchase a house, you have to get an appraisal to determine how much the house is worth, and that way, if you default on your mortgage, the bank doesn't end up with a house that's worth a whole lot less than the money that you still owe them. Borrowers also have to prove that they will be able to repay their loan. Most of the time this involves a credit history and a credit score, although there are some programs now for first time and underprivileged homebuyers who haven't had the opportunity to build a reliable credit history yet, and these programs like at other factors. Instead, they might look at say a person's reliability and paying their rent, or their ability to save the difference between their current rent payment and how much their mortgage payment would be. There are also lots of other pieces to this in modern homebuying, but those are the parts that are most relevant to what we're talking about, and this two parter. So during the Great Depression, when borrowers approached the Homeowners Loan Corporation, they were trying to save their homes, and the h o l c's job was not only to refinance loans that were in jeopardy, but also to make sure that the government didn't suffer financially as a consequence. Federal funding was going into this program, and the borrowers were people who had already defaulted meeting. They were considered risky right out of the gate, so there was a big focus on making sure borrowers could reliably pay back the money even in the midst of this ongoing financial crisis. Mortgage and underwriting manuals, policies, rules, and a lot of other documentation went into this which got bigger and more convoluted over time. A lot of these are things that anyone who is black the house and recognized the day. You know, I'm having like such flashbacks as we discussed this. Yeah, you and I have both bought homes and we have in through all the rigamarole, uh and seeing sort of what mortgage loans evolved into over this whole process, which is usually a much longer term than three to five years with a giant balloon payment at then. So here is how history and Policies of the Homeowners Loan Corporation describes these particular loans. H o l C loans were restricted to mortgages and default or mortgages held by financial institutions in distress and secured by non farm properties with dwelling space for not more than four families and appraised that not more than twenty thousand dollars by the h o l C. No loans could exceed eight percent of h o l C appraisal, nor could any loan exceed fourteen thousand dollars. Loans were to bear not over five percent interest and were to be amortized by monthly payments during their fifteen year life, so insummation. You had to be in financial distress. You're house couldn't be worth more than twenty thous dollars, and you couldn't need more than fourteen thousand dollars. Your home also couldn't be a farm or part of a building with more than four living units. There were to be clear, also some different aid programs in place to help farmers, but they were different from the standard homeowners assistants. Yeah, because h OLC refinancing also looks a lot more like a normal mortgage loan today, like it's fifteen years, which as a whole lot longer. It's a stable interest rate. People still do get adjustable rate interest loans, but like a conventional mortgage is a lot more often like a fixed rate loan. So this is sort of setting the model for home buying as it exists today, and there was an enormous demand for the h o LC's help. The four hundred field offices that were set up were flooded with almost two million requests for aid, with a grand total of six point to billion dollars requested. Applicants had to get credit report and the house had to be appraised, although the h o l c s appraisal formula generally came up with numbers that were above the market value. The same book estimates that a full fifth of the nation's homeowners who were living in their own homes and not living on a farm applied for h o LC refinancing. Applications came in for Of all the properties that qualified for the program, only about half of these were approved, though, with the rest being withdrawn or rejected. About ten percent of owner occupied non farm homes that were in one to four unit buildings got h o LC help. In terms of the rejections, some of them were just not eligible they were farms, or the owners weren't actually in financial distress or the home was part of a bigger building more than four units than was allowed. But the single biggest cause for rejection, according to later analysis of the available documentation, was quote inadequate security. This meant that, in one way or another, the home that needed to be refinanced was not sufficient. But for about half that were approved, the h o l C and by extension, the federal government, we're backing loans for a lot of houses. With all those houses as collateral, the h o LC became a major force in the world of mortgage lending. Also, loans weren't due to be paid off for fifteen years, so that was, again, as Tracy said, much longer than the three to five years that had been common up to this point, and much closer to the way mortgages continue to work today. So the government had some concerns about making sure that the homes that it held as collateral were worth the money that was owed on them. These concerns were legitimate thanks to default on the refinanced mortgages and voluntary surrenders from people who were facing default. The h o LC owned more than two hundred thousand houses by nineteen thirty seven in the interest of protecting its investment, the Federal Home Loan Bank Board, which is above the h o l C in the federal chain of command, asked it to evaluate trends in home ownership in American cities. As a result, the h o LC launched the City Survey Program in nineteen thirty five. It worked with lenders and real estate agents in order to assess more than two hundred major US cities, evaluate the neighborhoods and make color coded graded maps documenting each neighborhood's desirability. To do this, assessors all over the United States looked at all kinds of factors for each community. Mckep in mind, this was five The communities that they were looking at were heavily segregated, and race definitely played a factor in these assessments. So kind of wrap up what we've talked about so far. The government was wanting to protect its investments in all of these houses that it was refinancing, and to that end put a bunch of people to work making maps to make sure that the neighborhoods were appropriate. We're gonna talk about how those maths are created after a brief sponsor break, So whenever we talk about segregation as it persists today. People point out that folks like to live around people who are similar to them, so it's easy to see why immigrants from one particular nation might, for example, all settle in the same neighborhood, or why neighborhoods can diverge from one another along racial lines. And this is true. It's also simultaneously true that, for roughly a century after the abolition of slavery, neighborhood segregation was legally enforced regardless of whether people wanted to live near other people who were similar to them. The law made it next to impossible to live anywhere else for a lot of social and economic reasons. A lot of those patterns that used to be legally enforced still exists today, even though segregation itself is illegal. Originally, racially specific zoning laws were used to enforce neighborhood segregation. Cities and states would have zoning laws that specified, for example, that a black person couldn't live in a majority white neighborhood. But in nineteen seventeen, zoning based on race was declared unconstitutional by the Supreme Court. This decision was called Buchanan versus Warley. Warley a black man from Louisville, Kentucky, had bought a house from Buchanan, a white man. However, Louisville's zoning laws prevented a black person from living on a block where the majority of the residents were white, and this was the case on Buchanan's block. The Supreme Court ruled that this was unconstitutional. However, the decision applied only to legal statutes. It did not pertain to private agreements or two issues that were not enforced by the states. This led to two changes. First, the zoning laws themselves were revised so that instead of specifying what race could live where, they prevented the construction of smaller, affordable homes that lower income families, most of whom were black or another acial or ethnic minority, could afford to buy. And racially restrictive covenants, especially in majority white neighborhoods, took the place of zoning to keep the neighborhoods explicitly segregated. So to explain what that actually is. Racially restrictive covenants were clauses in the deeds to people's homes, primarily in white neighborhoods, that prevented white homeowners from selling their property to black buyers. African Americans are not the only people who have been targeted by racially restrictive covenants, but they were the most common inclusion, and they're what's relevant to what we're talking about in these episodes. Although racially restrictive covenants are illegal today, they do still exist in some deeds from properties that have been passed down through inheritance rather than having been resold. So when the city survey program started, the assessors were going into deeply segregated neighborhoods to document everything about them, including the races and ethnicities of people who were living there. But it started with stuff that was a lot more basic than that. The first thing was to describe the terrain. The instruction said, quote describe or give word picture of uh quote lay of the land, I e. Level, rolling, hilly, mentioned physical features like slopes, bluffs, fills, gullies, streams from their assessors described favorable and unfavorable influences. Favorable influences might be parks, good schools, churches, recreation centers, good traffic, and various nice amenities that a neighborhood might have. Detrimental influences might be traffic that is not good, noise, graffiti, proximity to manufacturing facilities or slaughter houses, the presence of apartments, flood risk, and to quote from the instructions, quote infiltrations of lower grade population or different racial groups. Then assess there's looked at the types of dwellings and the neighborhood, who lived there, what they did for a living, how much money they made, how the population was or wasn't shifting include to include more minorities, whether people owned or rented. It really went on and on and After assessing all these factors, with all these elements, a lot of which really are pretty objective and related to whether a neighborhood might be considered a nice neighborhood, all that data would go into a map, and the map would sort each neighborhood into four categories. And those categories were best, still desirable, definitely, declining, and hazardous. The hazardous neighborhoods, almost a hundred percent of the time, had one thing in common, regardless of what its buildings were like, how much money it's residents made, what they did for a living, or anything else. Almost always their residents were predominantly black. So in the nineteen thirties, the City Survey Program, which was a project of the United States federal government, was creating maps of all of the nation's major cities and color coding all the places where black people lived as hazardous. Which is where we are going to pause this episode. Next time, we're going to talk about some specific examples from these maps, how and where the maps were used, and how the practice of redlining, which these maps either started or simply documented, depending on who you ask, still exists today. Tracy, do you always also have a little bit of listener mail that's maybe not quite so uh intense, But I do, and it's it's not it's not quite so intense. I have. First, I'm gonna call this an anti correction. Okay, we have gotten so many emails about this that I feel like I feel compelled to clarify even though the emails that we've been getting are not correct. So in our Child Migrant Program episode, we read from Prime Minister Kevin Red's apology speech to the child migrants, and this was an apology for them having been removed from the settings that were familiar to them and then denied appropriate care once they got to Australia. We've gotten quite a few letters from people telling us that that apology was not for the Child Migrant Program, that it was for the Stolen Generation, which were Aboriginal children who were taken from their homes and put into residential schools to try to force them to assimilate into white society. So those were two different speeches, both of them delivered by Prime Minister Kevin Rud. We've gotten a whole bunch of emails from people who have said that apology didn't have anything to do with the Child Migrant Program. I double checked. We definitely read from the Child Migrant Program apology speech and the Stolen Generation apology speech was a separate thing, all so delivered by Prime Minister Kevin Rudd. So thanks to all the folks who have written in. I definitely double checked. There were definitely two different speeches. That's the thing. One thing, too, is an actual correction. It's from David on our Facebook and he says in the last episode, at least until yesterday, that I think you said that Mexico obtained its independence in eighteen twenty one, although the quote is not totally bias. The Mexican War of Independence ended on September one, I doubt you will characterize the United States obtained its independence in eighteen seventy three as the Revolutionary War ended September three of that year. No, the US independence is counted from the day was declared July four, seventeen seventy six. With the same tone, I would urge you to mention that Mexico obtained its independence in eighteen ten as independence was declared on September sixteenth, eighteen ten. And that was from David. And I'm not completely sure whether that one was related to our pastry war Epis Stowed or our battle of our Siege of Behart episode. It could have been either, but that's a valid point that I had not thought about at all. Um, and I have a feeling we have said that about other nations as well, that they obtained their independence on a particular date, but generally, like the day that's considered to be the nation's origin is the day that it's independence was declared, if you know, the if the war that often follows that uh ended in the new nations favor. I had never thought of that before, So thank you for your note, David. UM if you would like to write to us about this or any other subject where at history podcast at how stuff works dot com. We're also on Facebook at facebook dot com slash miss in history and on Twitter at miss in History. Our tumbler is miss in history dot tumbler dot com. We're also on pentterrist at pentriest dot com slash miss in history, and on Instagram at miss in history. If you would like to go to our parent companies website, which is how stuff works dot um, you will find all sorts of information about the mortgage industry that exists today and all of the various tax and legal things that come along with find a house. You can also come to our website, which is missed in history dot com, where you will find show notes for this and all of our other episodes, lots of cool links, an archive of episodes, every episode that we've ever done. So you can do all that and a whole lot more at how stuff works dot com or missing history dot com. For more on this and thousands of other topics, is it how stuff works dot com.