Since the probability of mortgage defaults was high, the FHA took a page out of the HOLC’s playbook and crafted policies to minimize risk. ![]() Instead of loaning money or building anything, it provided insurance “that guaranteed to make bankers whole when they wrote mortgages for properties approved of by the FHA.” One year after FDR created the HOLC, he established the Federal Housing Administration (FHA). The Federal Housing Administration Fostered Discrimination A "D" neighborhood was inner city, old buildings often in need of repair, sometimes high crime - a minority neighborhood. An "A" neighborhood was suburban with recent construction, low crime, business and professional people - a white neighborhood. Neighborhoods were marked as A (green), B (blue), C (yellow) or D (red). The neighborhoods were divided up into four categories: According to Powell, “HOLC rated properties and neighborhoods on a descending scale from most desirable to least desirable, and maps were produced to help speed up the process of evaluating mortgage applications.” To minimize risks, HOLC would develop more standardized methods for property assessment. FDR established the Home Owners Loan Corporation (HOLC), which spent roughly three billion dollars refinancing mortgages for people who failed to make their mortgage payments. With the Great Depression in full swing, once FDR stepped into office, one of his legislative priorities was to promote home ownership among America’s middle class. HOLC rated properties and neighborhoods on a descending scale from most desirable to least desirable. In the article, How FDR Promoted Racial Segregation, Jim Powell detailed some interesting facts about New Deal housing policy. However, one of the least-discussed aspects of discriminatory government policy during Franklin Roosevelt’s administration was in housing. FDR's Home Owners Loan Corporation Promoted Segregation ![]() Additionally, the Davis-Bacon Act was designed to prevent African-American construction workers from working on public projects during the Great Depression. The Wagner Act of 1935, which granted entrenched labor unions major leeway in excluding low-wage workers, allowed these same unions to discriminate against blacks. The New Deal was filled with legislation that disproportionately hurt minorities such as African-Americans. Was the New Deal responsible for segregated housing?
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