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The Home Owners Loan Corporation and the Redlining of Boyle Heights
One of the lesser-known programs of President Franklin Delano Roosevelt's New Deal, the Home Owners Loan Corporation (HOLC) was established in 1933 to help struggling homeowners pay their mortgages. In cities and towns nationwide, the HOLC used government bonds to buy out mortgages from banks and then worked with borrowers to refinance them at lower interest rates over longer loan periods. By 1935, the HOLC had made over one million such loans, providing vital aid to many trying to stay in their homes during the most turbulent years of economic downturn. In the late 1930s, the HOLC expanded their efforts to stabilize the mortgage market by producing a series of Residential Security Maps of major urban areas, including Los Angeles, to help banks and other mortgage-issuing companies determine how residential properties in those areas should be valued. HOLC investigators surveyed neighborhoods and appraised them based on a color-coded ranking system and passed that information on to lenders. But in making their appraisals, the HOLC combined assessments of the neighborhood’s buildings with assessments of the neighborhood’s residents, its rankings privileging racial homogeneity and penalizing “undesirable” racial and ethnic minorities. For example, the highest "A" (green) ranking was given to neighborhoods that were:
While the lowest "D" (red) ranking was given to neighborhoods that were:
...the new well planned sections of the city, and almost synonymous with the areas where good mortgage lenders with available funds are willing to make their maximum loans to be amortized over a 10-15-year period—perhaps up to 75-80% of the appraisal. They are homogeneous; in demand as residential locations in "good time" or "bad"; hence on the upgrade.
While the ranking system did not explicitly define what constituted an “undesirable population,” many of the completed forms did. In their survey of Boyle Heights, for example, the HOLC inspectors noted the area was home to “Russian, Polish & Armenian Jews, Slavs, Greeks, American Mexicans, Japanese and Italians” and then described it as being "literally honeycombed with diverse and subversive racial elements. It is seriously doubted whether there is a single block in the area which does not contain detrimental racial elements." The HOLC accordingly gave Boyle Heights its lowest, “red” ranking. That "red" ranking came with serious consequences: it signaled "riskiness," making it much more difficult for those interested in purchasing a home in the neighborhood to obtain financing from mortgage-lenders and, in turn, effectively reducing the value of the homes of existing property owners. Neighborhoods ranked “red” also became targets for a variety of slum clearance and urban renewal programs, as housing and development agencies at the local, state, and national level appropriate land in “red” areas to dedicate it to more “public” purposes. Boyle Heights provides a clear example of these impacts: between 1943 and 1960, five freeways were constructed in and around the neighborhood, the first of which, the Interstate 10, cut directly through Brooklyn Avenue, cleaving the neighborhood in two. The East Los Angeles Interchange, a snarling mess of concrete and steel that connected these new freeways, was also built next to the neighborhood, creating year-round sound and air pollution. In 1942, construction was completed on Aliso Village, one of the nation's first integrated public housing projects, followed by Pico Gardens, Estrada Courts, and Ramona Gardens in City Terrace by 1950. In total, 10 percent of all the land in Boyle Heights was used to meet the needs for transportation and housing in the region, the construction resulting in the removal of almost 3,000 dwellings in the area and the displacement of some 10,000 residents.7 And as a result of these projects, the neighborhood's remaining homeowners saw the values of their properties continue to decline.
characterized by detrimental influences in a pronounced degree, undesirable population or infiltration of it. Low percentage of home ownership, very poor maintenance and often vandalism prevail. Unstable incomes of the people and difficult collections are usually prevalent. The areas are broader than the so-called slum districts. Some mortgage lenders may refuse to make loans in these neighborhoods and others will lend only on a conservative basis.
The redlining of Boyle Heights thereby encouraged area residents—particularly those more affluent young adults seeking to purchase their first homes—to leave the neighborhood. Unlike other minority groups, most Jewish Americans were able to benefit from the labor protections of the New Deal, the expansion of access to affordable public higher education, and the benefits of the GI Bill. Jewish Angelenos were, accordingly, more upwardly mobile than ever before in the years that the freeways were erected. Those who could afford to purchased homes in other areas, many moving to the Fairfax district and other neighborhoods west of downtown and others settling in the new suburban communities of the San Fernando and San Gabriel Valleys. Parents, family members, and friends often joined them, and by 1955, Boyle Heights' Jewish population had declined by 72 percent.8 Mexican American, Asian American, and African American residents faced persistent employment discrimination that limited their economic mobility and they found it far more difficult to transgress the restrictive racial covenants that prevailed in most other neighborhoods in the city as well as the suburbs, limiting their ability to relocate as the freeways went up in Boyle Heights.
These exclusions did not go uncontested. In Fullerton, south of Boyle Heights, Mexican-Americans mounted a legal challenge to the racially-restrictive covenants that prevailed in most of Southern California in the Doss v. Bernal case, one of the first legal victories against housing discrimination based on race. Argued by David C. Marcus, the Iowa-born son of Jewish immigrants from Eastern Europe, Doss v. Bernal established Mexican Americans' rights to equal protection under the 14th amendment. The case represented what historian Genevieve Carpio described as an instance of "Jewish-Latino alliance" in the postwar era, revealing "how, together they [Jews and Latinos] attempted to shift the legal terrain of race and race-relations in the United States.”9 In West Adams, a group of African American entertainers, including Oscar-award winner Hattie McDaniel, mounted a similar challenge after a group of their white neighbors sued to have them evicted in 1945, their attorney Loren Miller successfully arguing that restrictive covenants violated both the 14th amendment to the U.S. Constitution as well as the California State Constitution. Both cases established important legal precedents against housing discrimination on a national scale, informing the Supreme Court's 1948 ruling in Shelley v. Kraemer that such racially-restrictive covenants were unconstitutional and therefore unenforceable. They also served to consecrate new coalitions and organizations that would mount similar challenges to school segregation in the years that followed, including the Boyle Heights-based Community Service Organization.
These landmark rulings democratized housing policies in Southern California and nationally, but their implementation was gradual, uneven, and piecemeal; in many parts of Los Angeles, and across the country, segregation and housing discrimination endured well into the 1960s and continues to the present day. The HOLC’s redlining of Boyle Heights thereby encouraged a rapid demographic shift known as “white flight,” wherein white residents left en masse and settled in more affluent areas, leaving behind a mostly non-white, minority population. The departures lowered the tax revenue in the area, depriving local schools and social service agencies of vital resources and fueling further population shifts. By the 1960s, Boyle Heights–once home to residents of a variety of ethnicities and incomes levels–was home to a predominantly low-income Mexican American population that was physically separated from the rest of the city by the freeways, denying them ready access to transportation and jobs; was underserved and neglected by public service agencies; and faced increasingly aggressive and brutal policing practices. These historical realities in Boyle Heights and redlined neighborhoods like it throughout the country prompted Richard Rothstein to describe the HOLC as “a state-sponsored system of racial segregation."10