By the time that report came out, President Franklin Roosevelt, inaugurated in January 1933, had already made his opening move to help stabilize the housing industry. That same year, in 1933, the federal government established the Home Owners Loan Corporation (HOLC). The goal of the HOLC was to buy up mortgages of those facing default, and issue new mortgages with favorable interest rates and repayment schedules. To make the program successful and financially viable, the HOLC worked with local realtors to rate regions according their investment value and to the risk of default. The HOLC created color-coded maps of cities and regions around the country, including Los Angeles, rating neighborhoods according to their perceived risk. The Title page of this exhibit shows the 1939 HOLC map of urban Los Angeles. Though not visible on the title page, the map's key indicates the grades assigned to each color.
As the map’s key shows, the neighborhoods marked as green were rated A, or First Grade, and were seen as"hot spots," and therefore the most favorable; blue neighborhoods, given a B or Second Grade, were still desirable; yellow neighborhoods, rated C or Third Grade, were in decline; and those marked in red were assigned D or Fourth Grade, marking them as the neighborhoods with the highest investment risk.
There could be a number of economic and social factors involved in marking a neighborhood as Green, Blue, or even Yellow. There was, however, only one factor that could mark a neighborhood as red. A red color meant that there was, in HOLC terms, “racial infiltration” in the neighborhood. This could include Latin or Asian populations; however, in The Color of Law, author Richard Rothstein notes the primary emphasis: [A] neighborhood earned a red color if African Americans lived in it, even if it was a solid middle-class neighborhood of single-family home.” (Rothstein, p. 64) The HOLC map “put the federal government on record as judging that African Americans, simply because of their race, were poor risks.” (Rothstein, p. 64)
To be sure, the federal government had a policy on supporting housing that would be for Whites only that predated the HOLC. Rothstein traces its occurrence as far back as a Department of Labor "Own-Your-Own-Home" campaign in 1917 (Rothstein, p. 60). Nonetheless, the HOLC maps have become notorious, and their red-colored areas gave rise to the term "redlining," in which "insurance companies, mortgage lenders, and banks have refused to offer, have limited the availability, or increased the cost of products or services based on location." (Shroder, p. 586)
Redlining and the attitudes of government and financial institutions behind it, have been the focus of much scholarship, and it warrants a great deal more. This exhibit, however, examines a neighborhood that would seem to have nothing to do with those marked in red on the HOLC maps. The neighborhood in question, in fact, received the highest possible rating in 1939, and it is listed as First Grade, colored a solid green. However, in looking at the development of the neighborhood, and how it came to receive its high rating, it proves to be every bit as representative of the same racial attitudes.