Before the creation of the Federal Housing Authority (FHA) in 1934, relatively few Americans owned their homes. The FHA made home ownership possible for many Americans by introducing low down-payment, long-term fixed-interest, self-amortizing loans. In 1938, the creation of the Federal National Mortgage Association (“Fannie Mae”) provided a market for Federal Housing Authority (FHA) loans, increasing liquidity and further decreasing lender risk.
Black Americans were almost completely excluded from benefiting from these loans because the FHA assigned “risk” rating to neighborhoods, based on various demographic factors, specifically race.
This very explicit and widespread discrimination sponsored by the Federal government had severe impacts still felt to the very present.
Let’s read from the Federal Housing Administration, Underwriting Manual: Underwriting and Valuation Procedure Under Title II of the National Housing Act, (Revised Feb. 1938, Washington, D.C.)
935. Natural Physical Protection:
Usually the protection from adverse influences afforded by these means
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