The failure of so many low-rent public housing projects led in the 1960s to a renewed emphasis on home ownership as the way out for black families and threatened neighborhoods. The idealistic Fair Housing Act of 1968 allowed the Federal Housing Administration (FHA) to address its now-forbidden redlining abuses through a new policy known as “Section 235.” This enabled the FHA to insure mortgages on favorable terms for homes in the inner city.
Unfortunately, this idealistic policy was undermined by corrupt speculators who bought up semi-abandoned houses, did a few cosmetic repairs, and then paid a corrupt appraiser to appraise the house at many times its real value. With an FHA-guaranteed mortgage the house could then be sold at its inflated price to a black family with little or no down payment and little prospect that the family could make its monthly payments or make necessary repairs. When the house inevitably went into foreclosure, the speculators had already made their windfall profits; banks, lawyers, appraisers had collected their fees; the FHA was required to repay the mortgage to the bank that issued it; and the federal government wound up owning masses of slum property “bought” at inflated prices.
Although the cruel nature of this corruption was often overlooked at the time, the experience was integral to the movement that led to the Community Reinvestment Act (CRA), passed under the Carter Administration, neglected by the Reagan and H.W. Bush Administrations, but powerfully revived under the Clinton Administration. Although the CRA continues to be demonized to this day, it stands powerfully for a community’s right to benefit from its own savings.
This chapter contrasts the loans available to suburban Whites with those given to urban Blacks. Mapping reveals that, although racial discrimination was still illegal, Federal government polices remained racist. The color line, started in the 1920s, continued moving in the 1970s with similar patterns that reproduced racial discrimination over a wider and wider area of majority-Black Detroit.
This chapter is still under construction.
See story map in Chapter 1 for work sample of what this chapter could become.