1 00:00:00,920 --> 00:00:03,880 Speaker 1: Welcome to Stuff you missed in History Class from how 2 00:00:03,960 --> 00:00:14,040 Speaker 1: Stuff Works dot com. Hello, and welcome to the podcast 3 00:00:14,160 --> 00:00:19,280 Speaker 1: I Am Training. We answer a lot of questions on 4 00:00:19,280 --> 00:00:21,840 Speaker 1: our Facebook and our Twitter. Some of them are about 5 00:00:21,840 --> 00:00:25,640 Speaker 1: the show, some of them are about specific episode. Sometimes 6 00:00:25,640 --> 00:00:28,520 Speaker 1: they're about articles that we post from other sources because 7 00:00:28,560 --> 00:00:31,720 Speaker 1: we think they're interesting or relevant. And every once in 8 00:00:31,720 --> 00:00:37,000 Speaker 1: a while, usually when we've posted something that's about discrimination 9 00:00:37,159 --> 00:00:39,960 Speaker 1: in some way, I have a conversation with somebody that 10 00:00:40,000 --> 00:00:43,040 Speaker 1: starts with them saying, explain to me why, in like 11 00:00:43,080 --> 00:00:46,519 Speaker 1: a really angry way, And a lot of times that 12 00:00:46,560 --> 00:00:48,480 Speaker 1: conversation plays out in a way that makes it clear 13 00:00:48,520 --> 00:00:51,720 Speaker 1: the person did not actually want an explanation. They were 14 00:00:51,800 --> 00:00:55,200 Speaker 1: kind of demanding an explanation, but really thinking that we 15 00:00:55,200 --> 00:00:58,840 Speaker 1: were gonna say, oh no, you're totally right, and that's 16 00:00:58,880 --> 00:01:04,039 Speaker 1: absolutely a valid reason to discriminate against these people. Uh. 17 00:01:04,160 --> 00:01:08,319 Speaker 1: It's never how it goes. That's neber what we're gonna do. Uh. 18 00:01:08,360 --> 00:01:13,240 Speaker 1: And but sometimes somebody demands that I explain something to them, 19 00:01:13,319 --> 00:01:17,560 Speaker 1: and it turns out they actually genuinely did want to know. Uh. 20 00:01:17,640 --> 00:01:20,559 Speaker 1: So I keep explaining to people why when they demand 21 00:01:20,600 --> 00:01:23,720 Speaker 1: explain to me why, even though most of the time, 22 00:01:23,720 --> 00:01:26,520 Speaker 1: that's not how it works out. Today's podcast is a 23 00:01:26,560 --> 00:01:30,000 Speaker 1: two parter that was inspired by one of these conversations, 24 00:01:30,200 --> 00:01:32,920 Speaker 1: and it's about the history of redlining, which is a 25 00:01:32,959 --> 00:01:35,240 Speaker 1: word that's now used to describe a lot of different 26 00:01:35,280 --> 00:01:40,399 Speaker 1: patterns of economic discrimination, but in this episode's context, it's 27 00:01:40,440 --> 00:01:44,200 Speaker 1: about the Great Depression, and it's specifically about buying houses. 28 00:01:45,080 --> 00:01:47,039 Speaker 1: Like I said, we're tackling the story in two parts, 29 00:01:47,160 --> 00:01:48,920 Speaker 1: and first we were going to talk about the Great 30 00:01:48,920 --> 00:01:51,760 Speaker 1: Depression itself and one of its lesser known effects, which 31 00:01:51,800 --> 00:01:54,520 Speaker 1: was changes in the housing market and the way loans 32 00:01:54,600 --> 00:01:57,880 Speaker 1: to buy houses actually work. We're also going to talk 33 00:01:57,920 --> 00:02:00,920 Speaker 1: about the Homeowner's Loan Corporation, which was created by the 34 00:02:00,920 --> 00:02:03,640 Speaker 1: federal government to try to save people's homes during the 35 00:02:03,640 --> 00:02:06,480 Speaker 1: Great Depression. And then in part two, we will talk 36 00:02:06,520 --> 00:02:09,160 Speaker 1: about the darker side of this whole story, how the 37 00:02:09,280 --> 00:02:13,480 Speaker 1: maps that the Homeowners Loan Corporation made and the trends 38 00:02:13,520 --> 00:02:16,920 Speaker 1: that those maps were documenting were used to discriminate against 39 00:02:16,919 --> 00:02:22,320 Speaker 1: people based on their race. So it is no big secret. 40 00:02:22,360 --> 00:02:24,760 Speaker 1: I think most listeners probably know that there was a 41 00:02:24,800 --> 00:02:30,480 Speaker 1: massive stock market crash on October and that crash sparked 42 00:02:30,480 --> 00:02:34,040 Speaker 1: the very long, extreme financial downturn that we refer to 43 00:02:34,120 --> 00:02:38,200 Speaker 1: as the Great Depression. This was an enormous economic crisis 44 00:02:38,280 --> 00:02:40,400 Speaker 1: in which about half of the banks in the United 45 00:02:40,440 --> 00:02:44,880 Speaker 1: States actually failed. The Great depressions height in ninety three, 46 00:02:45,400 --> 00:02:49,080 Speaker 1: about one quarter of Americans were unemployed, and the effects 47 00:02:49,160 --> 00:02:52,920 Speaker 1: of this event were really quite global, particularly in Europe. 48 00:02:53,320 --> 00:02:58,320 Speaker 1: Financial times were difficult all over the world. A lot 49 00:02:58,360 --> 00:03:01,600 Speaker 1: of history class discussions of out the Great Depression, especially 50 00:03:01,639 --> 00:03:05,400 Speaker 1: at like the K through twelve level, focus on homelessness, 51 00:03:05,560 --> 00:03:10,680 Speaker 1: breadlines and soup kitchens, shanty towns that were called Hooverville's 52 00:03:10,680 --> 00:03:13,520 Speaker 1: Franklin D. Roosevelt's New Deal, which was a set of 53 00:03:13,560 --> 00:03:16,600 Speaker 1: government policies, projects, and programs that were meant to put 54 00:03:16,600 --> 00:03:19,639 Speaker 1: people back to work and also shore up the economy. 55 00:03:19,960 --> 00:03:23,000 Speaker 1: Lessons on the New Deal often stick primarily to the 56 00:03:23,040 --> 00:03:27,480 Speaker 1: Works Progress Administration, which later became the Work Projects Administration, 57 00:03:27,720 --> 00:03:30,760 Speaker 1: and the Civilian Conservation Corps, which put unemployed people to 58 00:03:30,840 --> 00:03:35,640 Speaker 1: work on the nation's infrastructure, building things like bridges, highways, schools, 59 00:03:35,720 --> 00:03:38,240 Speaker 1: and parks. As a side note, I worked at one 60 00:03:38,280 --> 00:03:41,800 Speaker 1: of those parks uh all of the summers that I 61 00:03:41,840 --> 00:03:45,920 Speaker 1: was in college. These projects and their real world impact 62 00:03:46,000 --> 00:03:49,440 Speaker 1: in terms of government involvement and job availability are really 63 00:03:49,480 --> 00:03:53,440 Speaker 1: easy to visualize. It's much easier to imagine previously out 64 00:03:53,440 --> 00:03:56,600 Speaker 1: of work people getting jobs building schools than it is 65 00:03:56,640 --> 00:04:00,520 Speaker 1: to kind of get an imaginary sense of the abstraction 66 00:04:00,560 --> 00:04:03,560 Speaker 1: of a stock market crash, and a lot of new 67 00:04:03,600 --> 00:04:07,600 Speaker 1: deal policies set the stage for later government relief programs 68 00:04:07,600 --> 00:04:11,840 Speaker 1: and services that still exist today, especially that are the 69 00:04:11,840 --> 00:04:15,680 Speaker 1: ones related to helping people that are in financial distress, 70 00:04:15,800 --> 00:04:18,320 Speaker 1: and for these reasons. All of this is usually what's 71 00:04:18,360 --> 00:04:21,240 Speaker 1: front and center when people talk about the Great Depression 72 00:04:21,240 --> 00:04:25,800 Speaker 1: and its aftermath, But a lot of government policies and 73 00:04:25,839 --> 00:04:29,000 Speaker 1: programs that attempted to end the Great Depression weren't quite 74 00:04:29,000 --> 00:04:32,599 Speaker 1: as tangible. For example, changes that were made to mortgage lending, 75 00:04:33,160 --> 00:04:36,760 Speaker 1: just like in the United States more recent housing market crisis, 76 00:04:36,880 --> 00:04:39,279 Speaker 1: during the Great Depression, a lot of homeowners were at 77 00:04:39,360 --> 00:04:42,760 Speaker 1: risk of defaulting on their mortgages, going into foreclosure, and 78 00:04:42,839 --> 00:04:47,440 Speaker 1: losing their homes. Obviously, lots of houses falling into foreclosure 79 00:04:47,560 --> 00:04:51,239 Speaker 1: is bad for the economy on multiple levels. Homeowners lose 80 00:04:51,279 --> 00:04:54,000 Speaker 1: all the money that they've invested into their homes, along 81 00:04:54,080 --> 00:04:56,320 Speaker 1: with any future returns they would have gotten as their 82 00:04:56,360 --> 00:04:59,640 Speaker 1: home increased in value. The values of the homes in 83 00:04:59,680 --> 00:05:02,480 Speaker 1: the s rounding area decline as the market is flooded 84 00:05:02,480 --> 00:05:06,200 Speaker 1: with foreclosures that can be purchased for cheap. The effects 85 00:05:06,240 --> 00:05:09,600 Speaker 1: then trickled down to other industries like construction and renovation, 86 00:05:09,920 --> 00:05:13,440 Speaker 1: which slowed down significantly, and a ripple effect spreads through 87 00:05:13,440 --> 00:05:16,680 Speaker 1: the rest of the economy. Plus, the trauma of losing 88 00:05:16,680 --> 00:05:19,120 Speaker 1: a home in the financial strain of having to find 89 00:05:19,160 --> 00:05:22,359 Speaker 1: new housing and relocate when already in a state of 90 00:05:22,400 --> 00:05:26,640 Speaker 1: financial distress directly and negatively affects the families who were 91 00:05:26,680 --> 00:05:31,680 Speaker 1: living in those houses. So the Great Depression obviously a 92 00:05:31,680 --> 00:05:33,400 Speaker 1: lot of people lost their jobs or they had to 93 00:05:33,440 --> 00:05:36,400 Speaker 1: take lower paying jobs than consequently could not pay their 94 00:05:36,440 --> 00:05:39,560 Speaker 1: regular mortgage payment. But then compounding this issue in the 95 00:05:39,640 --> 00:05:42,599 Speaker 1: nineteen thirties was the fact that at the time, most 96 00:05:42,640 --> 00:05:47,080 Speaker 1: mortgages were what's referred to as balloon loans. After repaying 97 00:05:47,080 --> 00:05:49,800 Speaker 1: the mortgage for three to five years at one monthly 98 00:05:49,839 --> 00:05:53,359 Speaker 1: repayment rate, borrowers had to pay off the entire rest 99 00:05:53,400 --> 00:05:56,680 Speaker 1: of the loan, which was generally for not more than 100 00:05:56,800 --> 00:06:00,320 Speaker 1: half of the of the home's value in one lumps 101 00:06:00,440 --> 00:06:02,920 Speaker 1: some There was also one of the reasons why only 102 00:06:02,920 --> 00:06:06,560 Speaker 1: about of people own their homes before the Great Depression. 103 00:06:06,920 --> 00:06:09,000 Speaker 1: That was a lot of money to get together for 104 00:06:09,040 --> 00:06:11,560 Speaker 1: a down payment, and that balloon payment at the end 105 00:06:11,640 --> 00:06:15,680 Speaker 1: was a scary thought. Even for borrowers who did take 106 00:06:15,720 --> 00:06:19,040 Speaker 1: that plunge. Most of the time they couldn't actually afford 107 00:06:19,080 --> 00:06:22,160 Speaker 1: this final balloon payment, so people had to refinance their 108 00:06:22,200 --> 00:06:26,400 Speaker 1: homes before that payment came due. But thanks to unemployment 109 00:06:26,480 --> 00:06:28,720 Speaker 1: and the bank failures and all of the other economic 110 00:06:28,760 --> 00:06:31,240 Speaker 1: stresses that were going on as part of the Great Depression, 111 00:06:31,760 --> 00:06:34,640 Speaker 1: people who needed to refinance before their balloon payment was 112 00:06:34,720 --> 00:06:37,719 Speaker 1: due either couldn't qualify for a new mortgage or they 113 00:06:37,760 --> 00:06:40,760 Speaker 1: couldn't find a lender to work with. There were also 114 00:06:40,839 --> 00:06:43,159 Speaker 1: issues with people who were in good standing and could 115 00:06:43,240 --> 00:06:46,919 Speaker 1: afford their payments, but whose mortgage lenders had failed. And 116 00:06:46,960 --> 00:06:49,080 Speaker 1: then there were the folks who had just lost their 117 00:06:49,160 --> 00:06:53,599 Speaker 1: jobs and couldn't afford their payments at all. So, just 118 00:06:53,800 --> 00:06:57,000 Speaker 1: as happened after the United States housing markets started its 119 00:06:57,040 --> 00:07:00,000 Speaker 1: downward slide much more recently in two thousand and seven, 120 00:07:00,440 --> 00:07:04,200 Speaker 1: the government stepped in new programs and policies were put 121 00:07:04,240 --> 00:07:06,640 Speaker 1: into place during the Great depression that were meant to 122 00:07:06,680 --> 00:07:10,280 Speaker 1: help homeowners save their homes and help new buyers afford 123 00:07:10,280 --> 00:07:13,960 Speaker 1: their first homes. In y three, the federal government created 124 00:07:13,960 --> 00:07:17,280 Speaker 1: the Homeowners Loan Corporation or h o l C, which 125 00:07:17,360 --> 00:07:21,360 Speaker 1: was funded to help existing homeowners refinance their mortgages to 126 00:07:21,400 --> 00:07:24,720 Speaker 1: an affordable rates they could save their houses. The Federal 127 00:07:24,760 --> 00:07:27,880 Speaker 1: Housing Administration or f h A was created a year 128 00:07:28,000 --> 00:07:31,400 Speaker 1: later and was focused on affordable mortgages for borrowers who 129 00:07:31,480 --> 00:07:35,000 Speaker 1: wanted to buy a home, as well as overall standards 130 00:07:35,000 --> 00:07:38,920 Speaker 1: for mortgage lending. Our main focus for this two parter 131 00:07:39,160 --> 00:07:40,720 Speaker 1: is the h O l C, and we're going to 132 00:07:40,840 --> 00:07:43,160 Speaker 1: talk about that more in detail after we have a 133 00:07:43,200 --> 00:07:45,560 Speaker 1: brief word from one of the sponsors that keeps this 134 00:07:45,640 --> 00:07:49,280 Speaker 1: show going. So to understand redlining, you have to have 135 00:07:49,320 --> 00:07:52,280 Speaker 1: a clear sense of how a mortgage works from all 136 00:07:52,320 --> 00:07:56,280 Speaker 1: of the aspects, including the buyer and the bank. So 137 00:07:56,720 --> 00:07:59,160 Speaker 1: we're going to talk about some mortgage basics for the 138 00:07:59,240 --> 00:08:01,480 Speaker 1: many of our list sceners who probably have never bought 139 00:08:01,480 --> 00:08:04,720 Speaker 1: a house in the United States. So, a mortgage loan 140 00:08:04,920 --> 00:08:08,040 Speaker 1: is a loan used to buy a house. This is 141 00:08:08,080 --> 00:08:10,960 Speaker 1: a secured loan, meaning that the borrower has some kind 142 00:08:11,000 --> 00:08:13,920 Speaker 1: of collateral against the value of the loan, and in 143 00:08:13,920 --> 00:08:16,440 Speaker 1: the case of a mortgage, that collateral is the house 144 00:08:16,480 --> 00:08:19,280 Speaker 1: that you're purchasing. If you fail to pay back a 145 00:08:19,320 --> 00:08:23,560 Speaker 1: secured loan, the lender can, as repayment, take that collateral instead. 146 00:08:23,680 --> 00:08:26,720 Speaker 1: So in other words, if you default on your mortgage, 147 00:08:26,760 --> 00:08:31,560 Speaker 1: the bank can take your house. Home ownership is generally 148 00:08:31,600 --> 00:08:34,320 Speaker 1: considered to be an investment for buyers. The idea is 149 00:08:34,320 --> 00:08:36,440 Speaker 1: that you buy a house and the value of the 150 00:08:36,440 --> 00:08:38,960 Speaker 1: house increases over time, so that when you sell the 151 00:08:39,000 --> 00:08:42,000 Speaker 1: house you make money, or when you die, you can 152 00:08:42,080 --> 00:08:44,480 Speaker 1: leave your house to your heirs and they inherit a 153 00:08:44,480 --> 00:08:48,120 Speaker 1: piece of property that has significant value. This is definitely 154 00:08:48,160 --> 00:08:50,800 Speaker 1: not always true, as we have seen in the more 155 00:08:50,800 --> 00:08:55,480 Speaker 1: recent mortgage crisis that we have been referencing, but that's 156 00:08:55,480 --> 00:08:58,840 Speaker 1: how it's supposed to work. The whole system of home 157 00:08:58,920 --> 00:09:02,959 Speaker 1: buying and the real estate industry rests on the idea 158 00:09:03,040 --> 00:09:06,200 Speaker 1: that houses increase in value over time and are a 159 00:09:06,280 --> 00:09:10,040 Speaker 1: long term investment. It's also an investment for the bank 160 00:09:10,160 --> 00:09:12,920 Speaker 1: thanks to the significant amount of interest charged with a 161 00:09:12,920 --> 00:09:15,680 Speaker 1: conventional loan, and banks take a lot of steps to 162 00:09:15,679 --> 00:09:18,119 Speaker 1: try to make sure they are making a wise investment. 163 00:09:18,679 --> 00:09:20,480 Speaker 1: When you purchase a house, you have to get an 164 00:09:20,520 --> 00:09:23,280 Speaker 1: appraisal to determine how much the house is worth, and 165 00:09:23,320 --> 00:09:25,320 Speaker 1: that way, if you default on your mortgage, the bank 166 00:09:25,360 --> 00:09:27,240 Speaker 1: doesn't end up with a house that's worth a whole 167 00:09:27,320 --> 00:09:30,920 Speaker 1: lot less than the money that you still owe them. 168 00:09:31,120 --> 00:09:33,680 Speaker 1: Borrowers also have to prove that they will be able 169 00:09:33,720 --> 00:09:36,920 Speaker 1: to repay their loan. Most of the time this involves 170 00:09:36,920 --> 00:09:39,719 Speaker 1: a credit history and a credit score, although there are 171 00:09:39,760 --> 00:09:42,959 Speaker 1: some programs now for first time and underprivileged homebuyers who 172 00:09:42,960 --> 00:09:46,280 Speaker 1: haven't had the opportunity to build a reliable credit history yet, 173 00:09:46,280 --> 00:09:49,160 Speaker 1: and these programs like at other factors. Instead, they might 174 00:09:49,200 --> 00:09:51,880 Speaker 1: look at say a person's reliability and paying their rent, 175 00:09:52,360 --> 00:09:55,160 Speaker 1: or their ability to save the difference between their current 176 00:09:55,200 --> 00:09:57,680 Speaker 1: rent payment and how much their mortgage payment would be. 177 00:09:58,080 --> 00:10:00,640 Speaker 1: There are also lots of other pieces to this in 178 00:10:00,880 --> 00:10:03,320 Speaker 1: modern homebuying, but those are the parts that are most 179 00:10:03,360 --> 00:10:05,880 Speaker 1: relevant to what we're talking about, and this two parter. 180 00:10:07,120 --> 00:10:10,400 Speaker 1: So during the Great Depression, when borrowers approached the Homeowners 181 00:10:10,400 --> 00:10:14,240 Speaker 1: Loan Corporation, they were trying to save their homes, and 182 00:10:14,280 --> 00:10:16,360 Speaker 1: the h o l c's job was not only to 183 00:10:16,480 --> 00:10:19,400 Speaker 1: refinance loans that were in jeopardy, but also to make 184 00:10:19,400 --> 00:10:22,439 Speaker 1: sure that the government didn't suffer financially as a consequence. 185 00:10:23,080 --> 00:10:26,040 Speaker 1: Federal funding was going into this program, and the borrowers 186 00:10:26,040 --> 00:10:29,280 Speaker 1: were people who had already defaulted meeting. They were considered 187 00:10:29,360 --> 00:10:31,960 Speaker 1: risky right out of the gate, so there was a 188 00:10:31,960 --> 00:10:34,960 Speaker 1: big focus on making sure borrowers could reliably pay back 189 00:10:35,000 --> 00:10:38,320 Speaker 1: the money even in the midst of this ongoing financial crisis. 190 00:10:39,120 --> 00:10:42,760 Speaker 1: Mortgage and underwriting manuals, policies, rules, and a lot of 191 00:10:42,800 --> 00:10:46,040 Speaker 1: other documentation went into this which got bigger and more 192 00:10:46,080 --> 00:10:50,240 Speaker 1: convoluted over time. A lot of these are things that 193 00:10:50,679 --> 00:10:52,760 Speaker 1: anyone who is black the house and recognized the day. 194 00:10:52,800 --> 00:10:57,320 Speaker 1: You know, I'm having like such flashbacks as we discussed this. Yeah, 195 00:10:57,720 --> 00:10:59,800 Speaker 1: you and I have both bought homes and we have 196 00:11:00,040 --> 00:11:03,160 Speaker 1: in through all the rigamarole, uh and seeing sort of 197 00:11:03,200 --> 00:11:07,440 Speaker 1: what mortgage loans evolved into over this whole process, which 198 00:11:07,480 --> 00:11:10,160 Speaker 1: is usually a much longer term than three to five 199 00:11:10,240 --> 00:11:13,880 Speaker 1: years with a giant balloon payment at then. So here 200 00:11:13,960 --> 00:11:17,760 Speaker 1: is how history and Policies of the Homeowners Loan Corporation 201 00:11:18,000 --> 00:11:21,600 Speaker 1: describes these particular loans. H o l C loans were 202 00:11:21,640 --> 00:11:25,400 Speaker 1: restricted to mortgages and default or mortgages held by financial 203 00:11:25,400 --> 00:11:30,280 Speaker 1: institutions in distress and secured by non farm properties with 204 00:11:30,440 --> 00:11:34,679 Speaker 1: dwelling space for not more than four families and appraised 205 00:11:34,679 --> 00:11:37,480 Speaker 1: that not more than twenty thousand dollars by the h 206 00:11:37,559 --> 00:11:41,080 Speaker 1: o l C. No loans could exceed eight percent of 207 00:11:41,240 --> 00:11:44,600 Speaker 1: h o l C appraisal, nor could any loan exceed 208 00:11:44,679 --> 00:11:49,280 Speaker 1: fourteen thousand dollars. Loans were to bear not over five 209 00:11:49,360 --> 00:11:52,760 Speaker 1: percent interest and were to be amortized by monthly payments 210 00:11:52,840 --> 00:11:57,920 Speaker 1: during their fifteen year life, so insummation. You had to 211 00:11:57,960 --> 00:12:01,199 Speaker 1: be in financial distress. You're house couldn't be worth more 212 00:12:01,240 --> 00:12:04,360 Speaker 1: than twenty thous dollars, and you couldn't need more than 213 00:12:04,400 --> 00:12:08,120 Speaker 1: fourteen thousand dollars. Your home also couldn't be a farm 214 00:12:08,280 --> 00:12:10,720 Speaker 1: or part of a building with more than four living units. 215 00:12:11,160 --> 00:12:14,040 Speaker 1: There were to be clear, also some different aid programs 216 00:12:14,040 --> 00:12:16,720 Speaker 1: in place to help farmers, but they were different from 217 00:12:16,760 --> 00:12:21,920 Speaker 1: the standard homeowners assistants. Yeah, because h OLC refinancing also 218 00:12:21,960 --> 00:12:26,320 Speaker 1: looks a lot more like a normal mortgage loan today, 219 00:12:26,440 --> 00:12:28,319 Speaker 1: like it's fifteen years, which as a whole lot longer. 220 00:12:29,120 --> 00:12:32,320 Speaker 1: It's a stable interest rate. People still do get adjustable 221 00:12:32,400 --> 00:12:34,880 Speaker 1: rate interest loans, but like a conventional mortgage is a 222 00:12:35,640 --> 00:12:37,720 Speaker 1: lot more often like a fixed rate loan. So this 223 00:12:37,840 --> 00:12:41,240 Speaker 1: is sort of setting the model for home buying as 224 00:12:41,280 --> 00:12:45,720 Speaker 1: it exists today, and there was an enormous demand for 225 00:12:45,840 --> 00:12:49,120 Speaker 1: the h o LC's help. The four hundred field offices 226 00:12:49,160 --> 00:12:52,240 Speaker 1: that were set up were flooded with almost two million 227 00:12:52,480 --> 00:12:56,000 Speaker 1: requests for aid, with a grand total of six point 228 00:12:56,080 --> 00:13:00,760 Speaker 1: to billion dollars requested. Applicants had to get credit report 229 00:13:00,800 --> 00:13:02,920 Speaker 1: and the house had to be appraised, although the h 230 00:13:02,920 --> 00:13:05,320 Speaker 1: o l c s appraisal formula generally came up with 231 00:13:05,440 --> 00:13:10,199 Speaker 1: numbers that were above the market value. The same book 232 00:13:10,400 --> 00:13:13,520 Speaker 1: estimates that a full fifth of the nation's homeowners who 233 00:13:13,559 --> 00:13:16,040 Speaker 1: were living in their own homes and not living on 234 00:13:16,040 --> 00:13:20,920 Speaker 1: a farm applied for h o LC refinancing. Applications came 235 00:13:20,920 --> 00:13:25,440 Speaker 1: in for Of all the properties that qualified for the program, 236 00:13:25,480 --> 00:13:27,880 Speaker 1: only about half of these were approved, though, with the 237 00:13:27,960 --> 00:13:31,720 Speaker 1: rest being withdrawn or rejected. About ten percent of owner 238 00:13:31,760 --> 00:13:34,960 Speaker 1: occupied non farm homes that were in one to four 239 00:13:35,080 --> 00:13:39,120 Speaker 1: unit buildings got h o LC help. In terms of 240 00:13:39,120 --> 00:13:41,920 Speaker 1: the rejections, some of them were just not eligible they 241 00:13:41,920 --> 00:13:45,320 Speaker 1: were farms, or the owners weren't actually in financial distress 242 00:13:45,880 --> 00:13:48,160 Speaker 1: or the home was part of a bigger building more 243 00:13:48,200 --> 00:13:51,640 Speaker 1: than four units than was allowed. But the single biggest 244 00:13:51,679 --> 00:13:56,120 Speaker 1: cause for rejection, according to later analysis of the available documentation, 245 00:13:56,400 --> 00:14:00,320 Speaker 1: was quote inadequate security. This meant that, in one way 246 00:14:00,400 --> 00:14:03,520 Speaker 1: or another, the home that needed to be refinanced was 247 00:14:03,640 --> 00:14:07,640 Speaker 1: not sufficient. But for about half that were approved, the 248 00:14:07,800 --> 00:14:10,440 Speaker 1: h o l C and by extension, the federal government, 249 00:14:10,840 --> 00:14:14,160 Speaker 1: we're backing loans for a lot of houses. With all 250 00:14:14,280 --> 00:14:17,720 Speaker 1: those houses as collateral, the h o LC became a 251 00:14:17,760 --> 00:14:21,280 Speaker 1: major force in the world of mortgage lending. Also, loans 252 00:14:21,320 --> 00:14:23,400 Speaker 1: weren't due to be paid off for fifteen years, so 253 00:14:23,440 --> 00:14:26,520 Speaker 1: that was, again, as Tracy said, much longer than the 254 00:14:26,560 --> 00:14:28,520 Speaker 1: three to five years that had been common up to 255 00:14:28,560 --> 00:14:31,560 Speaker 1: this point, and much closer to the way mortgages continue 256 00:14:31,600 --> 00:14:35,680 Speaker 1: to work today. So the government had some concerns about 257 00:14:35,720 --> 00:14:37,640 Speaker 1: making sure that the homes that it held as collateral 258 00:14:37,680 --> 00:14:40,160 Speaker 1: were worth the money that was owed on them. These 259 00:14:40,200 --> 00:14:44,680 Speaker 1: concerns were legitimate thanks to default on the refinanced mortgages 260 00:14:44,840 --> 00:14:48,280 Speaker 1: and voluntary surrenders from people who were facing default. The 261 00:14:48,480 --> 00:14:52,680 Speaker 1: h o LC owned more than two hundred thousand houses 262 00:14:52,840 --> 00:14:57,680 Speaker 1: by nineteen thirty seven in the interest of protecting its investment, 263 00:14:58,080 --> 00:15:00,800 Speaker 1: the Federal Home Loan Bank Board, which is above the 264 00:15:00,960 --> 00:15:02,880 Speaker 1: h o l C in the federal chain of command, 265 00:15:03,600 --> 00:15:07,600 Speaker 1: asked it to evaluate trends in home ownership in American cities. 266 00:15:08,280 --> 00:15:10,840 Speaker 1: As a result, the h o LC launched the City 267 00:15:10,920 --> 00:15:14,360 Speaker 1: Survey Program in nineteen thirty five. It worked with lenders 268 00:15:14,360 --> 00:15:16,800 Speaker 1: and real estate agents in order to assess more than 269 00:15:16,840 --> 00:15:21,000 Speaker 1: two hundred major US cities, evaluate the neighborhoods and make 270 00:15:21,040 --> 00:15:27,440 Speaker 1: color coded graded maps documenting each neighborhood's desirability. To do this, 271 00:15:27,800 --> 00:15:30,760 Speaker 1: assessors all over the United States looked at all kinds 272 00:15:30,760 --> 00:15:33,560 Speaker 1: of factors for each community. Mckep in mind, this was 273 00:15:34,480 --> 00:15:38,400 Speaker 1: five The communities that they were looking at were heavily segregated, 274 00:15:38,520 --> 00:15:42,160 Speaker 1: and race definitely played a factor in these assessments. So 275 00:15:42,880 --> 00:15:44,800 Speaker 1: kind of wrap up what we've talked about so far. 276 00:15:45,440 --> 00:15:50,920 Speaker 1: The government was wanting to protect its investments in all 277 00:15:50,960 --> 00:15:53,520 Speaker 1: of these houses that it was refinancing, and to that 278 00:15:53,680 --> 00:15:56,320 Speaker 1: end put a bunch of people to work making maps 279 00:15:56,520 --> 00:15:59,920 Speaker 1: to make sure that the neighborhoods were appropriate. We're gonna 280 00:16:00,040 --> 00:16:03,120 Speaker 1: talk about how those maths are created after a brief 281 00:16:03,200 --> 00:16:07,680 Speaker 1: sponsor break, So whenever we talk about segregation as it 282 00:16:07,720 --> 00:16:11,320 Speaker 1: persists today. People point out that folks like to live 283 00:16:11,360 --> 00:16:13,960 Speaker 1: around people who are similar to them, so it's easy 284 00:16:14,000 --> 00:16:17,840 Speaker 1: to see why immigrants from one particular nation might, for example, 285 00:16:17,920 --> 00:16:21,440 Speaker 1: all settle in the same neighborhood, or why neighborhoods can 286 00:16:21,560 --> 00:16:26,240 Speaker 1: diverge from one another along racial lines. And this is true. 287 00:16:26,960 --> 00:16:30,320 Speaker 1: It's also simultaneously true that, for roughly a century after 288 00:16:30,360 --> 00:16:36,120 Speaker 1: the abolition of slavery, neighborhood segregation was legally enforced regardless 289 00:16:36,120 --> 00:16:38,360 Speaker 1: of whether people wanted to live near other people who 290 00:16:38,400 --> 00:16:40,720 Speaker 1: were similar to them. The law made it next to 291 00:16:40,760 --> 00:16:44,120 Speaker 1: impossible to live anywhere else for a lot of social 292 00:16:44,160 --> 00:16:46,720 Speaker 1: and economic reasons. A lot of those patterns that used 293 00:16:46,720 --> 00:16:50,800 Speaker 1: to be legally enforced still exists today, even though segregation 294 00:16:50,840 --> 00:16:57,480 Speaker 1: itself is illegal. Originally, racially specific zoning laws were used 295 00:16:57,520 --> 00:17:01,680 Speaker 1: to enforce neighborhood segregation. Cities and states would have zoning 296 00:17:01,760 --> 00:17:05,359 Speaker 1: laws that specified, for example, that a black person couldn't 297 00:17:05,400 --> 00:17:08,800 Speaker 1: live in a majority white neighborhood. But in nineteen seventeen, 298 00:17:08,960 --> 00:17:13,080 Speaker 1: zoning based on race was declared unconstitutional by the Supreme Court. 299 00:17:14,119 --> 00:17:18,320 Speaker 1: This decision was called Buchanan versus Warley. Warley a black 300 00:17:18,359 --> 00:17:21,280 Speaker 1: man from Louisville, Kentucky, had bought a house from Buchanan, 301 00:17:21,480 --> 00:17:25,359 Speaker 1: a white man. However, Louisville's zoning laws prevented a black 302 00:17:25,359 --> 00:17:28,000 Speaker 1: person from living on a block where the majority of 303 00:17:28,000 --> 00:17:30,840 Speaker 1: the residents were white, and this was the case on 304 00:17:30,920 --> 00:17:35,840 Speaker 1: Buchanan's block. The Supreme Court ruled that this was unconstitutional. However, 305 00:17:35,960 --> 00:17:39,160 Speaker 1: the decision applied only to legal statutes. It did not 306 00:17:39,200 --> 00:17:42,440 Speaker 1: pertain to private agreements or two issues that were not 307 00:17:42,520 --> 00:17:47,119 Speaker 1: enforced by the states. This led to two changes. First, 308 00:17:47,240 --> 00:17:50,840 Speaker 1: the zoning laws themselves were revised so that instead of 309 00:17:51,080 --> 00:17:54,960 Speaker 1: specifying what race could live where, they prevented the construction 310 00:17:55,000 --> 00:17:58,399 Speaker 1: of smaller, affordable homes that lower income families, most of 311 00:17:58,400 --> 00:18:01,480 Speaker 1: whom were black or another acial or ethnic minority, could 312 00:18:01,520 --> 00:18:07,160 Speaker 1: afford to buy. And racially restrictive covenants, especially in majority 313 00:18:07,200 --> 00:18:10,240 Speaker 1: white neighborhoods, took the place of zoning to keep the 314 00:18:10,240 --> 00:18:15,239 Speaker 1: neighborhoods explicitly segregated. So to explain what that actually is. 315 00:18:16,040 --> 00:18:20,440 Speaker 1: Racially restrictive covenants were clauses in the deeds to people's homes, 316 00:18:20,440 --> 00:18:24,920 Speaker 1: primarily in white neighborhoods, that prevented white homeowners from selling 317 00:18:24,920 --> 00:18:29,159 Speaker 1: their property to black buyers. African Americans are not the 318 00:18:29,200 --> 00:18:32,600 Speaker 1: only people who have been targeted by racially restrictive covenants, 319 00:18:32,600 --> 00:18:35,359 Speaker 1: but they were the most common inclusion, and they're what's 320 00:18:35,400 --> 00:18:38,879 Speaker 1: relevant to what we're talking about in these episodes. Although 321 00:18:38,960 --> 00:18:42,800 Speaker 1: racially restrictive covenants are illegal today, they do still exist 322 00:18:42,840 --> 00:18:45,560 Speaker 1: in some deeds from properties that have been passed down 323 00:18:45,880 --> 00:18:50,760 Speaker 1: through inheritance rather than having been resold. So when the 324 00:18:50,840 --> 00:18:55,119 Speaker 1: city survey program started, the assessors were going into deeply 325 00:18:55,200 --> 00:18:59,240 Speaker 1: segregated neighborhoods to document everything about them, including the races 326 00:18:59,280 --> 00:19:02,280 Speaker 1: and ethnicities of people who were living there. But it 327 00:19:02,359 --> 00:19:04,600 Speaker 1: started with stuff that was a lot more basic than that. 328 00:19:04,840 --> 00:19:09,240 Speaker 1: The first thing was to describe the terrain. The instruction said, 329 00:19:09,320 --> 00:19:13,600 Speaker 1: quote describe or give word picture of uh quote lay 330 00:19:13,600 --> 00:19:18,680 Speaker 1: of the land, I e. Level, rolling, hilly, mentioned physical 331 00:19:18,720 --> 00:19:24,920 Speaker 1: features like slopes, bluffs, fills, gullies, streams from their assessors 332 00:19:24,960 --> 00:19:31,400 Speaker 1: described favorable and unfavorable influences. Favorable influences might be parks, 333 00:19:31,520 --> 00:19:36,640 Speaker 1: good schools, churches, recreation centers, good traffic, and various nice 334 00:19:36,640 --> 00:19:40,760 Speaker 1: amenities that a neighborhood might have. Detrimental influences might be 335 00:19:41,320 --> 00:19:45,640 Speaker 1: traffic that is not good, noise, graffiti, proximity to manufacturing 336 00:19:45,640 --> 00:19:50,320 Speaker 1: facilities or slaughter houses, the presence of apartments, flood risk, 337 00:19:50,440 --> 00:19:54,639 Speaker 1: and to quote from the instructions, quote infiltrations of lower 338 00:19:54,680 --> 00:20:00,400 Speaker 1: grade population or different racial groups. Then assess there's looked 339 00:20:00,400 --> 00:20:03,520 Speaker 1: at the types of dwellings and the neighborhood, who lived there, 340 00:20:03,640 --> 00:20:05,840 Speaker 1: what they did for a living, how much money they made, 341 00:20:06,119 --> 00:20:09,879 Speaker 1: how the population was or wasn't shifting include to include 342 00:20:09,880 --> 00:20:13,640 Speaker 1: more minorities, whether people owned or rented. It really went 343 00:20:13,760 --> 00:20:17,560 Speaker 1: on and on and After assessing all these factors, with 344 00:20:17,640 --> 00:20:20,600 Speaker 1: all these elements, a lot of which really are pretty 345 00:20:20,600 --> 00:20:23,640 Speaker 1: objective and related to whether a neighborhood might be considered 346 00:20:23,680 --> 00:20:27,240 Speaker 1: a nice neighborhood, all that data would go into a map, 347 00:20:27,720 --> 00:20:30,600 Speaker 1: and the map would sort each neighborhood into four categories. 348 00:20:30,640 --> 00:20:36,440 Speaker 1: And those categories were best, still desirable, definitely, declining, and hazardous. 349 00:20:37,920 --> 00:20:41,040 Speaker 1: The hazardous neighborhoods, almost a hundred percent of the time, 350 00:20:41,320 --> 00:20:44,480 Speaker 1: had one thing in common, regardless of what its buildings 351 00:20:44,480 --> 00:20:47,240 Speaker 1: were like, how much money it's residents made, what they 352 00:20:47,280 --> 00:20:51,000 Speaker 1: did for a living, or anything else. Almost always their 353 00:20:51,040 --> 00:20:55,720 Speaker 1: residents were predominantly black. So in the nineteen thirties, the 354 00:20:55,720 --> 00:20:58,520 Speaker 1: City Survey Program, which was a project of the United 355 00:20:58,520 --> 00:21:01,680 Speaker 1: States federal government, was creating maps of all of the 356 00:21:01,800 --> 00:21:04,960 Speaker 1: nation's major cities and color coding all the places where 357 00:21:04,960 --> 00:21:10,240 Speaker 1: black people lived as hazardous. Which is where we are 358 00:21:10,280 --> 00:21:13,040 Speaker 1: going to pause this episode. Next time, we're going to 359 00:21:13,119 --> 00:21:16,919 Speaker 1: talk about some specific examples from these maps, how and 360 00:21:17,000 --> 00:21:20,200 Speaker 1: where the maps were used, and how the practice of redlining, 361 00:21:20,320 --> 00:21:24,679 Speaker 1: which these maps either started or simply documented, depending on 362 00:21:24,720 --> 00:21:29,359 Speaker 1: who you ask, still exists today. Tracy, do you always 363 00:21:29,440 --> 00:21:31,520 Speaker 1: also have a little bit of listener mail that's maybe 364 00:21:31,520 --> 00:21:35,440 Speaker 1: not quite so uh intense, But I do, and it's 365 00:21:35,520 --> 00:21:38,160 Speaker 1: it's not it's not quite so intense. I have. First, 366 00:21:38,960 --> 00:21:43,960 Speaker 1: I'm gonna call this an anti correction. Okay, we have 367 00:21:44,040 --> 00:21:47,000 Speaker 1: gotten so many emails about this that I feel like 368 00:21:47,280 --> 00:21:51,280 Speaker 1: I feel compelled to clarify even though the emails that 369 00:21:51,320 --> 00:21:54,200 Speaker 1: we've been getting are not correct. So in our Child 370 00:21:54,240 --> 00:21:58,119 Speaker 1: Migrant Program episode, we read from Prime Minister Kevin Red's 371 00:21:58,160 --> 00:22:01,760 Speaker 1: apology speech to the child migrants, and this was an 372 00:22:01,760 --> 00:22:06,119 Speaker 1: apology for them having been removed from the settings that 373 00:22:06,200 --> 00:22:09,720 Speaker 1: were familiar to them and then denied appropriate care once 374 00:22:09,760 --> 00:22:13,680 Speaker 1: they got to Australia. We've gotten quite a few letters 375 00:22:13,720 --> 00:22:17,720 Speaker 1: from people telling us that that apology was not for 376 00:22:17,840 --> 00:22:21,240 Speaker 1: the Child Migrant Program, that it was for the Stolen Generation, 377 00:22:21,359 --> 00:22:24,639 Speaker 1: which were Aboriginal children who were taken from their homes 378 00:22:24,680 --> 00:22:28,960 Speaker 1: and put into residential schools to try to force them 379 00:22:29,000 --> 00:22:34,600 Speaker 1: to assimilate into white society. So those were two different speeches, 380 00:22:35,480 --> 00:22:39,200 Speaker 1: both of them delivered by Prime Minister Kevin Rud. We've 381 00:22:39,240 --> 00:22:41,320 Speaker 1: gotten a whole bunch of emails from people who have 382 00:22:41,400 --> 00:22:44,320 Speaker 1: said that apology didn't have anything to do with the 383 00:22:44,359 --> 00:22:49,560 Speaker 1: Child Migrant Program. I double checked. We definitely read from 384 00:22:49,600 --> 00:22:56,480 Speaker 1: the Child Migrant Program apology speech and the Stolen Generation 385 00:22:57,080 --> 00:23:01,200 Speaker 1: apology speech was a separate thing, all so delivered by 386 00:23:01,280 --> 00:23:05,359 Speaker 1: Prime Minister Kevin Rudd. So thanks to all the folks 387 00:23:05,359 --> 00:23:07,919 Speaker 1: who have written in. I definitely double checked. There were 388 00:23:07,920 --> 00:23:12,639 Speaker 1: definitely two different speeches. That's the thing. One thing, too, 389 00:23:12,760 --> 00:23:15,240 Speaker 1: is an actual correction. It's from David on our Facebook 390 00:23:16,000 --> 00:23:18,560 Speaker 1: and he says in the last episode, at least until yesterday, 391 00:23:18,560 --> 00:23:22,200 Speaker 1: that I think you said that Mexico obtained its independence 392 00:23:22,200 --> 00:23:25,879 Speaker 1: in eighteen twenty one, although the quote is not totally bias. 393 00:23:25,960 --> 00:23:30,720 Speaker 1: The Mexican War of Independence ended on September one, I 394 00:23:30,760 --> 00:23:33,960 Speaker 1: doubt you will characterize the United States obtained its independence 395 00:23:33,960 --> 00:23:37,560 Speaker 1: in eighteen seventy three as the Revolutionary War ended September 396 00:23:37,600 --> 00:23:40,679 Speaker 1: three of that year. No, the US independence is counted 397 00:23:40,680 --> 00:23:44,040 Speaker 1: from the day was declared July four, seventeen seventy six. 398 00:23:44,160 --> 00:23:45,960 Speaker 1: With the same tone, I would urge you to mention 399 00:23:46,000 --> 00:23:50,320 Speaker 1: that Mexico obtained its independence in eighteen ten as independence 400 00:23:50,480 --> 00:23:54,119 Speaker 1: was declared on September sixteenth, eighteen ten. And that was 401 00:23:54,160 --> 00:23:57,000 Speaker 1: from David. And I'm not completely sure whether that one 402 00:23:57,160 --> 00:24:00,760 Speaker 1: was related to our pastry war Epis Stowed or our 403 00:24:00,880 --> 00:24:03,560 Speaker 1: battle of our Siege of Behart episode. It could have 404 00:24:03,600 --> 00:24:06,560 Speaker 1: been either, but that's a valid point that I had 405 00:24:06,600 --> 00:24:10,600 Speaker 1: not thought about at all. Um, and I have a 406 00:24:10,640 --> 00:24:12,800 Speaker 1: feeling we have said that about other nations as well, 407 00:24:12,840 --> 00:24:16,760 Speaker 1: that they obtained their independence on a particular date, but generally, 408 00:24:17,520 --> 00:24:22,440 Speaker 1: like the day that's considered to be the nation's origin 409 00:24:22,760 --> 00:24:26,639 Speaker 1: is the day that it's independence was declared, if you know, 410 00:24:26,680 --> 00:24:30,600 Speaker 1: the if the war that often follows that uh ended 411 00:24:30,600 --> 00:24:33,320 Speaker 1: in the new nations favor. I had never thought of 412 00:24:33,359 --> 00:24:38,439 Speaker 1: that before, So thank you for your note, David. UM 413 00:24:38,480 --> 00:24:40,040 Speaker 1: if you would like to write to us about this 414 00:24:40,200 --> 00:24:42,560 Speaker 1: or any other subject where at history podcast at how 415 00:24:42,600 --> 00:24:45,680 Speaker 1: stuff works dot com. We're also on Facebook at facebook 416 00:24:45,720 --> 00:24:47,919 Speaker 1: dot com slash miss in history and on Twitter at 417 00:24:47,920 --> 00:24:50,480 Speaker 1: miss in History. Our tumbler is miss in history dot 418 00:24:50,480 --> 00:24:52,920 Speaker 1: tumbler dot com. We're also on pentterrist at pentriest dot 419 00:24:52,920 --> 00:24:55,440 Speaker 1: com slash miss in history, and on Instagram at miss 420 00:24:55,440 --> 00:24:57,800 Speaker 1: in history. If you would like to go to our 421 00:24:57,880 --> 00:25:00,239 Speaker 1: parent companies website, which is how stuff works dot um, 422 00:25:00,280 --> 00:25:03,520 Speaker 1: you will find all sorts of information about the mortgage 423 00:25:03,560 --> 00:25:06,359 Speaker 1: industry that exists today and all of the various tax 424 00:25:06,440 --> 00:25:08,359 Speaker 1: and legal things that come along with find a house. 425 00:25:08,920 --> 00:25:10,920 Speaker 1: You can also come to our website, which is missed 426 00:25:10,960 --> 00:25:12,879 Speaker 1: in history dot com, where you will find show notes 427 00:25:12,920 --> 00:25:15,520 Speaker 1: for this and all of our other episodes, lots of 428 00:25:15,600 --> 00:25:19,160 Speaker 1: cool links, an archive of episodes, every episode that we've 429 00:25:19,160 --> 00:25:21,080 Speaker 1: ever done. So you can do all that and a 430 00:25:21,080 --> 00:25:23,280 Speaker 1: whole lot more at how stuff works dot com or 431 00:25:23,320 --> 00:25:29,960 Speaker 1: missing history dot com. For more on this and thousands 432 00:25:29,960 --> 00:25:44,639 Speaker 1: of other topics, is it how stuff works dot com.