Federal housing rules pushed racism

By Stefani Evans

Thursday, Nov. 20, 2008 | midnight

Stefani Evans

My parents bought their first house sight unseen Nov. 15, 1950.

As a World War II veteran, my father was eligible for the Servicemen's Readjustment Act of 1944, also known as the GI Bill of Rights. This legislation provided returning veterans "education and training, loan guaranty for homes, farms or businesses, and unemployment pay." Between 1944 and 1952, the GI Bill developed America's middle class by guaranteeing nearly 2.4 million home loans to veterans like my father if the house met Federal Housing Administration (FHA) standards.

How do FHA standards apply to genealogy? We need to know the laws and policies that affected our ancestors. My father was stationed in North Carolina in 1950 when his squadron received notice of transfer to California before deployment to Korea. The squadron also heard that a new housing development available on the GI Bill was being built within an easy commute of the California base. Several squadron members seized the opportunity to buy houses on affordable terms and to settle their families before they left for Korea. My parents moved into their mystery house on Magnolia Street in time for my father to fence the backyard before he left for Korea. My mother was in good company while my father was overseas; Magnolia Street was populated with North Carolina Marine Corps families in the same situation.

Kenneth T. Jackson explains FHA standards in "Race, Ethnicity and Real Estate Appraisal: The Home Owners Loan Corporation and the Federal Housing Administration," 1980. The Home Owners Loan Corporation (HOLC) was established in 1933 to enable homeowners to avoid foreclosure during the Great Depression. HOLC introduced long-term, fixed rate mortgages to replace at-risk, short-term loans. To protect their investment, HOLC appraisers standardized real estate appraisal criteria across the industry and mapped urban and suburban neighborhoods according to a four-tier system. Security rankings considered a neighborhood's age, condition, location, and racial "infiltration." The top tier consisted of newly built homes (usually in suburban neighborhoods) and "homogenous" homeowners who were "American business and professional men." This designation excluded non-white or ethnic white residents. The second tier included less expensive or older homes that were expected to hold their value. The bottom tier, or "redlined" grade, was reserved for dense, non-white, low-income, or poorly maintained neighborhoods; HOLC did not refinance homes in bottom-rated neighborhoods. Even though HOLC ceased operation in 1935, HOLC's "Residential Security Maps" became the industry standard adopted by the Federal Housing Administration in 1934. HOLC standards promoted suburbs and guaranteed inner-city decline. HOLC real estate appraisal guidelines ensured that "the middle-class suburban family with the new house and the long-term, fixed-rate FHA-insured mortgage became a symbol … of 'the American way of life.'"

Monitor Homes Inc. executed the deed of sale to my parents one day after filing a Declaration of Restrictions in the California county recorder's office. Monitor's "covenants, conditions and restrictions" do not contain racially or ethnically restrictive covenants; those were struck down by the U.S. Supreme Court in 1948 (Shelley v. Kraemer, 334 US 1). But World War II veterans like my father used the GI Bill, which applied only to homes that met FHA standards. The FHA, by relying on the HOLC tier system, supported and encouraged racial housing segregation. Monitor Homes met FHA standards. Therefore, suburban Magnolia Street was destined to be as white as its namesake. My parents didn't seek an all-white neighborhood in 1950. The government did it for them.

Stefani Evans is a board-certified genealogist and a volunteer at the Regional Family History Center. She can be reached c/o the Home News, 2360 Corporate Circle, Third Floor, Henderson, NV 89074, or [email protected].