As the United States marks its 250th anniversary, WTOP presents “250 Years of America,” a multipart series examining the innovations, breakthroughs, and pivotal moments that have shaped the nation since 1778.
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Federal laws have shaped who gets to own a home in the United States, and who does not. Gregory Squires, a research professor and emeritus professor in the Department of Sociology at George Washington University, explained how several key housing policies have evolved.
The National Housing Act of 1934 was a critical part of efforts to recover from the Great Depression. It created the Federal Housing Administration, which insured mortgages to stabilize the housing market.
By getting federal insurance, lenders knew that if buyers defaulted on the loan, the government would cover the loss. “And it made it a lot easier [and] financially feasible for far more lenders to make far more home loans,” Squires said.
This program expanded mortgage lending, but FHA underwriting guidelines discouraged lending in racially mixed or Black neighborhoods, making it nearly impossible for many people of color to qualify for a federally insured loan. This helped institutionalize redlining, the practice of denying credit or insurance to people because they live in areas labeled as a poor financial risk.
FHA policies shaped private lending norms for decades and reinforced segregation.
“The federal government itself was one of the key, if not the key, redliner in the United States,” Squires said. “(The FHA) did open up homeownership opportunities for a lot of people, but it clearly set the tone for what followed, which was decades of racially discriminatory mortgage lending practices.”
In 1968, the Fair Housing Act was a landmark civil rights law that changed the dynamics of the housing market, making it illegal for lenders to discriminate on the basis of race, color, religion, and national origin — later expanded to include sex, familial status, and disability. “This has been the key statute aimed at housing discrimination,” Squires said.
The act also gave the Department of Housing and Urban Development major enforcement responsibilities. HUD was created in 1965 to administer housing and community development programs, working to ensure fair and equal housing opportunities.
The Equal Credit Opportunity Act was passed in 1974, prohibiting discrimination in all credit markets, not just housing. It has been widely used in mortgage discrimination cases.
The Home Mortgage Disclosure Act was passed the following year, requiring most mortgage lenders to disclose detailed information about where they make loans, who applies, and who gets approved or denied.
HMDA has been modified and expanded several times over the years. “Now we know we can report what’s happened to loan applications submitted by people of different colors and races, genders and income levels,” Squires said.
The Community Reinvestment Act, enacted in 1977, requires federal banking regulators, including the Federal Reserve, to ensure banks are serving the credit needs of the neighborhoods they’re part of, particularly low and moderate‑income communities.
”[It’s] a federal statute that basically prohibits redlining,” Squires said. “The statute actually says that lenders are required to ascertain and be responsive to the credit needs of their entire service areas, including low and moderate income areas.”
CRA has been used in conjunction with HMDA to challenge discriminatory mortgage lending practices and to support community reinvestment programs in neighborhoods that have historically been underserved by lenders.
Squires said there is still significant work to be done, and he believes there needs to be a shift in how society views housing at a foundational level.
“We need to begin to think about housing as a human right, rather than as a commodity that consumers win by being successful in the marketplace,” he said, noting how some communities have done a better job maintaining public housing or creating land trusts that take some of the profit pressure out of housing.
Many advocacy groups are also negotiating community benefits agreements, often using the CRA as leverage to push mortgage lenders to serve communities that have historically been underserved. “Remove the market and make housing a right, so that all families have access to affordable and decent housing in decent neighborhoods.”
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