Historical Significance

In 1936, the federal government established HOLC to inventory and grade all residential areas throughout the nation. HOLC hired appraisers and surveyors to assign a "grade" on a scale from "A" to "D" for residential homes. Red was the color used for the "D" grade--thus, the term "red-lining." If a neighborhood received a "D" grade, mortgage lenders often refused to make loans to properties within the neighborhood. The appraiser looked at such factors as building decay, neglect, and a neighborhood's racial and ethnic make-up. If African Americans, Jews, and the foreign-born lived in the neighborhood, the appraiser downgraded the area for mortgage insurance. HOLC produced hundreds of maps--viewed only by federal government officials and senior bank managers.