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Abstract

The economic collapse that set into motion the Great Depression of the 1930s was portended by mass mortgage defaults in the mid-1920s. To address this unprecedented housing crisis, New Deal legislation created the Federal Housing Administration (FHA) to insure mortgage loans. Without predecessors or peers and faced with a national emergency, the FHA turned to risk-rating experts in real estate valuation to craft underwriting policies that would shape the geography of the country and cement racial segregation in the United States for generations to come. Chapter 3 details how FHA officials utilized risk-rating standards that disqualified people of color from obtaining federally subsidized mortgage insurance. This institutional discrimination had the deleterious effect of essentially precluding people of color from obtaining middle-class America’s most important wealth-generating asset: the single-family home. Though others have written about the agency’s policies before, my analysis is notably the first to locate each version of the FHA’s underwriting manual, to take stock of each facet of race-based risk rating until the conclusion of the practice in 1947, and to analyze the agency’s effect on the lending industry thereafter.