Quotes About FHA

The FHA was particularly concerned with preventing school desegregation. Its manual warned that if children "are compelled to attend school where the majority or a considerable number of the pupils represent a far lower level of society or an incompatible racial element, the neighborhood under consideration will prove far less stable and desirable than if this condition did not exist," and mortgage lending in such neighborhoods would be risky.

The FHA favored mortgages in areas where boulevards or highways served to separate African American families from whites, stating that "[n]atural or artificially established barriers will prove effective in protecting a neighborhood and the locations within it from adverse influences, . . . includ[ing] prevention of the infiltration of . . . lower class occupancy, and inharmonious racial groups." The FHA was particularly concerned with preventing school desegregation.

Only in 1962, when President John F. Kennedy issued an executive order prohibiting the use of federal funds to support racial discrimination in housing, did the FHA cease financing subdivision developments whose builders openly refused to sell to black buyers.

ALONG WITH THE real estate industry and state courts, the FHA justified its racial policies—both its appraisal standards and its restrictive covenant recommendations—by claiming that a purchase by an African American in a white neighborhood, or the presence of African Americans in or near such a neighborhood, would cause the value of the white-owned properties to decline.

Because the FHA's appraisal standards included a whites-only requirement, racial segregation now became an official requirement of the federal mortgage insurance program. The FHA judged that properties would probably be too risky for insurance if they were in racially mixed neighborhoods or even in white neighborhoods near black ones that might possibly integrate in the future.

By 1950, the FHA and VA together were insuring half of all new mortgages nationwide.

The FHA's success provides strong evidence that government can and should play a role in the nation's mortgage finance system. It also demonstrates that although government intervention in the economy during the Great Recession was messy, things would have been a lot messier without it.

It has become fashionable to rail against government intervention in the economy, and the FHA is a favorite example by those trying to show the government's overreach. In reality, the FHA shows how government action during the Great Recession forestalled a much worse economic fate.

The FHA literally drew up the redlining map and then basically distributed - I'm sorry, the Home Owners' Loan Corporation actually did it, and then distributed to banks who used that as policy to determine how they would lend and who they would lend to. The racism in the system was pervasive and total.

Between the 1930s and the 1970s, urban renewal programs demolished 1,600 black neighborhoods, and 90 percent of the low-income units destroyed for urban renewal were never replaced. Between 1934 and 1962 the FHA and the Veterans Administration financed more than $120 billlion worth of new housing, but only 2 percent of this went to nonwhite families.

Indeed, the FHA was born out of the Great Depression, which was also caused in significant part by a foreclosure crisis. Mortgages in the early 1930s were mostly three- to five-year 'bullet' loans, which did not amortize and were due in full at maturity.

the FHA-induced easy credit began to push up the price of houses for the middle class, and that quickly offset any real advantage of the subsidy.

The average credit score of today's FHA borrowers is higher than the average American household with a score. As it becomes more costly and difficult to get a FHA loan, loans from private mortgage lenders will become more attractive and their market share will grow.

Redlining went beyond FHA-backed loans and spread to the entire mortgage industry, which was already rife with racism, excluding black people from most legitimate means of obtaining a mortgage.

loan guarantees by the FHA and Veterans Administration (VA) were the most important single cause of postwar suburbanization, and more than 98% of the millions of home loans guaranteed by the FHA and VA after World War II were available only to whites.

The FHA manual was perhaps the single most detrimental document in the history of urbanism in the United States. With a few lines of anti-density, racist planning policy, the federal government essentially forced the creation of the suburbs and the near-complete disinvestment of the inner city.

Every loan that we did in the City of Detroit in the 10 years they studied - between 2005 and 2014 - were conventional FHA, VA loans with average interest rates of 6%.

The FHA's success provides strong evidence that government can and should play a role in the nation's mortgage finance system. It also demonstrates that although government intervention in the economy during the Great Recession was messy, things would have been a lot messier without it.