How the FHA encouraged segregation

[aegsm76]

link
http://www.npr.org/2017/05/03/526655...egated-america
snippet
It was in something called the Underwriting Manual of the Federal Housing Administration, which said that 'incompatible racial groups should not be permitted to live in the same communities.' Meaning that loans to African-Americans could not be insured.

And people wonder why I do not trust the government...

[jfrog]

Originally Posted by aegsm76

link
http://www.npr.org/2017/05/03/526655...egated-america
snippet
It was in something called the Underwriting Manual of the Federal Housing Administration, which said that 'incompatible racial groups should not be permitted to live in the same communities.' Meaning that loans to African-Americans could not be insured.

And people wonder why I do not trust the government...

Terrible article to have to sift through for one interesting fact. About 99% of what it claimed was just a rant about how bad they thought that rule was and trying to act like everything would have been hunky dory without that rule. Not so. Let's not rewrite history so fast! The reason for the rule was a risk to the loan whether we now want to admit it or not. It was a risk whether blacks paid more for houses at that time or not. Why? Because it made the community less desirable to more people than it made it desirable to, especially in the 1930's. If a home for whatever reasons starts out more desirable and then loses desirability for any number of reasons the bank may not be able to resale the property for what was owed on it in the case of a default and that is precisely the risk the rule was looking to avoid.

Now suppose there's a 5% chance that not having that rule in place will mean many many loans in many communities will devaluate as the program continues and some of those loans are bound to default. What if all those loans that defaulted devalued because of the lack of such a rule. It could have been devastating. Why take that chance especially at that time?

[Jermyn Davidson]

Do you realize that what the government did perpetuated systemic racism and encouraged racial prejudice?

I already see myself not enjoying this conversation so I am going to see my way out.

I just want you to realize... nothing. Realize nothing.

Good night.

[jfrog]

Originally Posted by Jermyn Davidson

Do you realize that what the government did perpetuated systemic racism and encouraged racial prejudice?

I already see myself not enjoying this conversation so I am going to see my way out.

I just want you to realize... nothing. Realize nothing.

Good night.

Yes. You do realize that government insurance of mortgage loans was a great benefit to a vast number of both poorer white and black people and that without that rule the risk would have been to great for the government insure mortgage loans.

[Jermyn Davidson]

The practices of the government back in those days is what stymied the economic of blacks in America.

In real estate. In education. In healthcare. In business loans. In every aspect of life. The American government PURPOSEFULLY enacted policies that SPECIFICALLY were unfair for blacks in America.

Many blacks in 21st century America are affected by policies of the 18th, 19th, and 20th centuries American government.

Still, many, many people would rather look at today's persistent problems WITHOUT the context of American history.

[Originalist]

Originally Posted by Jermyn Davidson

The practices of the government back in those days is what stymied the economic of blacks in America.

In real estate. In education. In healthcare. In business loans. In every aspect of life. The American government PURPOSEFULLY enacted policies that SPECIFICALLY were unfair for blacks in America.

Many blacks in 21st century America are affected by policies of the 18th, 19th, and 20th centuries American government.

Still, many, many people would rather look at today's persistent problems WITHOUT the context of American history.

It was a plan to fail, to divide and conquer, from the moment Lee surrendered. What, you really believe Lincoln and the Republicans cared about blacks? Heck no! Nor did the phony "progressives" that began to take over the Democrat Party in the 30's. Blacks are, to these people, and always be, nothing more than pawns. The only people who care about blacks are the average, every day conservative voters. But the elite powers have succeeded in alienating those two groups from each other. What a formidable force we will be if we could ever unite. But as long as whites continue to be alienated and told they have to pay for the sins of a past generation of whites, there will be no progress for any of us.

[aegsm76]

Originally Posted by jfrog

Terrible article to have to sift through for one interesting fact. About 99% of what it claimed was just a rant about how bad they thought that rule was and trying to act like everything would have been hunky dory without that rule. Not so. Let's not rewrite history so fast! The reason for the rule was a risk to the loan whether we now want to admit it or not. It was a risk whether blacks paid more for houses at that time or not. Why? Because it made the community less desirable to more people than it made it desirable to, especially in the 1930's. If a home for whatever reasons starts out more desirable and then loses desirability for any number of reasons the bank may not be able to resale the property for what was owed on it in the case of a default and that is precisely the risk the rule was looking to avoid.

Now suppose there's a 5% chance that not having that rule in place will mean many many loans in many communities will devaluate as the program continues and some of those loans are bound to default. What if all those loans that defaulted devalued because of the lack of such a rule. It could have been devastating. Why take that chance especially at that time?

jf - it was not the private market that did this. If that had happened and they could have justified it with market analysis, then so be it.
However, it was the government program that did this, to keep and promote segregation.
That is what I find reprehensible.

[jfrog]

Originally Posted by aegsm76

jf - it was not the private market that did this. If that had happened and they could have justified it with market analysis, then so be it.
However, it was the government program that did this, to keep and promote segregation.
That is what I find reprehensible.

Doesn't matter. When you are in the business of insuring mortgage loans (whether government or private) you can't take on the risk that your policy or lack of policy could systematically lead to all your properties losing value when defaults will inevitably happen. We are talking about a chance for a loss in the hundreds of billions that was easily mitigated. Personally in the 1930's I'd put the chance of that large loss happening as very high without that policy.

In other words, without that policy there would be no mortgage loan insurance program because it would have been seen as costing way to much.