National Housing Act of 1934

Performance Property Real Estate Question

Does FHA Discriminate Against Certain Borrowers

Q: I read that FHA had a racist lending policy.  Is that true? Theresa, Montclair, NJ A: The Federal Housing Administration (FHA) operated the National Housing Act of 1934 that provided federal guarantees on mortgage loans to home buyers.  From the very beginning, FHA limited federal housing mortgage loan assistance to White buyers denying mortgage loan assistance to Blacks.  In fact, this Whites-only federal mortgage loan subsidy was codified in FHA’s manual.  For decades, FHA refused to insure houses for Black people living in predominantly Black neighborhoods and also refused to insure houses in White neighborhoods that were deemed “too close” in proximity to Black neighborhoods.  For example, in 1940, the FHA denied insurance to a private builder in Detroit […]

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