It’s hard to talk about housing in Santa Clara County without looking at the history of the region’s Red Zone, a tool that once contributed to racial segregation and discrimination across the United States for decades.

The term appears in conversations on topics ranging from political representation and community governance to historic neighborhoods and land use policy.

A recent report from the city shows racial segregation still runs deep in San Jose, with racial and income disparities depending on which side of Highway 101 residents live. Residents tend to be whiter west of the highway, with high concentrations of white neighborhoods in Willow Glen and Cambrian, and some concentrations of Asian residents. Residents tend to be Latinos and Asians east of the highway, with high concentrations at Alum Rock.

“San Jose is a very segregated space,” said Scott Myers-Lipton, professor at San Jose State University. “Historically, whites didn’t want to live with blacks in this country, so they created mechanisms, and one of them was redlining. “

The term has a complex history and has taken on several meanings that don’t apply to the original concept, according to Stephen Menendian, research director at the Othering & Belonging Institute, an inclusive policy think tank based at UC Berkeley. Redlining has contributed to segregation by discouraging investment in integrated neighborhoods.

“When people use the term redlining, they are using it symbolically to refer primarily to any public discrimination in housing subsidies or access to housing or mortgages and housing insurance, particularly federal discrimination,” he said. said Menendian in San José Spotlight. “That’s really not what redlining is.”

Redlining was born in the 1930s, when a short-lived bureaucracy called Home Owners Loan Corporation was formed to slow the rate of foreclosures during the Great Depression, Menendian said. The company has a program in place to determine the creditworthiness of different neighborhoods and has created color-coded maps to indicate the level of risk posed by approving a mortgage in a certain area.

The colors ranged from green – the highest and safest rating – to red, considered a “dangerous” area for investments. Many maps published during the Home Owners Loan Corporation era can be viewed online, including one for San José.

A map of San José published by the company in 1937 shows the Japantown area highlighted in red. Notes on the map indicate that the area suffers from an “infiltration” of low-income people, with 10% of the population estimated to be black.

“It is generally an eastern and black center and contains the greatest concentration of these races in the city,” the map says. “A black church is located in the south-central part and a Japanese church in the north-central part.”

However, it was not until the creation of the Federal Housing Administration in 1934 that redlining took its strongest effect, Menendian said. The administration provides mortgage insurance, protecting lenders against mortgage losses.

The Federal Housing Administration did not use the cards to determine the creditworthiness of applicants. Instead, he created his own cards using the Home Owners Loan Corporation methodology, said Menendian, many of whom have been lost in history. The administration analyzed the race, income and occupations of residents to determine a neighborhood’s creditworthiness.

“The FHA did not exclude black candidates from consideration as a policy issue and funded approximately 70,000 loans for black buyers from 1935 to 1950,” he said. “Here’s the trick: It was only a fraction of the rate he was financing white borrowers. “

Menendian said the agency does not systematically discriminate against black homebuyers, but card redlining has led to banks issuing far fewer home loans to black applicants.

“Some people think redlining refers to a policy of systematically denying home loans to black buyers. That’s not what redlining is, ”he said. “Redlining says home buyers in neighborhoods marked in red are at higher risk and therefore should be approved with a higher degree of scrutiny and (at) a lower overall rate.”

The Federal Housing Administration’s mortgage insurance guidelines made explicit reference to race and encouraged segregation.

“If a neighborhood is to maintain its stability, it is necessary that the properties continue to be occupied by the same racial and social classes,” reads the administration’s subscription manual of 1935. “A change of occupation social or racial generally leads to instability and diminished values.

Kevin Stein, deputy director of the California Reinvestment Coalition, said banks and other lending institutions may have ultimately turned down home loans to black applicants, but Federal Housing Administration risk assessments have guided actions.

“It’s hard to imagine anything more systemic than that… for the federal government to say, ‘We’re developing a policy that makes it much less likely that financial institutions will grant loans, primarily on the basis of the race of people who live in these neighborhoods, ”Stein told the San José Spotlight. “The effects of these cards are profound. “

Stein said his organization works to ensure financial institutions serve communities of color, and he defines redlining more broadly.

“Redlining, one way of looking at it, is when entire neighborhoods and communities are systematically excluded from access to the general financial public,” said Stein. “One form that can take is that banks don’t lend, provide credit, or provide good credit in certain neighborhoods… those neighborhoods generally tend to be neighborhoods of color.”

Stein said all communities must accept the story of discrimination, which has created large disparities in wealth.

“It’s something that we have to address and understand,” said Stein. “How can we remedy the effects of discrimination that have lasted for some time?

Myers-Lipton asked if residents and lawmakers today are doing enough to thwart the legacy of such policies.

“What are they doing to break the segregation created by the whites? Myers-Lipton asked. “What do we do, now that we are a multi-ethnic society, to say that we need to have policies that promote integration rather than segregation? “

Contact Sonya Herrera at [email protected] or follow @SMHsoftware on Twitter.