Nationality and Neighborhood Risk at the Origins of FHA Underwriting

Abstract

Histories of the emergence of federally sanctioned mortgage underwriting in the United States have made racial discrimination a central theme. Yet their emphasis on systematic favoritism for whites over blacks tells only part of the story. This article examines how a broader, waning concept of race that encompassed nationality as well as skin color influenced the practice of locational risk rating at the Federal Housing Administration. Using qualitative and quantitative methods to examine the construction of “neighborhood risk” reveals how, from the introduction of the agency’s underwriting standards, raters depended on a more nuanced population classification scheme in evaluating urban areas. The evidence presented here about the differential treatment of nationality groups points to new directions for studies of housing policy in the United States.