Editing Federal Housing Administration (section)

==== Appraisal criteria and race discrimination ====
{{See also|Redlining}}

It is important to note that these innovative lending practices were, in some regions, exclusively available to white Americans. These practices effectively expanded the pool of white Americans who could manage both the initial [[down payment]] for a house and the ongoing monthly mortgage payments. Consequently, this expansion significantly enlarged the market for single-family homes.<ref>{{Cite book |last=Garvin |first=Alexander|author-link=Alexander Garvin|title=The American City: What Works, What Doesn't. 2nd Edition.|isbn=9780071373678|publisher=[[McGraw-Hill Professional]]|location=New York|year=2002}}</ref> The FHA employed a specific methodology for assessing the appraisal value of properties, relying on eight distinct criteria. It instructed its agents, known as "appraisers," to allocate more funding to projects with higher appraised values, up to a predetermined maximum limit. Among these criteria, the two most pivotal were "Relative Economic Stability," accounting for 40% of the appraisal value, and "protection from adverse influences," contributing an additional 20%.

In 1935, the FHA furnished its appraisers with an Underwriting Manual, which included the following directive: "If a neighborhood is to retain stability it is necessary that properties shall continue to be occupied by the same social and racial classes. A change in social or racial occupancy generally leads to instability and a reduction of values." Appraisers were further instructed to assign superior property and zoning ratings in areas deemed to have "protection against some adverse influences." The manual characterized these adverse influences as "infiltration by inharmonious racial or nationality groups."<ref>{{Cite journal |date=2019 |title=UNDER WRITING MANUAL UNDER WRITING AND VALUATION PROCEDURE UNDER TITLE II OF THE NATIONAL HOUSING ACT FEDERAL HOUSING ADMINISTRATION |url=https://www.huduser.gov/portal/sites/default/files/pdf/Federal-Housing-Administration-Underwriting-Manual.pdf |journal=Federal Housing Administration Under Writing Manual |volume=HA Form NO.2019 |pages=439}}</ref> Due to the FHA's appraisal criteria, which stipulated a whites-only occupancy requirement, racial segregation became an integral component of the federal mortgage insurance program. This occurred because the FHA often classified properties in racially mixed neighborhoods or those in close proximity to black neighborhoods as high-risk, effectively endorsing and enforcing racial segregation as an official requirement.<ref>{{Cite book |last=Rothstein |first=Richard |author-link=Richard Rothstein |title=[[The Color of Law: A Forgotten History of How Our Government Segregated America]] |isbn=9781631492860|publisher=[[Liverlight Publishing]] |location=New York |oclc=959808903|year = 2017|page=[https://books.google.com/books?id=SdtDDQAAQBAJ&pg=PT51 PT 51]}}</ref>