Drawing the Lines: The HOLC Report (1935)

As part of his New Deal policies, President Franklin Delano Roosevelt created new agencies meant to help poorer Americans and recent veterans to afford mortgages and build equity. The Federal Housing Association, or FHA, and the Home Owners Loan Corporation or HOLC were meant to evaluate and finance mortgages that include both principal and interest so once paid, the loanee would own the property.

The FHA insisted on doing its own appraisals to ensure its loans were not at risk of default. They instituted a whites-only policy for the federal mortgage insurance program, making housing segregation legal at a national level. The HOLC, on the other hand, relied on local realtors to do its evaluations. This made it possible for pre-existing stereotypes to color their reports with little to no investigation from the federal government. With written evaluations of each city’s areas of high and low risk, the HOLC produced a color coded map that showed which areas were most or least likely to default on their loans.

Green areas were considered “best”, blue were “still desirable”, yellow were “definitely declining”, and red was “hazardous”. Nationally, these maps tended to rate a disproportionate amount of African American neighborhoods as red even if they were solid, middle class single-family homes. Harrisburg was no different.

The realtors employed to survey Harrisburg were William Nelson, William M. Hollinger, Percy L. Grubb, Evan Miller, and E. R. Donald. Each had been selling properties in Harrisburg for several years and most likely had established credibility within the community. While their reports included elements like housing condition and neighborhood location, they also relied heavily on race. White, upper class neighborhoods received better ratings while “negro” or “alien” influenced areas were redlined. Because the map encouraged loan agencies to avoid investing in redlined areas, they continued to lose value. money was redirected from the inner city to the new housing stock in the surrounding suburbs. Consequently, moving out of these areas was very difficult; African American communities became ostracized and further compressed into isolated communities.

Click on the map to get a closer look at the map and the different security gradings. (interactive map courtesy of the Digital Harrisburg Initiative)

Building Borders: Harrisburg’s Racially Restrictive Covenants

Restrictive housing covenants existed long before the 1930s. They were issued as conditions upon purchase of a property to limit what the buyer can do with said property. Early on, they were used to control the physical conditions of a house and prescribe certain landscaping details that coincided with the rest of the neighborhood. However, some time around the 1920s they began to develop racial clauses. The earliest known racially restrictive covenant in Harrisburg was issued in 1926. However, racially restrictive covenants were the most frequent in 1936, 37, and 39, only a few years after the HOLC map was issued. While the language in these covenants varies from deed to deed, they each contain some variation of the following:

“…neither the grantee or grantees herein nor their heirs executors, administrators, successors or assigns, shall sell or lease the said ground to any person or persons than of the Caucasian race.”

The earlier covenants with racial clauses tended to be indefinite, while newer issued ones provided a time limit after which the restriction would expire.

While there is still need for extensive research to be done on these covenants in Harrisburg, certain trends can be observed with the ones that have been discovered. While there are covenants scattered across the city before the HOLC map was issued, after 1936 entire neighborhoods began to develop based on racial restrictions. Colonial Park in Susquehanna township which was under construction starting in 1936 issued racial restrictions on at least 12 covenants that covered multiple properties. The Hollinger Realty Company and Nelson Investment and Development Corporation were responsible for many of the restrictive covenants in Susquehanna, Lower Paxton Township, the community of Progress, and other rural areas that were developed into suburban housing after the HOLC report was issued.

Some neighborhoods only used restrictive covenants in certain areas considered to be in danger of infiltration. The restrictive covenants in the township of Progress were just located on the western edge of the neighborhood most close to Edgemont, a redlined African American farming community. The covenants in the center, however, contained no racial restrictions.

As for the covenants inside the city, there seems to be a correlation between the HOLC map ratings and restrictive covenant use. Restricted properties in the city center tend to lie on the border between colors on the map where a more highly rated area transitions to a lower rated neighborhood. For instance, the restricted properties on Verbeke St. in the 7th ward sat on the boarder between a red and blue zone. Acting as a fence or borders, these covenants kept African Americans out of higher income and better residential neighborhoods.

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