Under the "New Deal," the Federal Housing Administration facilitated segregation efforts by refusing to insure...

The Federal Housing Administration (FHA), established during the New Deal in 1934, implemented policies that denied mortgage insurance to African-American neighborhoods while supporting white suburban development, a practice known as redlining. The term “redlining” originates from the FHA’s use of maps where minority neighborhoods were outlined in red,marking them as high-risk and ineligible for loans. According to the APA’sAICP Certification Exam Content Outline(2022), under “Fundamental Planning Knowledge,” redlining is identified as a historical planning practice that “systematically denied services to minority communities, contributing to segregation.” TheCPC Study Manual(2024) elaborates that “the FHA’s redlining practices in the 1930s and 1940s entrenched racial segregation by refusing to insure mortgages in African-American areas.” Options B (gentrification), C (displacement), and D (sub-prime lending) are incorrect: gentrification involves neighborhood revitalization often leading to displacement, which is a later phenomenon; displacement is an outcome, not a policy; and sub-prime lending refers to high-risk loans, a more modern practice.