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The role of federal and state government in creating and maintaining residential racial segregation must be understood, without excuse, as a reality of American history. On the federal level, the United States government reinforced discriminatory norms through various public policies. The Federal Housing Administration (FHA) adopted the practice of "red-lining," a discriminatory rating system used by FHA to evaluate the risks associated with loans made to borrowers in specific urban neighborhoods.[14]The vast majority of the loans went to the two top categories of the rating system, the highest of which included areas that were "new, homogenous, and in demand in good times and bad."[15] The second highest category was comprised of mostly stable areas that were still desirable. The third category, and the level at which discriminatory "red-lining" began, consisted of working class neighborhoods near black residences that were "within such a low price or rent range as to attract an undesirable element."[16] Black areas were placed in the fourth cate gory. Mortgage funds were channeled away from fourth category African American neighborhoods and were typically redirected from communities that were located near a black settlement or an area expected to contain black residences in the future.[17] As a result of these policies, the vast majority of FHA mortgage loans went to borrowers in white middle-class neighborhoods, and very few were awarded to black neighborhoods in central cities.[18] Between 1930 and 1950, three out of five homes purchased in the United States were financed by FHA, yet less than two percent of the FHA loans were made to non-white home buyers.[19] The FHA thus became the first federal agency to openly counsel and support segregation.[20] [MORE]