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Urban decline and its impact upon American society have been national concerns for nearly three decades. Although the causes of urban decline are numerous and diverse, a key factor is the in­ adequacy of the financial resources available to resolve the massive problems associated with urban decay. In the residential mortgage market, funds for home mortgage loans and home repair loans in declining neighborhoods are conspicuously absent. As a result, ur­ban decline accelerates, and any realistic hopes for the revitalization of urban neighborhoods are eliminated.

During the 1970s, national attention has focused on redlining - ­the term used to describe the decision by the private financial sector to withdraw its available loan funds within a particular geographic area. As one commentator observed:

"This decision to "disinvest" the community reflects a loss of confidence in the neighborhood as a viable economic investment, and has grave con­sequences not only for the residents of the area, but for the city as a whole. As a result of the disinvestment decision, the deterioration process seems to take on a life of its own as local lenders and eventually the F.H.A. withdraw financial support from the community. By the time dis­investment is complete the neighborhood involved is generally well on its way to becoming racially re-segregated."

This article will focus on the redlining process and on federal, local, and private reinvestment efforts. Finally, it offers what is believed to be a workable solution to the effects of redlining-the establish­ment of a neighborhood development bank.

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Urban Lawyer