I’m sure that it seemed like a good idea at the time, but it either was a delusion or it got abused and spiraled into financial chaos.
I'm afraid it was an obvious fiction at the time. It was noted that blacks and whites had the same default rates. That means that the banks' credit decisions up to that point were about right.
If there had been actual discrimination, as Jesse, Al, and the other race hustlers were claiming, that would have meant that blacks were being held to a higher standard. Of course, if that had been the case, black default rates should have been lower than that of whites. But they were the same.
The "red-lining" issue was firmly based on a lie, and the risks of making loans to less qualified, inner-city applicants were quite real. Because the mortgages being forced on banks were so suspect, Fan and Fred agreed to buy them from the banks. Then banks discovered they could apply these same wispy loan standards to borrowers everywhere (not just in the inner cities), and pass the loans to Fan and Fred, which repackaged them eagerly and sold them to others. That didn't work out so well in the end.