Jesus Hernandez of UC Davis, summarizes the redlining inflicted on communities of color into three phases The period 1930-1950 reveals the initial period of redlining and racially restrictive covenants required by FHA and the official use of racial categories in determining access to housing credit that established racial segregation as an accepted government practice in US cities. The period 1950-1980 describes the effects of urban renewal programs, highway construction projects, the resulting mass relocation of non-White communities, the subsequent redlining of neighborhoods integrated as a result of these projects, and the actions of local real estate professionals. The period 1980-2004 describes the development of the subprime loan market and the concentration of these loans in racialized space created by national housing policy and private actions, a process now known as “reverse redlining.” HMDA data reveals that high concentrations of subprime loans are found in formerly redlined areas of the city. Foreclosure rates also mirror the concentration of subprime loans in redlined space.
People of color were more than three times as likely to receive high-cost or subprime loans and high cost loans accounted for more than half of all loans offered to African Americans and Latinos. Even when compared to White borrowers with similar incomes, borrowers of color were 30% more likely to receive a subprime loan. Across the nation subprime loans and corresponding foreclosures accumulated in communities of color. Federal Reserve studies in 2004, 2005 and 2006 found disparities in the rate that minorities and those living in neighborhoods with significant minority concentrations received subprime loans. As stated by Ira Goldstein in a study by The Reinvestment Fund , “both minority group members and the neighborhoods where they live are more likely to receive subprime loans than White borrowers and borrowers in predominantly White areas.” These neighborhoods were ripe for subprime loans because they were either “equity rich but cash poor,” or starved of prime credit entirely. The resulting asset loss for African American and Latino homeowners due to the disparity in foreclosure impact is estimated to exceed a quarter trillion dollars.
Opportunity for All: Inequity, Linked Fate and Social Justice in Michigan Conference Detroit, MI January 30 th 2008 Transforming Communities: The Dynamics of Race, Class and Housing Opportunities Workshop Series 1 Jason Reece, AICP Senior Researcher Kirwan Institute for the Study of Race & Ethnicity The Ohio State University [email_address]
Transforming Communities: The Dynamics of Race, Class and Housing
Social Justice and Housing: A Web of Challenges Housing Challenges Subsidized Housing Policies Discriminatory And Unfair Lending A Housing Market That Does Not Serve the Population Racial Steering And Discrimination Exclusionary Zoning
The High Cost of Foreclosure Source: “Sheltering Neighborhoods from the Subprime Foreclosure Storm.” Special Report from the Joint Economic Committee. April 2007. Slide Adapted from Presentation by: Solomon Greene, Open Society Institute, Neighborhood Stabilization Initiative
More to Come? (Mortgage Outlook: Rate Resets) Slide Adapted from Presentation by: Solomon Greene, Open Society Institute, Neighborhood Stabilization Initiative Source: Credit Suisse Monthly Mortgage Rate Resets (in billions of dollars)
What responses are needed to address these priorities and fulfill these goals?
Small scale and big picture
Strategic intervention points
Steps to bring these ideas to action?
Power analysis – who needs to be brought to the table?
Opportunity for All: Inequity, Linked Fate and Social Justice in Michigan Conference Detroit, MI January 30 th 2008
Questions or Comments: [email_address] For more information about the racial impacts of the foreclosure crisis, visit our convening web site at: http://www.kirwaninstitute.org/events/archive/subprime-convening/index.php To Learn More about the Kirwan Institute: www.kirwaninstitute.org