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Transforming Communities: The Dynamics of Race, Class and Housing Opportunities
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Transforming Communities: The Dynamics of Race, Class and Housing Opportunities


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  • 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.
  • Transcript

    • 1. 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]
    • 2. Transforming Communities: The Dynamics of Race, Class and Housing
      • Overview of today’s workshop:
      • Part 1: Thinking About The Future of Housing
        • Why focus on housing?
        • What are the challenges?
        • How do we respond?
      • Part 2: Dialogue
        • What are the priorities?
        • What should the advocacy response be?
        • How do we move these ideas into actions?
    • 3. Why Focus on Housing?
    • 4. Why Focus on Housing?
      • Housing is more than just shelter in our society
        • Housing is the gateway to opportunity
          • Wealth
          • Neighborhood Stability
          • Access to opportunity
            • Schools
            • Employment
            • Safety
            • Health
            • Wealth
    • 5. Opportunity Matters: Housing, Neighborhoods & Access to Opportunity
      • Five decades of research indicate that your environment has a profound impact on your access to opportunity and likelihood of success
      • High poverty areas with poor employment, underperforming schools, distressed housing and public health/safety risks depress life outcomes
        • A system of disadvantage
        • Many manifestations
          • Urban, rural, suburban
    • 6. Which school will children succeed in?
    • 7. Which community has better economic prospects?
    • 8. Which community is safer and supports positive health outcomes?
    • 9. Housing and Opportunity Fiscal Policies Housing Childcare Employment Education Health Transportation Effective Participation
    • 10. Housing and Social Justice
      • Because of its significance, housing can be either a gateway to opportunity or barrier to opportunity for people
        • Representing a critical intervention point for those pursuing civil rights, social justice and equity
      • Housing acting as a gateway
        • Integration into areas of opportunity, home equity (asset accumulation), stable and health neighborhoods
      • Housing acting as a barrier
        • Segregation and isolation into neighborhoods of disadvantage, vacant properties destabilizing neighborhoods, stripping wealth through foreclosure and neighborhood decline
    • 11. Social Justice and Housing: What are the Challenges?
    • 12. Housing Challenges
      • Challenges
        • Pre-existing
          • Affordability
          • Concentration
            • Subsidized Housing
            • Affordability
            • Steering & Discrimination
          • Lending
            • From Redlining to Reverse Redlining
        • New
          • Foreclosure Epidemic
            • More to Come
            • The Future: A New Wave of Redlining
    • 13. 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
    • 14.  
    • 15. Racial Steering in Detroit
    • 16.  
    • 17. New Challenges: The Foreclosure Epidemic
      • The foreclosure problem is really a credit problem
        • From redlining to reverse redlining
      • Why?
      • The impacts
      • More to come?
    • 18. Institutionalized Disinvestment: Redlining Map of Philadelphia
    • 19.  
    • 20. High Cost Loans & Vacant Residences for Cities with the Highest Foreclosure Rates in the Detroit MSA Source: HUD
    • 21. The Result
      • Surge in foreclosures
        • 49,000 active foreclosures in Wayne County (Source: HUD)
        • More than 80,000 residential addresses vacant for 90 days or more in Wayne County (Source: HUD)
          • Nationally at least 7 million homeowners now owe more than their homes value
      • A global crisis with racially disparate impacts
        • Nearly half of all subprime loans went to African American and Latino borrowers
        • “ Equity Rich, Cash Poor” – less than 10% of subprime went to first time homebuyers and half of subprime loans were for refinancing
        • People of color were 30% more likely to receive subprime
          • 30% of subprime borrowers qualified for prime loans
    • 22. Foreclosure Trends Foreclosures in U.S. by Loan Type: 2006 – 2008 Source: Mortgage Bankers Association, National Delinquency Survey, First Quarter 2008.
    • 23.  
    • 24. More than Just Foreclosures and a Few Bad Borrowers: Understanding the Credit Crisis Impact in Communities of Color Why Were Subprime Loans Concentrated in These Neighborhoods?
      • Why is the growing foreclosure problem causing problem in communities of color?
      • -Lenders targeted communities of color with subprime loans
      • -Lack of loan information or understanding for consumers in many of these communities
      • -Communities were historically starved of credit
      • -Mortgage securitization and the growth of the subprime industry created incentives to target new markets with mortgages
    • 25. The Impact of Concentrated Foreclosures in a neighborhood
      • Foreclosures pull wealth/equity and assets out of the neighborhood
      • Widespread displacement of renters, homeowners which rips the neighborhood’s social fabric and creates instability for school age children
      • The growth of vacant property encourages crime, disinvestment and public safety risks
      • Challenges which eventually ensnare all residents (even those who were never foreclosed upon)
    • 26. Impacts
      • Communities of color further inundated with vacant properties
      • Mortgage applications for African Americans and Latinos dropped approximately 40% from 06 to 08
        • Compared to 19% for White’s
        • African American and Latino homeowners are expected to lose more than $250 trillion in assets due to the crisis
          • Compounding the existing 900% racial wealth gap
          • Research in Boston has identified additional “asset stripping” for borrowers of color who are drawing down 401K accounts and other savings to avoid foreclosure
    • 27.  
    • 28. 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
    • 29. 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)
    • 30. Opportunities Amid Crisis: How do we respond?
    • 31. Opportunities Amid Crisis
      • What is the response?
      • Crisis – danger and opportunity
      • The Housing Market will be Reshaped
        • The social justice community must take part in that reshaping (have a seat at the table)
        • Make housing and housing policy fit your goals of equity and integration with opportunity
    • 32. Small Scale and Big Picture Issues
      • Many Important Issues
        • Strategically using HUD money?
        • Still need for foreclosure prevention
      • But we also need to think big picture
        • How can we reshape neighborhoods?
        • How can we use this crisis to address future affordable housing challenges?
        • What are strategies for assuring sustainable credit and credit providing institutions are offered and active in these communities (prevent another era of redlining)
      • Look for strategic action points, leverage actions and resources
    • 33. What’s Next? (National)
      • Systemic problem, requires complex solutions
        • Need more than just changing Wall Street, we also must provide funds for communities, while changing the rules which produce disparate lending outcomes
      • Deflecting attacks on equitable policies
        • Attacks on CRA and first time homebuyer programs are misguided and inaccurate
        • A response should not starve communities of color of sustainable credit options
      • From crisis to opportunity?
        • Can the federal government utilize its new leverage over Fannie and Freddie to provide more sustainable credit (expanding scope of the Fair Housing Act)
        • New federal resources to confront the long term vacant property challenge facing urban communities?
        • Can the challenge open new affordable housing opportunities (in the long term)
    • 34. Part II: Dialogue
      • What are the priorities?
      • What are the goals?
      • 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?
        • First steps….
      Opportunity for All: Inequity, Linked Fate and Social Justice in Michigan Conference Detroit, MI January 30 th 2008
    • 35. Questions or Comments: [email_address] For more information about the racial impacts of the foreclosure crisis, visit our convening web site at: To Learn More about the Kirwan Institute: