1. THE HOUSING CRISIS:
OPPORTUNITY, COMMUNITY AND
RACE
Jason Reece
Senior Researcher
Opportunity Communities Initiative
Kirwan Institute for the Study of Race & Ethnicity
The Ohio State University
Town Hall on Economic Crisis & Foreclosure;
Interfaith Vigil for Workers, Homeowners & Tenants
Sponsored by Jobs for Justice - Columbus, Ohio - October 1, 2009

2. The Housing Crisis
2
 Where are we?
A Crisis: for the nation, out state and our
neighborhoods
 How did we get here?
 What happened?
 What needs to happen?
 The three “R’s”
 Rescue, Revitalization and Reform

3. An Epidemic
3
 Foreclosures in Ohio were a pressing issue
well before they became a national epidemic.
 Foreclosure filings have increased every year
since 1995.[1]
 As of June 2009, there was one foreclosure in
Ohio for every 449 houses, and Ohio ranked
8th in the nation in foreclosure activity.[2]
[1] Rothstein, David and Sapna Mehta. “Foreclosure Growth in Ohio 2009.” PolicyMatters Ohio, March 2009. Page 6.
[2]Realtytrac, Accessed July 23, 2009 at http://www.realtytrac.com/trendcenter/default.aspx

4. Ohio Foreclosure Totals: 1995-2008
100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
4

5. Density of foreclosure filings, January 2003-March 2004
Slides Obtained from
The Columbus United
Way, Prepared by
Community Research
Partners

6. Density of foreclosure filings, January 2007-March 2008
Slides Obtained from
The Columbus United
Way, Prepared by
Community Research
Partners

7. Density of properties at Sheriff’s Sale, Jan 2005-Mar 2008
Slides Obtained from
The Columbus United
Way, Prepared by
Community Research
Partners

8. Density of properties with high rate mortgage*, June 2008
* Mortgage loans with
interest rate of 8%+

9. Density of properties with ARM or balloon loan*, June 2008
Slides Obtained from
The Columbus United
Way, Prepared by
Community Research
Partners
* Among mortgage loans
with interest rate below 8%

10. 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
10
 Challenges which
eventually ensnare all
residents (even those

11. What Happened?
11
 How did we get here?
A changing system (broken system)
 Vulnerable communities struck first
 TheMiner’s Canary
 Race, Credit, Lending and Foreclosure

12. Prior to securitization…
Pre-Depression:
The Two Party Housing
Market
Party
1 Party Post-Depression FHA
2
Homebuyer
Era:
Seller
(and/or) The Three Party
Lending
Institution Mortgage Market
Party
Party 3
Party 2
1 Government
Lending Sponsored
Institution
purchases, insures
Homebuyer Institution or underwrites loan
Based on research by Chris
Peterson, University of Utah Law School

13. After
securitization

14. Subprime Loans
14
 About half of all subprime loans went to
African American and Latino borrowers.
 People of color were 30% more likely to
receive subprime, even after factoring out
financial differences.
 30% of subprime borrowers qualified for prime
loans

15. Why is the growing
foreclosure problem
causing problem in
communities of
More than Just color?
Foreclosures and a -Lenders targeted
Few Bad Borrowers: communities of
color with subprime
Understanding the loans
Credit Crisis Impact in
-Lack of load
Communities of Color information or
understanding for
consumers in many
Why Were Subprime of these
communities
Loans Concentrated
in These -Communities were
historically starved
Neighborhoods? of credit
-Mortgage
securitization and
the growth of the
subprime industry
created incentives 15
to target new
markets with
mortgages

16. The Footprint of History
“If a neighborhood is to retain stability, it is necessary that
properties shall continue to be occupied by the same
social and racial classes. A change in social or racial
occupancy generally contributes to instability and a
decline in values.”
–Excerpt from the 1947 FHA underwriting manual
16

17. Institutionalized Disinvestment:
Redlining Map of Philadelphia
17

18. From Redlining to Reverse
Redlining:
A historical view of redlining
zones in Philadelphia and
areas of foreclosure in
minority communities.
18

19. The Subprime Lending and Foreclosure Crisis:
The Baltimore Experience – The City of Baltimore v. Wells Fargo
“We just went right after them,” said Ms. Jacobson, who is white and
said she was once the bank’s (Wells Fargo) top-producing subprime
loan officer nationally. “Wells Fargo mortgage had an emerging-markets
unit that specifically targeted black churches, because it figured church
leaders had a lot of influence and could convince congregants to take
19 out subprime loans.”
From the NY Times. June 6th 2009. “Banks accused of pushing mortgage deals on Blacks”

20. Cleveland: Subprime Loans and Foreclosure
20
Maps: Produced and
adapted from Charles
Bromley, SAGES
Presidential
Fellow, Case Western
University

21. 21

22. What Needs to Happen? (3 R’s)
22
 Rescue
 House Bill 3
 Loss of income/job driving new wave of
foreclosures
Half of borrowers fall behind again despite home-loan helpinitiatives
 Avoid challenges with existing
Thursday, October 1, 2009 3:20 AM
BY ALAN ZIBEL
ASSOCIATED PRESS
WASHINGTON -- Lenders are ramping up efforts to avoid home foreclosures, but a report by bank regulators says that more than half of
borrowers who get help fall behind again.
More than 50 percent of homeowners with loans modified in the first half of last year had missed at least two months of payments a year
later, the federal Office of the Comptroller of the Currency and the Office of Thrift Supervision said yesterday.
But the results were better among those whose payments dropped substantially. About one in three borrowers whose monthly payments
were reduced by 20 percent or more had fallen behind again within a year. Among borrowers whose loan payments were left unchanged or
increased, more than 60 percent had fallen behind again.
The report highlights a significant challenge for the Obama administration's plan to tackle the foreclosure crisis, backed by $50 billion in
money from the financial-industry bailout fund.
The administration's effort got off to a slow start, but it has picked up speed in recent months. As of last month, about 360,000 borrowers, or
12 percent of those eligible, have signed up for three-month trial modifications. They are supposed to be extended for five years if the
homeowners make their payments on time. There is no data yet on redefaults within the plan.
Traditionally, most lenders have offered payment plans that allowed borrowers to catch up on missed payments. But those modifications
often do not involve an interest-rate reduction, so they result in a higher monthly payment.

23. What Needs to Happen? (3 R’s)
23
 Revitalization
 Not just neighborhood stabilization – need long
term reinvestment to revitalize hard hit
neighborhoods
 Reinvestment, land banking

24. What Needs to Happen? (3 R’s)
24
 Reform: Economic empowerment for all must
progress on multiple fronts
 Fair and sustainable housing -- integration into
opportunity
 Fair and sustainable access to credit (manage
debt)
 Fair banking and financial products (build assets)
 Ensure that programs and policies responding
to the subprime crisis reach those most
affected

25. To Learn More about
the Kirwan Institute:
www.kirwaninstitute.org
For more information
about the racial impacts
of the foreclosure
crisis, visit our http://www.kirwaninstitute.org/events/archiv
convening web site at: e/subprime-convening/index.php
Questions or Comments?