THE HOUSINGCRISIS, FORECLOSURES AND RACEStephen MenendianSenior Legal Research AssociateKirwan Institute for the Study of ...
2        The Foreclosure Crisis    A National Epidemic
An Epidemic  3             Foreclosures in Ohio were a pressing issue              well before they became a national epi...
Ohio Foreclosure Totals: 1995-2008    100,000     90,000     80,000     70,000     60,000     50,000     40,000     30,000...
Foreclosure Outlook: RateResets Monthly Mortgage Rate Resets (in billions of dollars)Source: Credit Suisse      Slide Adap...
Foreclosures and Race  6              In Cuyahoga County, African Americans make up 74%               of the population i...
7
8Why is the foreclosure crisis inOhio highly racialized?         -Communities of color         were historically starved  ...
9   Credit
Cleveland: Subprime Loans and Foreclosure10     Maps: Produced and     adapted from Charles     Bromley, SAGES     Preside...
Subprime Loans11      About half of all subprime loans went to       African American and Latino borrowers.      People ...
Racial Disparities in Lending12        Upper income whites received high cost loans         only 10% of the time.       ...
Columbus13
Connecticut14
15   Residential Segregation
Historical Policies Contributing to     Residential Segregation and16     Isolation        Segregation as policy         ...
Historical Government Role“If a neighborhood is to retain    stability, it is necessary that    properties shall continue ...
Institutionalized Disinvestment:Redlining Map of Philadelphia                                   18
The Rise of Suburbia:But not accessible to everyone                                                                      1...
N                  African American PopulationW       E    S       in Franklin County by Census Tract 1970                ...
N                  African American PopulationW       E    S       in Franklin County by Census Tract 1980                ...
N                       African American Population     W       E         S       in Franklin County by Census Tract 1990 ...
N                  African American PopulationW       E    S       in Franklin County by Census Tract 2000                ...
24                Residential Segregationo Communities of color and        o People in these communities  low-income commu...
From Redlining to Reverse              Redlining:     A historical view of redlining      zones in Philadelphia and       ...
Impacts26        Communities of color further inundated with         vacant properties        Mortgage applications for ...
Social Justice and Housing:A Web of Challenges                  Exclusionary           Subsidized Housing                 ...
To Learn More about                                          the Kirwan Institute:                                        ...
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The Housing Crisis, Foreclosures and Race

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The Housing Crisis, Foreclosures and Race

  1. 1. THE HOUSINGCRISIS, FORECLOSURES AND RACEStephen MenendianSenior Legal Research AssociateKirwan Institute for the Study of Race & EthnicityThe Ohio State University Ohio Organizing Collaborative Housing Summit Columbus, Ohio July 29, 2009
  2. 2. 2 The Foreclosure Crisis A National Epidemic
  3. 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. 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 20084
  5. 5. Foreclosure Outlook: RateResets Monthly Mortgage Rate Resets (in billions of dollars)Source: Credit Suisse Slide Adapted from Presentation by: Solomon Greene, 5 Open Society Institute, Neighborhood
  6. 6. Foreclosures and Race 6  In Cuyahoga County, African Americans make up 74% of the population in the quartile with the highest rates of foreclosure, but only 3% of the population in the quartile with the lowest rates.[3]  ½ of Cuyahoga County’s African American population lives in census tracts in the quartile with the highest rates of foreclosures, with 1/3 living in the tracts of the quartile with the second highest rate of foreclosure.[4]  While these tracts contain almost 40% of foreclosure filings, they house only 19% of the county’s total population.[3] Nelson, Lisa. “Foreclosure Filings in Cuyahoga County.” The Federal Reserve Bank of Cleveland. A Look Behind the Numbers 1(1).Fall 2008.Page 5. Accessed July 23, 2009 athttp://www.clevelandfed.org/Our_Region/Community_Development/Publications/Behind_the_Numbers/2008/0908/ALBTN_V1_I1.pdf[4] Nelson. “Foreclosure Filings in Cuyahoga County.” Page 5.
  7. 7. 7
  8. 8. 8Why is the foreclosure crisis inOhio highly racialized? -Communities of color were historically starved of credit -Lenders targeted communities of color with subprime loans -Lack of loan information or understanding for consumers in many of these communities -Mortgage securitization and the growth of the subprime industry created incentives to target new markets with mortgages 8
  9. 9. 9 Credit
  10. 10. Cleveland: Subprime Loans and Foreclosure10 Maps: Produced and adapted from Charles Bromley, SAGES Presidential Fellow, Case Western University
  11. 11. Subprime Loans11  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
  12. 12. Racial Disparities in Lending12  Upper income whites received high cost loans only 10% of the time.  Upper income African Americans received high-cost home purchase loans 32% of the time in Ohio, compared to 20% of the time for low income whites.  For refinance loans, upper income African Americans received high-cost loans 38% of the time, compared to 26% of the time for low income whites. Source: Persisting Racial and Ethnic Disparities in Ohio Mortgage Lending, Housing Research and Advocacy Center
  13. 13. Columbus13
  14. 14. Connecticut14
  15. 15. 15 Residential Segregation
  16. 16. Historical Policies Contributing to Residential Segregation and16 Isolation  Segregation as policy  Jim Crow in the south  The Great Migration North  FHA policies upholding segregation  Redlining, discouraging mixed race neighborhoods  Blockbusting, racially restrictive covenants and other forms of discrimination in the housing industry  Urban renewal, highway construction and public housing policy  Suburban sprawl and white flight
  17. 17. Historical Government Role“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 17
  18. 18. Institutionalized Disinvestment:Redlining Map of Philadelphia 18
  19. 19. The Rise of Suburbia:But not accessible to everyone 19 In the suburb-shaping years (1930-1960), less than one-percent of all African Americans were able to obtain a mortgage.
  20. 20. N African American PopulationW E S in Franklin County by Census Tract 1970 Prepared by: Kirwan Institute for the Study of Race & Ethnicity Date: 10/13/05 Source: Census, NCDB Legend: Columbus Public School District Highways % African American 0 - 5% 5 - 10% 10 to 25% 25 to 50% 50 to 100%
  21. 21. N African American PopulationW E S in Franklin County by Census Tract 1980 Prepared by: Kirwan Institute for the Study of Race & Ethnicity Date: 10/13/05 Source: Census, NCDB Legend: Columbus Public School District Highways % African American 0 - 5% 5 - 10% 10 to 25% 25 to 50% 50 to 100%
  22. 22. N African American Population W E S in Franklin County by Census Tract 1990 Prepared by: Kirwan Institute for the Study of Race & Ethnicity Date: 10/13/05 Source: Census, NCDB Legend: Columbus Public School District Highways % African American 0 - 5% 5 - 10% 10 to 25% 25 to 50%22 50 to 100%
  23. 23. N African American PopulationW E S in Franklin County by Census Tract 2000 Prepared by: Kirwan Institute for the Study of Race & Ethnicity Date: 10/13/05 Source: Census, NCDB Legend: Columbus Public School District Highways % African American 0 - 5% 5 - 10% 10 to 25% 25 to 50% 50 to 100%
  24. 24. 24 Residential Segregationo Communities of color and o People in these communities low-income communities were subject to sub-par were physically, socially and lending from rent-to-own, to economically segregated payday lenders, to check from prime credit markets. cashing places that all charged exorbitant interest rates.  And finally…subprime home loans
  25. 25. From Redlining to Reverse Redlining: A historical view of redlining zones in Philadelphia and areas of foreclosure in minority communities.25
  26. 26. Impacts26  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
  27. 27. Social Justice and Housing:A Web of Challenges Exclusionary Subsidized Housing Zoning Policies Racial Housing Challenges A Housing Market Discriminatory That Does Not Serve And Unfair Lending the Population Racial Steering And Discrimination
  28. 28. To Learn More about the Kirwan Institute: www.kirwaninstitute.orgFor more informationabout the racial impactsof the foreclosurecrisis, visit our http://www.kirwaninstitute.org/events/archivconvening web site at: e/subprime-convening/index.php Questions or Comments?

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