1. THE HOUSING
CRISIS, FORECLOSURE
S AND RACE
Stephen Menendian
Senior Legal Research Associate
Kirwan Institute for the Study of Race & Ethnicity
The Ohio State University
Ohio Organizing Collaborative Housing Summit
Columbus, Ohio
July 29, 2009

2. 2 The Foreclosure Crisis
A National Epidemic

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. Foreclosure Outlook: Rate
Resets
Monthly Mortgage Rate Resets (in billions of dollars)
Source: Credit Suisse Slide Adapted from
Presentation by: Solomon
Greene,
5 Open Society
Institute, Neighborhood

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 at
http://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

8. 8
Why is the foreclosure crisis in
Ohio 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 Credit

10. Cleveland: Subprime Loans and Foreclosure
10
Maps: Produced and
adapted from Charles
Bromley, SAGES
Presidential
Fellow, Case Western
University

11. Subprime Loans
11
 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. Racial Disparities in Lending
12
 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. Columbus
13

14. Connecticut
14

15. 15 Residential Segregation

16. Historical Policies Contributing to
Residential Segregation and
16
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. 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. Institutionalized Disinvestment:
Redlining Map of Philadelphia
18

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. N
African American Population
W 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. N
African American Population
W 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. 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. N
African American Population
W 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
Residential Segregation
o 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. From Redlining to Reverse
Redlining:
A historical view of redlining
zones in Philadelphia and
areas of foreclosure in
minority communities.
25

26. Impacts
26
 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. 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. 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?