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
3. An Epidemic
3
ď¨ Foreclosures in Ohio were a pressing issue
well before they became a national epidemic.
ď¨ Foreclosure filings have increased every year
since 1995.[1]
ď¨ 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. âForeclosure Growth in Ohio 2009.â PolicyMatters Ohio, March 2009. Page 6.
[2]Realtytrac, Accessed July 23, 2009 at http://www.realtytrac.com/trendcenter/default.aspx
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
ď¨ 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]
ď¨ Â˝ of Cuyahoga Countyâs 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]
ď¨ While these tracts contain almost 40% of foreclosure
filings, they house only 19% of the countyâs total
population.
[3] Nelson, Lisa. âForeclosure Filings in Cuyahoga County.â 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. âForeclosure Filings in Cuyahoga County.â Page 5.
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
10. Cleveland: Subprime Loans and Foreclosure
10
Maps: Produced and
adapted from Charles
Bromley, SAGES
Presidential
Fellow, Case Western
University
11. Subprime Loans
11
ď¤ About half of all subprime loans went to
African American and Latino borrowers.
ď¤ People of color were 30% more likely to
receive subprime, even after factoring out
financial differences.
ď¤ 30% of subprime borrowers qualified for prime
loans
12. Racial Disparities in Lending
12
ď¨ Upper income whites received high cost loans
only 10% of the time.
ď¨ 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.
ď¨ 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
16. Historical Policies Contributing to
Residential Segregation and
16
Isolation
ď¨ Segregation as policy
ď¤ Jim Crow in the south
ďŽ The Great Migration North
ď¤ FHA policies upholding segregation
ďŽ Redlining, discouraging mixed race neighborhoods
ď¤ Blockbusting, racially restrictive covenants and
other forms of discrimination in the housing
industry
ď¤ Urban renewal, highway construction and public
housing policy
ď¤ Suburban sprawl and white flight
17. Historical Government Role
âIf 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.â
âExcerpt from the 1947 FHA
underwriting manual
17
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.
ď§ And finallyâŚsubprime
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
ď¨ Communities of color further inundated with
vacant properties
ď¨ Mortgage applications for African Americans
and Latinos dropped approximately 40% from
06 to 08
ď¤ Compared to 19% for Whiteâs
ď¨ African American and Latino homeowners are
expected to lose more than $250 trillion in
assets due to the crisis
ď¨ 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?