#159-160 Fall/Winter 2009-10

The Housing Crisis: How Did We Get Here? Where Do We Go?

In early October 2008, The Kirwan Institute hosted a national summit on subprime lending, foreclosure, and race. We didn't know it when we were planning the event, but a series of unfolding economic events spurred by our nation's housing crisis would have our government contemplating a $700 billion financial sector bailout on the eve of our convening.

Upon reading these volumes, you cannot escape the powerful impact historical policies and discriminatory actions have had in creating today’s crisis. The era of redlining in communities of color is well documented and addressed in all three books, but in greatest detail by Immergluck and Katz. The pathways to building the American middle class was aided by the development of the policies to support homeownership created by FHA and other post New Deal programs. Unfortunately, these programs primarily only served white suburban America, leaving most communities of color behind and leading to the huge race-based disparities in wealth in our nation today, where recent data finds the disparity in white vs. black assets to be nearly 900 percent. In many ways we are still trying to solve the problems created by the redlining era — instead of assuring sustainable credit in communities of color, the more drive there is to increase homeownership by creating a dual “predatory” lending market for underserved communities resulted in reverse redlining. That said, reverse redlining was only possible because of the continued effect of redlining dating back to the 50s and 60s with credit-starved communities of color presenting vulnerable targets for the lending industry.

Race is critical to understanding and solving the housing crisis; our society cannot tolerate or sustain a separate and unequal system of delivering credit to marginalized communities of color. Minority populations became the target of subprime loans, with many borrowers not being informed of other loan options even if they qualified. As we are learning from the recent Wells Fargo litigation in Baltimore, lenders openly targeted black families for subprime loan products. Because of the extreme concentrations of subprime loans in communities of color, these neighborhoods were disproportionately affected when foreclosures spiked, resulting in a deadly spiral of abandonment, blight, disinvestment and neglect for these communities. Until we can provide sustainable credit in our underserved and marginalized communities we will never truly address our nation’s housing challenges.

OTHER ARTICLES IN THIS ISSUE

  • Slipping Away

    February 12, 2010

    As a wave of HUD mortgages expires in the next four years, an already dwindling supply of affordable units may nosedive with owners making windfall profits -- unless the right mix of federal legislation and local organizing can save the day.

  • HUD’s New Team

    February 12, 2010

    The U.S. Department of Housing and Urban Development under the Obama administration is equipped with an impressive list of housing experts at the top.

  • Heard and Not Forgotten

    February 12, 2010

    What started out as a "weird art project" in Toronto is providing aural illustrations into a northern New Jersey community's past, and, organizers hope, laying the groundwork for the future.