For readers who have not yet had the opportunity to hear Michael Allen, partner at civil rights firm Relman & Dane speak on the Westchester County fair housing case and affirmatively further fair housing, check out the YouTube video of his recent lecture on the subject at Emory University. Michael and his Westchester co-counsel Craig Gurian of the Anti-Discrimination Center also recently published two articles on the case and its impact on all local jurisdictions receiving federal housing funds: Making Real the Desegregating Promise of the Fair Housing Act in Clearinghouse Review (March-April 2010) and No Certification, No Money: The Revival of the Civil Rights Obligations in HUD Funding Programs, the Planning Commissioners Journal, Spring 2010 edition. Not familiar with the Westchester lawsuit and settlement agreement? Click on this earlier REP blog post for more information.

As most REP blog readers know, the foreclosure crisis has disproportionately impacted low-income communities of color, homeowners and tenants alike.  An outgrowth of the crisis has been the surge of investors buying up foreclosed properties.  In many low-income communities with high foreclosure rates, investors purchase foreclosed properties and become absentee or irresponsible owners, causing neighborhood decline.

This week, Policy Link published a report “When Investors Buy Up The Neighborhood: Preventing Investor Ownership From Causing Neighborhood Decline.” The report presents best practices and advocacy tools from across the country to combat the adverse affects of irresponsible investor homeowners.  This report is a great asset for advocates and communities fighting for community stabilization, despite the ongoing foreclosure crisis.

In the low-income neighborhoods of many American cities, evictions are simply accepted as a part of life. However, as the New York Times recently reported (see A Sight All Too Familiar in Poor Neighborhoods, 2/28/10), a soon-to-be-published University of Wisconsin study on eviction rates and African American women in Milwaukee suggests that a focused and serious treatment of the problem is long overdue. “Just as incarceration has become typical in the lives of poor black men, eviction has become typical in the lives of poor black women,” sociologist and author of the study Matthew Desmond told the Times.

According to Desmond’s study, which analyzes eviction patterns in the private rental housing sector beginning in 2002, whereas one in 25 renter households is evicted every year in the general population in Milwaukee, the eviction rate is one in 14 in African-American neighborhoods, counting only court-ordered evictions. The study also found that women from predominantly black neighborhoods comprise 13 percent of the city’s population, yet make up 40 percent of persons evicted. The study cites to some of the obvious causes for eviction such as low wages and benefit amounts. In the Times article, Milwaukee property manager Tim Ballering asks, rhetorically, “On $673 a month, how do you buy tennis shoes for the kids, clean shirts for school and still pay your rent?” Uniquely, the study also explores rarely publicized causes of eviction well known to tenants and housing advocates. These include retaliation for reporting or complaining about poor conditions, with the study observing, interestingly, that women are more likely to make such complaints than men, and domestic violence-related evictions in which survivors get penalized (evicted) for the criminal conduct of abusive partners. Poverty and Race Research action Council’s Chester Hartman’s lament over the lack of focused studies of eviction and its causes and effects underscores the need for more studies like Desmond’s if we are ever to address effectively the disproportionate eviction burden, and consequent loss of assets and opportunity, that African-American women are bearing.

A disturbing legal precedent has developed in the 11th Circuit regarding tenants’ abilities to sue Public Housing Authorities under 42 U.S.C. 1983.  There, the Circuit Court and two District Courts have dismissed the Section 1983 claims brought by plaintiffs suing a Public Housing Authority for wrongful Section 8 terminations.  The Courts have found the Public Housing Authorities were administering a federal program, paid for by federal funds; thus, the Public Housing Authorities were not operating under “color of state law” and could not be sued under Section 1983.  For the opinions, see Shell v. U.S. Dept. of Housing and Urban Devel., 2009 WL 4298757 (11th Cir. Dec. 2, 2009), Shell v. U.S. Dept. of Housing and Urban Devel., 2008 WL 2637431 (S.D.Fla. Jul. 03, 2008), and Peete v. Palm Beach County Housing Authority, Case No. 09-82365 (S.D.Fla. Feb. 9, 2010).

By Angela Glover Blackwell

One of the visible areas of pain in this current recession has been the subprime mortgage debacle which caused a wave of foreclosures among many borrowers of color who had been unfairly targeted for high interest loans by the nation’s financial lenders. Had America paid attention to what was happening in communities of color the nation might have been spared the worst effects of an economic catastrophe that pummeled home values and sucked Americans into a vortex of foreclosures and layoffs, and stalled economic growth.  In a similar manner, the boat was missed in addressing our failing education system earlier, when test scores and dropout rates made it clear that something was going terribly wrong for many African American and Latino students.

For too long communities of color have been the canaries in the coal mine, sending out signals that should have served as urgent wake-up calls for the rest of the country.  One approach to ensuring that communities of color participate fully in the vitality of American economic life is through a focus on equity—just and fair inclusion for all.

The pursuit of equity today is different from the pursuit of equality.  While civil rights legislation established equality in principle many practical barriers remain to achieving economic and social parity.  You can’t just have the right to sit in a bus. Today, you need a bus that is frequent, connects you to employment, and provides a platform for economic, social, and physical mobility.

In many ways, inattention to equity brought about the country’s current economic mess.  The only way out is to refocus our sights on what it takes to build strong and healthy communities that enable everyone, including low-income people of color, to succeed.  To do this, the country must focus on jobs that pay family-supporting wages; high-quality education that prepares the next generation for 21st-century success; immigration and immigrant policy that fully taps the productivity and contribution of all residents; and reducing incarceration while at the same time preparing more young men for successful re-entry as productive and engaged citizens and community members. Just as essential is making sure our communities are livable, with access to healthy foods and physical activity for everyone.

Time is also running short because the demographic clock is ticking.   By sometime around 2042, the country is projected to shift from a majority white society to a “majority-minority” society with no single racial group as a majority.   Seventy-eight million baby boomers are poised to eventually retire, to be replaced by a new complement of workers reflecting the richness and diversity of America. The very future of the country will depend on how well it prepares that next generation of workers.

This is the time to reimagine the American future.  A bright future is possible if we keep in mind that diversity and equity are not the same.  Just because the country has a black president and is moving toward a more multicultural future does not mean that equity has been achieved.  At a time when everyone is hurting, communities of color are hurting even more.  High unemployment and poverty rates and growing hunger continue to define the reality for many black and Latino families.

To change that reality requires recognizing that universal strategies and policies don’t always work for everyone. For instance, the last attempt to address a financial crisis of this magnitude—the New Deal during the Great Depression—introduced many new programs but still fell short in reducing longstanding racial disparities.  Sometimes, countless seldom-seen barriers prevent communities of color from getting the help they both need and deserve.  The American Recovery and Reinvestment Act (ARRA), touted as a cure-all, has not yet reached low-income communities of color. As we look toward 2010, we must find ways to target investment so that all will benefit.

In the end, though, racial progress is more than about policy.  The civil rights struggle became a movement when it was fueled by ordinary citizens from all walks of life.  To address today’s pressing challenges, we need a similar movement, by Americans from every corner of the nation, who recognize that the country is at a crossroads and that the future depends on a broad vision of opportunity and inclusion for all.

Angela Glover Blackwell is the founder and CEO of PolicyLink, a national research and action institute. She is the coauthor of Uncommon Common Ground: Race and America’s Future, forthcoming from W.W. Norton & Company in 2010.

By Jesus Hernandez

Abundant research exists showing how the current wave of foreclosures from unsustainable subprime mortgage products has brought a devastating loss of wealth to non-white neighborhoods across the US. Accordingly, the case against racially concentrated subprime lending should demonstrate not only how the inequitable effects of the mortgage meltdown are concentrated in non-white communities but also how these inequities remain rooted in long-standing patterns of housing discrimination that shaped segregated space – the essential condition for a racialized concentration of subprime lending to take place. Racially defined residential space should be seen as “ground-zero” for the foreclosure crisis and remains an important piece of evidence in building the case against predatory lending. The task before us is to clearly articulate how the uneven effects of subprime lending, a seemingly place-less and colorblind market phenomenon, continues the intergenerational practice of housing discrimination in the very neighborhoods initially shaped by race-based housing policies.

Here I offer two suggestions for building the fair housing case against predatory lenders and for stabilizing communities under stress. First, fair housing litigation and advocacy can benefit from contexualizing predatory lending within the historical record of racialized housing thereby linking the economic catastrophes brought on by the subprime mortgage meltdown to past episodes of racially disparate market action. Second, fair housing advocates can use this evidence to justify improvements to federal mortgage reporting requirements that can lead to more effective monitoring of financial institutions. The improved lender monitoring will aid in demonstrating how the spatially and racially concentrated loss of homeownership seen today represents a continuum of housing discrimination in segregated residential space. In turn, practical and expedited solutions for crisis relief can be targeted to those places and populations most affected by the on-going financial crisis.

Building the fair housing case against predatory lenders remains complicated by explanations that frame the cause of the mortgage meltdown as complex financial processes removed from social decisions or as irresponsible consumer action. Missing from this reasoning, of course, is acknowledging the racialized predatory lending that took place in predominantly non-white neighborhoods by subprime lenders supported by Wall Street investment. Here the significance of race-based market manipulation cannot be overstated. Holding financial institutions accountable for the social and financial damage brought by the default of rapidly unsustainable mortgages requires identifying the specific market practices that made racially segregated space vulnerable to predatory capital extraction. Connecting these historical practices to subprime lending is surprisingly very simple but because this link developed over decades of time through the formative years of the modern real estate and mortgage industry, it is easily overlooked. More often, the link is simply explained away as an epiphenomenon of competitive supply and demand markets. The link can be summarized as follows.

During the 1900s, community builders and the National Association of Real Estate Boards (NAREB) actively promulgated the use of racially restrictive covenants limiting the purchase of newly constructed homes to whites. The covenants were used as a way to create value and demand for new suburban residential developments. The NAREB also guided the development of appraisal techniques and practices that conditioned property values upon the racial characteristics of neighborhood residents. When NAREB members were appointed to draft FHA underwriting guidelines for New Deal home financing programs, racial restrictions became a formal condition of mortgage credit and fueled the formation of the homogeneous residential suburbs during the post-war housing boom.

New Deal FHA guidelines also prohibited, or “redlined,” access to credit in neighborhoods with non-white residents. The subsequent decline in redlined property values made inner-city neighborhoods vulnerable to urban redevelopment programs that assembled de-valued property for transfer to commercial developers. The forced exodus of non-white residents from redevelopment zones to areas without racially restricted covenants created new racial boundaries for residency and led to a second wave of mortgage redlining during the period 1950-1980. By this time, racialized residential boundaries were firmly embedded in the social and physical landscapes of our cities. Federal urban policy, and private implementation of said policy by the real estate industry, effectively redirected the flow of capital towards predominantly white suburban residential development. Concomitantly, these race-based market interventions shaped segregated space and created credit-starved neighborhoods now vulnerable to subprime and predatory lending.

When intensive bank deregulation shifted the risk traditionally associated with lending in segregated space to Wall Street via securitization, the rush was on. During the period 2003-2006, data from the Home Mortgage Disclosure Act (HMDA) revealed an intense concentration of unsustainable subprime loans in previously redlined areas, a market phenomenon now referred to as “reverse redlining.” To no one’s surprise, mortgage default and foreclosure rates also mirror subprime loan concentrations in redlined space. Accordingly, race remains a salient factor in understanding the current housing crisis as it played a central role in triggering the wave of foreclosures that eventually froze Wall Street credit markets.

Making the connection between financially vulnerable segregated space and today’s predatory lending practices exposes the inadequacies of federal financial monitoring policies designed to keep discriminatory mortgage lending practices in check. Lender monitoring currently takes place via the Community Reinvestment Act (CRA), which discourages redlining by assessing a financial institution’s record of helping to meet the credit needs of its entire community, including low- and moderate-income neighborhoods; and HMDA, which mandates lenders to report data regarding loan originations, loan pricing, loan purchases, and applicant demographics. Because these monitoring practices failed to detect in advance the disparate lending practices seen today in segregated space, connecting the history of housing discrimination to the current wave of foreclosures occurring in non-white communities becomes the starting point for justifying changes to federal monitoring policy.

Housing advocates should now push for three broad changes to federal monitoring that can improve access to fair credit and fair housing. First, expand HMDA reporting requirements to keep pace with industry innovation. The list of lenders required to report should now include all financial institutions and their affiliates that generate loans for securitization and eventual sale on Wall Street. Also, expand HMDA reporting to include data on borrower interest rates, credit scores, loan reset periods, balloon payments, adjustable rate mortgage margins and indices, and loan product underwriting (e.g. stated income or low-documentation loans). These data will help identify racial and spatial concentrations of dangerous credit products that strip away home equity and cause financial instability. Simply monitoring high-cost loans as the primary indicator of predatory lending fails to capture data on important loan characteristics that help identify abusive lending practices.

Finally, housing advocates should push for transparency and enforcement of loan modification reporting requirements imposed by federal bailout programs. Loan modifications are critical to stabilizing neighborhoods experiencing stress from concentrated subprime lending and mortgage foreclosures. Proper reporting of loan modification activities remains essential to monitoring the actions of lenders and asset managers who are unwilling to move quickly to modify unsustainable loans. When used with HMDA data on subprime lending and mortgage default data, the tracking of loan modification applications and outcomes can help demonstrate disparate patterns of treatment by lenders. Thus housing advocates can gain leverage against lenders by showing how the number of approved loan modifications in segregated space fails to keep pace with their mortgage foreclosure rates thereby inhibiting federal efforts to stabilize communities in stress. Such leverage can be used to push these same lenders to remedy past practices by improving access to safe financing products designed for home buyers in crisis neighborhoods. The resulting increase in homeownership opportunities will slow the pace of investors “bottom-feeding” on repossessed homes. This will expedite the rebuilding of communities with stable families and support networks rather than encouraging investor-owned neighborhoods of unstable renters.

Keeping an innovative global credit market accountable for abusive lending practices is a process that relies upon public scrutiny for its effectiveness. Improving the data available for fair housing practitioners can be a valuable strategy in revealing disparate credit practices, advancing fair credit and fair housing enforcement, and act as a pre-emptive strike against dangerous profit-taking from financially vulnerable communities in the future. These steps will go a long way in reversing the effects of the new global financial infrastructure now operating as a Plessy-type credit market that continues to separate and divide our communities.

Jesus Hernandez is a real estate broker practicing in the Sacramento area with over 20 years of experience in residential sales and financing. His research connects the current subprime loan crisis to historical processes of mortgage redlining and residential segregation and demonstrates how racialized mortgage credit practices reproduce long-standing spatial and social patterns of inequality. He is currently completing his Ph.D in sociology at the University of California at Davis.

By Seth Wessler

The Obama administration recently announced plans to bolster it’s foreclosure prevention plan — the one that was supposed to keep millions of Americans in their homes by giving banks incentives to refinance mortgages. Until recently the Making Home Affordable plan has been a widespread failure as mortgage makers have faced no mandate to renegotiate the terms of troubled mortgages. The recent move by the administration aims to put some teeth into the program.

The impact of the failure to date is catastrophic, as millions of homeowners continue to slide into foreclosure. People of color have been hit hardest by the crisis, facing disproportionate rates of foreclosure as well as higher levels of unemployment. The recession has deepened the racial divide.

This is why it seemed odd to many when Federal Reserve Chair Ben S. Bernanke met with world bankers and collectively declared the global economy to be back on track to normal. As long as we fail to address the struggles of working people and ignore the structures of racial inequity that helped push us all into recession, we will find that a return to normal will mean very little.

Earlier this year, I traveled the country from Michigan to Arizona, Rhode Island to Washington, researching race and the recession. Near Detroit, I met Leila*, who recently lost her job as a teacher’s assistant and supports her four children alone.

She was laid off late last year because of state budget cuts. Her unemployment benefit ran out and she applied for government cash assistance. A month later, her welfare checks were also cut off and she was suddenly without any income.

Leila fell behind on her mortgage payments on the house she had just moved into. She realizes now she was sold an adjustable rate subprime loan. Her house went into foreclosure. Without any other wealth to fall back on, she’s not sure what will happen.

Because people of color were disproportionately saddled with predatory loans, neighborhoods of color bear the brunt of foreclosures. Black, Latino, Asian and American-Indian families have been stripped of much of the wealth they had carefully accumulated over the years. The impact of these losses will last for generations.

That people of color face higher rates of foreclosure is no coincidence. Until the 1970s, communities of color were broadly excluded from owning homes as a result of racial “redlining” practices and racially restrictive neighborhood agreements. Then Congress passed the Community Reinvestment Act (CRA) to end discrimination in lending. Suddenly redlining and racial exclusion were made illegal and people of color slowly began to access prime loans.

But in the late 1990s, Congress deregulated the mortgage industry along with Wall Street, opening the space for industry to circumvent the CRA. These were the same anti-regulatory maneuvers that made subprime securitization possible.

As the CRA was weakened and incentives to sell subprime loans grew, neighborhoods of color provided fertile ground for the sale of these faulty products. Since communities like Leila’s were largely devoid of prime lenders as a result of redlining, there was little competition and the credit vacuum created conditions for the predatory sale of high-cost loans to communities of color.

The streets of central Brooklyn and Detroit filled with predatory lenders and millions of these mortgages were sold. They ultimately burst, flooding the economy with toxic assets and submerging all of us in an economic storm.

In other words, the economic crisis is built on the country’s long history of racial discrimination.

Recovery must prevent families from suffering the recession’s worst results and lay a new foundation to avoid the kinds of unjust structures that put us all in this mess. Only by tackling racial inequity in the economy can we ensure a stable and just recovery.

An immediate halt on foreclosures is necessary, as is modernization of the Community Reinvestment Act, which would require equity in mortgage lending and expand the Act’s reach to cover new kinds of lending practices. The administration’s retooled foreclosure prevention plan is a hopeful sign but it should go further by mandating banks to renegotiate mortgages to less than 30 percent of income. Meanwhile, lawmakers should pass legislation allowing those facing foreclosure to rent their homes from the bank.

Fixing the broken healthcare system, which is responsible for more than half of personal bankruptcies and has pushed scores into foreclosure, ought to have happened months ago.

Meanwhile, unemployment continues to rise, and it’s always much higher for people of color. Stimulus job creation money and green jobs programs should be targeted to communities of color, where joblessness is literally killing people. In all this, racial impact assessments must be conducted to ensure we’re building an equitable economy.

Recovery will not mean much if we return to the “normal” economy. Let’s demand an economy that is good for all of us.

A version of this article was published on inthesetimes.com.

Seth Wessler is a Research Associate at the Applied Research Center (ARC). He is the author and principal investigator of ARC’s recent report on Race and Recession.

“Only a very small percentage of white children live in high poverty neighborhoods throughout childhood, while a majority of black children do.”  Pew Charitable Trust, Neighborhoods and the Black-White Mobility Gap (2009).

Launched in 2003, the Baltimore Housing Mobility Program was established to combat the concentration of poverty in minority communities.  The program provides current and former public housing families and families on the public housing or Housing Choice Voucher waiting lists access to private market housing in low poverty and predominantly white neighborhoods.  Program participants receive budget and financial education, at least two years of post-move counseling, and employment and transportation assistance.   To date, the program has moved 1,522 families into low-poverty, racially integrated neighborhoods.

A recent report written by Lora Engdahl and published by Poverty and Race Research Action Council and The Baltimore Regional Housing Campaign gives the program a very positive review. The report is based on the results of an ACLU of Maryland client feedback survey.  Participants reported dramatic, positive changes in their environment upon moving, significant improvement in school quality, and enhanced quality of life.

The Los Angeles Times reports today that Donald Sterling, owner of the Los Angeles Clippers and a Los Angeles real estate mogul, has agreed to settle a housing discrimination lawsuit for $2.725 million, which he will pay into a fund for the victims of his discriminatory housing practices.  If approved, the settlement will end the case, filed three years ago by the Department of Justice, Civil Rights Division, based on allegations that Sterling favored Korean tenants and deliberately excluded African Americans, Hispanics, and families with children.  Sterling and his wife own and manage over 100 apartment buildings with approximately 5,000 units in Los Angeles County.

On October 21, HUD Secretary Shaun Donovan announced several initiatives, including an upcoming proposed rule, to ensure in Donovan’s words that “a qualified individual and family will not be denied housing choice based on sexual orientation or gender identity.” Among other things, the proposed rule will clarify that the term “family” as used in reference to beneficiaries of the Section 8 voucher and public housing programs, includes otherwise eligible lesbian, gay, bisexual and transgender (LGBT) individuals and couples.

In another initiative, HUD will commission the first-ever national study of the impact of discrimination against members of the LGBT community in the rental and sale of housing. HUD compares this planned study with research it undertook in 1977, 1989 and 2000 to study the impact of housing discrimination based on race and color. See HUD’s press release on these initiatives for more details and a link to a study by Michigan’s Fair Housing Centers that found that nearly one-third of same sex couples were treated differently from different sex couples when attempting to rent or buy a place to live.