As I get closer to the date to close on my home, I often wonder about those suffering from foreclosures. Are we out of the woods? Is the economy finally starting to turn around…….they approve me right? My heart goes out to families that got caught up in that subprime mortgage scheme.
Last Week the New York Times reported that middle class families of color have been most hurt by the subprime crisis in New York City. The article authenticate what many have thought for month which ismiddle and upper income borrowers of color across the country are more likely to receive predatory, high cost loans than whites--even low-income whites.
This action has caused Black, Latino, Asian and American Indian families are burdened with the heaviest weight of foreclosures.
The article goes on to state that …..
The New Deal-era Federal Housing Administration (FHA) extended credit by making mortgages more affordable. But racial exclusion was written into government lending guidelines and people of color were explicitly denied access to loans. The practice became known as redlining because red lines were drawn around neighborhoods of color to mark them as high risk. Redlining and privately enforced restrictive racial codes or covenants designed to maintain all-white neighborhoods created segregated cities. White families accumulated home equity and people of color did not.
With the advent of the GI Bill, thousands of veterans were given access to low-cost loans but people of color were still denied mortgages because of racist lending practices. According to Columbia University Professor Ira Katznelson, by the time most of these loans matured, the median wealth of a family of color was just 9 percent that of a white family.
Over the ensuing decades, redlining and restrictive covenants were outlawed through the Community Reinvestment Act and other laws, yet their lasting effects left neighborhoods of color with few prime lenders who could help them to buy homes. In place of these traditional services, non-traditional lenders moved into communities of color. Then, in the late 1990's, the Financial Services Modernization Act deregulated mortgage lending and opened space for new arrangements between investment banks and lenders--arrangements not covered by the Community Reinvestment Act. Because communities of color had long been denied fair lending services, predatory mortgage lenders who faced little competition swarmed into their neighborhoods with hardly any regulatory framework to prevent abuse
Thus, the now illegal practice of redlining set up communities of color for what's known as reverse redlining. Reverse redlining--where people of color have access only to risky financial products regardless of income or credit scores while whites are much more likely to have access to traditional 30-year prime loans--became the norm across the country. In the mostly Black neighborhoods of Detroit where Hines lived, it's easy enough for anyone to find a check cashing outfit or loan shark while traditional banks are just about nowhere to be found. These neighborhoods of color are the same ones hit hardest by foreclosure. It is now troublingly clear that we could have prevented these abuses if we had applied the same racial justice lens to new lending practices as we had to the old.
As a result of our research at the Applied Research Center, we propose including racial impact assessments in all policy and regulatory rulemaking. Modeled on environmental impact assessments, which help prevent potentially negative environmental effects, a systematic review of potential racial impacts prior to the passage of new laws can help prevent the replication of long-standing and new forms of racial inequality.
Many people still think racism is intentional, conscious and personal. It's not. As the economic crisis shows, we are facing racial inequities that have their roots in the explicit racism of earlier generations but which now devastate communities of color without intent. This is where we now need to turn our attention. It is the only way we will stop what Hines calls "an American nightmare" that is "two or three nightmares if you're African American."
Learn more at arc.org/recession
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