Opportunity for All: Inequity, Linked Fate and Social Justice in Michigan Conference

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Transforming Communities The Dynamics of Race,
Class and Housing Opportunities Workshop Series 1
Jason Reece, AICP Senior Researcher Kirwan
Institute for the Study of Race Ethnicity The
Ohio State University Reece.35_at_osu.edu
Opportunity for All Inequity, Linked Fate and
Social Justice in Michigan Conference Detroit, MI
January 30th 2008
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Transforming CommunitiesThe Dynamics of Race,
Class and Housing

• Overview of todays workshop
• Part 1 Thinking About The Future of Housing
• Why focus on housing?
• What are the challenges?
• How do we respond?
• Part 2 Dialogue
• What are the priorities?
• What should the advocacy response be?
• How do we move these ideas into actions?

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Why Focus on Housing?
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Why Focus on Housing?

• Housing is more than just shelter in our society
• Housing is the gateway to opportunity
• Wealth
• Neighborhood Stability
• Access to opportunity
• Schools
• Employment
• Safety
• Health
• Wealth

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Opportunity Matters Housing, Neighborhoods
Access to Opportunity

• Five decades of research indicate that your
  environment has a profound impact on your access
  to opportunity and likelihood of success
• High poverty areas with poor employment,
  underperforming schools, distressed housing and
  public health/safety risks depress life outcomes
• A system of disadvantage
• Many manifestations
• Urban, rural, suburban

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Which school will children succeed in?
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Which community has better economic prospects?
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Which community is safer and supports positive
health outcomes?
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Housing and Opportunity
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Housing and Social Justice

• Because of its significance, housing can be
  either a gateway to opportunity or barrier to
  opportunity for people
• Representing a critical intervention point for
  those pursuing civil rights, social justice and
  equity
• Housing acting as a gateway
• Integration into areas of opportunity, home
  equity (asset accumulation), stable and health
  neighborhoods
• Housing acting as a barrier
• Segregation and isolation into neighborhoods of
  disadvantage, vacant properties destabilizing
  neighborhoods, stripping wealth through
  foreclosure and neighborhood decline

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Social Justice and Housing What are the
Challenges?
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Housing Challenges

• Challenges
• Pre-existing
• Affordability
• Concentration
• Subsidized Housing
• Affordability
• Steering Discrimination
• Lending
• From Redlining to Reverse Redlining
• New
• Foreclosure Epidemic
• More to Come
• The Future A New Wave of Redlining

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Social Justice and Housing A Web of Challenges
Housing Challenges
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(No Transcript)
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Racial Steering in Detroit
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(No Transcript)
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New Challenges The Foreclosure Epidemic

• The foreclosure problem is really a credit
  problem
• From redlining to reverse redlining
• Why?
• The impacts
• More to come?

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Institutionalized Disinvestment Redlining Map
of Philadelphia
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(No Transcript)
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High Cost Loans Vacant Residences for Cities
with the Highest Foreclosure Rates in the Detroit
MSASource HUD
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The Result
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• Surge in foreclosures
• 49,000 active foreclosures in Wayne County
  (Source HUD)
• More than 80,000 residential addresses vacant for
  90 days or more in Wayne County (Source HUD)
• Nationally at least 7 million homeowners now owe
  more than their homes value
• A global crisis with racially disparate impacts
• Nearly half of all subprime loans went to African
  American and Latino borrowers
• Equity Rich, Cash Poor less than 10 of
  subprime went to first time homebuyers and half
  of subprime loans were for refinancing
• People of color were 30 more likely to receive
  subprime
• 30 of subprime borrowers qualified for prime
  loans

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Foreclosure Trends
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(No Transcript)
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More than Just Foreclosures and a Few Bad
BorrowersUnderstanding the Credit Crisis Impact
in Communities of ColorWhy Were Subprime Loans
Concentrated in These Neighborhoods?

• Why is the growing foreclosure problem causing
  problem in communities of color?
• -Lenders targeted communities of color with
  subprime loans
• -Lack of loan information or understanding for
  consumers in many of these communities
• -Communities were historically starved of credit
• -Mortgage securitization and the growth of the
  subprime industry created incentives to target
  new markets with mortgages

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The Impact of Concentrated Foreclosures in a
neighborhood

• Foreclosures pull wealth/equity and assets out of
  the neighborhood
• Widespread displacement of renters, homeowners
  which rips the neighborhoods social fabric and
  creates instability for school age children
• The growth of vacant property encourages crime,
  disinvestment and public safety risks
• Challenges which eventually ensnare all residents
  (even those who were never foreclosed upon)

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Impacts
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• 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 Whites
• 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
• Research in Boston has identified additional
  asset stripping for borrowers of color who are
  drawing down 401K accounts and other savings to
  avoid foreclosure

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(No Transcript)
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The High Cost of Foreclosure
Slide Adapted from Presentation by Solomon
Greene, Open Society Institute, Neighborhood
Stabilization Initiative
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Source Sheltering Neighborhoods from the
Subprime Foreclosure Storm. Special Report from
the Joint Economic Committee. April 2007.
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More to Come? (Mortgage Outlook Rate Resets)
Slide Adapted from Presentation by Solomon
Greene, Open Society Institute, Neighborhood
Stabilization Initiative
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Opportunities Amid Crisis How do we respond?
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Opportunities Amid Crisis

• What is the response?
• Crisis danger and opportunity
• The Housing Market will be Reshaped
• The social justice community must take part in
  that reshaping (have a seat at the table)
• Make housing and housing policy fit your goals of
  equity and integration with opportunity

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Small Scale and Big Picture Issues

• Many Important Issues
• Strategically using HUD money?
• Still need for foreclosure prevention
• But we also need to think big picture
• How can we reshape neighborhoods?
• How can we use this crisis to address future
  affordable housing challenges?
• What are strategies for assuring sustainable
  credit and credit providing institutions are
  offered and active in these communities (prevent
  another era of redlining)
• Look for strategic action points, leverage
  actions and resources

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Whats Next? (National)
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• Systemic problem, requires complex solutions
• Need more than just changing Wall Street, we also
  must provide funds for communities, while
  changing the rules which produce disparate
  lending outcomes
• Deflecting attacks on equitable policies
• Attacks on CRA and first time homebuyer programs
  are misguided and inaccurate
• A response should not starve communities of color
  of sustainable credit options
• From crisis to opportunity?
• Can the federal government utilize its new
  leverage over Fannie and Freddie to provide more
  sustainable credit (expanding scope of the Fair
  Housing Act)
• New federal resources to confront the long term
  vacant property challenge facing urban
  communities?
• Can the challenge open new affordable housing
  opportunities (in the long term)

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Part II Dialogue

• What are the priorities?
• What are the goals?
• What responses are needed to address these
  priorities and fulfill these goals?
• Small scale and big picture
• Strategic intervention points
• Steps to bring these ideas to action?
• Power analysis who needs to be brought to the
  table?
• First steps.

Opportunity for All Inequity, Linked Fate and
Social Justice in Michigan Conference Detroit, MI
January 30th 2008
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To Learn More about the Kirwan Institute
www.kirwaninstitute.org
For more information about the racial impacts of
the foreclosure crisis, visit our convening web
site at
http//www.kirwaninstitute.org/events/archive/subp
rime-convening/index.php

• Questions or Comments Reece.35_at_osu.edu