Foreclosures and Race

The New York Times has a map of foreclosures in the New York City area, with details down to the level of city blocks.



It's a very uneven pattern, and a pattern that closely follows of the distribution of minority neighborhoods in the region. Says the Times:

But the storm has fallen with a special ferocity on black and Latino homeowners, the analysis shows. Defaults occur three times as often in mostly minority census tracts as in mostly white ones. Eighty-five percent of the worst-hit neighborhoods — where the default rate is at least double the regional average — have a majority of black and Latino homeowners.

And the hardest blows rain down on the backbone of minority neighborhoods: the black middle class. In New York City, for example, black households making more than $68,000 a year are almost five times as likely to hold high-interest subprime mortgages as are whites of similar — or even lower — incomes.

This holds a special poignancy. Just four or five years ago, black homeownership was rising sharply, after decades in which discriminatory lending and zoning practices discouraged many blacks from buying. Now, as damage ripples outward, black families in foreclosure lose savings and credit, neighbors see the value of their homes decline, and renters are evicted.

That pattern plays out across the nation. A study released this week by the Pew Research Center also shows foreclosure taking the heaviest toll on counties that have black and Latino majorities, with the New York region among the badly hit.

This is especially tragic considering the history of redlining in urban minority neighborhoods. Redlining was the practice of denying access to services, including mortgages, to residents of minority communities, and it was practiced in cities across the US. Here's a redlined map of Philadelphia from Wikipedia:



Give you a buck if you can figure out what the euphemisms in the legend mean... This is the very definition of institutional racism (and it is, by the way, the sort of thing that needs pointing to when people argue that one's position in life is entirely the product of their own effort and moral virtue, rather than any contingent facts about their background or race). Redlining as such no longer exists, but the now infamous sub-prime loans were in some ways predatory on minority neighborhoods in a way that was disconcertingly reminiscent of the old segregation-era practices. As the Times says:

Black buyers often enter a separate lending universe: A dozen banks and mortgage companies, almost all of which turned big profits making subprime loans, accounted for half the loans given to the region’s black middle-income borrowers in 2005 and 2006, according to The Times’s analysis. The N.A.A.C.P. has filed a class-action suit against many of the nation’s largest banks, charging that such lending practices amount to reverse redlining.

“This was not only a problem of regulation on the mortgage front, but also a targeted scourge on minority communities,” said Shaun Donovan, the secretary of Housing and Urban Development, in a speech this year at New York University. Roughly 33 percent of the subprime mortgages given out in New York City in 2007, Mr. Donovan said, went to borrowers with credit scores that should have qualified them for conventional prevailing-rate loans.

For anyone taking out a $350,000 mortgage, a difference of three percentage points — a typical spread between conventional and subprime loans — tacks on $272,000 in additional interest over the life of a 30-year loan.

“There’s a huge worry that this will exacerbate historic disparities between the wealth of black and white families,” said Ingrid Ellen, co-director of the Furman Center for Real Estate and Urban Policy at New York University.

But at least the article ends on a happy note:

But few in 1965 would have predicted the South Bronx devastation of 1979. At the very least, tens of thousands of people will lose their homes, their savings and their dreams.

“Rather than helping to narrow the wealth and home ownership gap between black and white,” Mr. Grannum said, “we’ve managed in the last few years to strip a lot of equity out of black neighborhoods.”

I suckered you, didn't I? That's not a happy ending at all. Well, now you know how it feels. Except not really.