Factors Affecting The Foreclosure Crisis

The intent was to open up the ability for the average American to purchase homes for the first time (Adelman, 2003). What was also introduced by the government underwriters was a national appraisal system. The national appraisal system unfairly tied race, loan eligibility, and property values together, which resulted in minorities and mixed neighborhoods receiving low ratings and being denied loans, while all white neighborhoods received the benefits of a higher rating and the low cost loans backed by the government (Adelman, 2003). As a result of this system of appraisal, less than two percent of the one hundred and twenty billion in loans went to nonwhites (Adelman, 2003). This resulted in an unfair advantage in

The racial undertones of Detroit have been extremely problematic to Detroit’s real estate market for well over 50 years. These social disruptions continue to have an effect on the current residents of Detroit. During the middle of the nineteenth century, the Federal Housing Administration (FHA) introduced real estate tactics such as redlining, which is the practice of flagging minority dense neighborhoods for the purposes of denying approval of mortgages or inflating the price of the homes. Redlining had a profound social and economic effect on all residents of Detroit. The white majority began abandoning and selling their homes in fear that the value of the home would plummet, leading to a great financial loss when minorities moved in the area. This idea is known as white flight, and is the primary reason that Detroit has one of the highest African American populations in the country. However, through revitalization and gentrification of the Midtown/Downtown area, Detroit is slowly becoming more diverse. Throughout history, racial politics of the mid-to-late twentieth century affected Detroit 's real estate market by excluding minorities from the real estate market. Although adding stadiums, high end retail, small shops, and restaurants is economically valuable to the city of Detroit, this is conflicting and potentially problematic for the original residents of the area because the prices of these new establishments are often much higher than the residents can afford.

Access to resources has been historically constrained in the U.S. on the basis of ethnicity, race and most recently class. This differential access to resources is a result of overt structural forces that create barriers to employment, housing, education and neighborhood investment. The political policy of “redlining” is a great example of how public policy can affect access to resources. This policy selectively avoided giving mortgages to individuals living in predominantly Black

Lipsitz uses practices of the housing market to illustrate how the diverse practices provide the privilege to white people in the current institutional arrangements. The capital resides in suburban houses has proven many white families’ economic mobility, although few white Americans recognize that segregation has historically been the guarantee of suburban real estate values. Housing policy and real estate practices, banking and finance, education, tax codes and subsidies, the behavior of the courts, and the norms of urban policing are all heavily inflected by a racialist logic or tend toward racialized consequences. Lipsitz delineates the weaknesses embedded in civil rights laws, the racial dimensions of economic restructuring and deindustrialization, and the effects of environmental racism, job discrimination and school segregation. Lipsitz describes the centrality of whiteness to American culture, and explains how the whites have used identity politics to forward their collective interests at the expense of racialized groups, including African Americans, Asian Americans, and Latinos.

Different areas of the private sector took control of the racial segregation. Areas such as real estate, banks, labor, and toxic waste locations have participated in some way to continue the segregation and inferiority of people of color. “African Americans and other communities of color are often victims of land-use decision making that mirrors the power arrangements of the dominant society” (Bullard [1994]2004:269). The land-use decisions are used by the real estate industry. The real estate industry along with the bank industry have worked together in order to make it almost impossible for people of color to acquire their own homes. When individuals of color do obtain their own homes the real estate industry corrals them all into one zone. Then the banks charge homeowners in these zones high interest rates on the mortgages needed to maintain their home ownership. “Zoning is probably the most widely applied mechanism to regulate urban land use in the United States” (Bullard [1994]2004:269). When people of color are corralled into a neighborhood the quality of the neighborhood is diminished. The

As he pointed out in the very early part of his article, for instance Clyde Ross, resident of North Lawndale Chicago, was denied when he first tried to get a legitimate mortgage; mortgages were effectively not available to black people (Coates, June 2014). Also, just like what we talked about in class last week, Ross and many other black families were forced to live in those redlined neighborhoods with “contract house.” Basically, Ross had not signed a normal mortgage. He’d bought “on contract”: a predatory agreement that combined all the responsibilities of homeownership with all the disadvantages of renting—while offering the benefits of neither (Coates, June 2014). This is a perfect example of how these ghetto-neighborhoods were created; it was created by white supremacists and people in the government who chose to ignore “the elephant in the room.” All these black families left with no choice. They ran from the South, thinking that they could finally go the land of the free. They quickly found out that, it was no different in the North, or even the West. They were forced to stuck with the

This power helped white families considerably in gaining ownership of houses, but severely crippled home ownership ability for African American families. The role of the HOLC was to provide low interest loans and refinance homes to prevent foreclosure; the role of the FHA was to guarantee mortgages from default. Both of these organizations worked to minimize the risk of home loans for banks, making it easier for families to obtain loans and mortgages to buy homes. This resulted in an explosion of home ownership from the 1930’s to the 1960’s, “In 1930, only 30 percent of Americans owned their homes; by 1960, more than 60 percent were home owners.”

Wealth inequality has become a hot-topic in recent years, this is because the return rate on capital, such as stocks or real estate, outruns that of economic growth which resulted in the wealthiest grasping a growing share of wealth, leading to increasing inequality. The unequal distribution of wealth has been a major hallmark of the U.S economy, and among its most notable and lasting results, but until it was brought to the awareness of the public by the Occupy movement’s catch phrase referring to “the 1%” of the populace who control half of the nation’s wealth, this issue had not been brought to the limelight of public economic and political discourse since the Great Depression of the 1930s, and almost every American is basically unaware of the true magnitude and character of the unequal distribution of wealth in our country. Inequality in wealth i.e. the sum of household savings, home equity, investments, and debts is

In order to support his opinion, the author uses historical references to the enormous impact of racial inequality on African American lives. Additionally, Desmond names a set of historical data and rates of the poor African Americans in cities to enhance the reader’s understanding of this complex situation. African Americans were also more likely to get the apartment with broken furniture, windows, and other facilities that confirmed the existence of racial inequality (Desmond, 2016, p.249). To reassert his position, Desmond provides offensive statistics that millions of people are evicted from American homes, and most of them are African American (Desmond, 2016, p.293). As a matter of fact, the author proves that housing discrimination based on race is the primary cause of

The readings for this week fall under the umbrella of “Issues in Housing Policy”, more specifically race, discrimination and segregation. Looking at this topic with the naked eye may lead one to conclude that these issues are age-old, but by looking at the occurrences within the housing policy we can very much conclude that these drawbacks still remain and are salient to the present. To begin, the Schwartz piece highlights that housing policies are mandated to condemn the discriminatory practices that plague real estate and mortgage markets, where African-Americans and other minorities are at a “decided disadvantage”. However, the federal laws passed, such as the Fair Housing Act of 1968, prohibiting racial discrimination by real estate

Despite beliefs to the contrary, the increasing disparity in real wealth between white and black Americans during the past half century shows that the economic system is unjust. Considering factors such as less intergenerational inheritance, higher unemployment and lower incomes serve as key components in economic disparity. Disparity can be viewed as a systematic design to keep a specific group of people continually oppressed through a mixture of inequality, injustice and power. When there is an inequality that is also an injustice (Wright, 2009).

Ruetschlin stated, “Homeownership is the central vehicle Americans use to store wealth, so homeownership and access to homeownership are at the heat of that widening wealth gap”. The median house worth for blacks and Latinos is $48-$50,000; while the median house worth for whites is a whopping $85,800. Much of this disparity derives from the increasing gap in housing values located in neighborhoods where people of color live versus white neighborhoods. The roots of this issue go back to the National Housing Act of 1934, which marked entire black neighborhoods as bad credit risks. Being so, the act discouraged lending in these areas, even as black homebuyers continued to be excluded from white neighborhoods. (forbes.com) Although it was outlawed over thirty years later, its impact is still felt today as the continuation of residential segregation patterns persists. For example, just three years ago, Wells Fargo admitted to leering those of color into subprime mortgages all the while offering whites with similar credit profiles prime

One of the factors that contributed to this wealth gad was the federal housing policies. The policy permitted redlining and discrimination in finances, and homeowners insurance, and sales, this reflected the unequal rates of the house ownerships that we see today. During this period in the U.S. blacks, Mexicans, Chinese and Japanese immigrants were the most targeted when it came to employment and property ownership. Many African American lost their homes during the foreclosure during the 1930’s and 1940’s, they were victim of deception and fraud. In the south many African American were the victims of abusive agriculture which kept them always in

wealth had no concern for the minorities of America. They were left behind to cultivate the

Chinatown, Olvera Street, and Compton all contributed to culturally diversity and the expansion of Los Angeles. Although Los Angeles has become rich in cultures, its evolution did not go without racial tensions and segregation. With the arrival of blacks from the south, white-Los Angeles did always recognize the minority community. Angelenos did not always embrace diversity with pride, but perhaps the sad part is not the fact that racial segregation took place, but the fact that it was not created by just the individual, but also by the organization. Federal programs like the Federal Housing Administration (FHA) and the Homeowner’s Loan Corporation (HOLC) divided up Los Angeles into a complex socio-economic racial-class system. The influences of the local level influenced the federal level and revolutionized the finance industry. (Avila, lecture 2/5/02) These federal organizations blatantly labeled minorities as derogatory, uneducated, second-class citizens that brought down property value in “white” neighborhoods. Latinos and Black were often labeled as a “minority problem” and even as a “disease” on official HOLC documents. The HOLC implemented strict government guidelines and kept maps of white neighborhoods confidential. It also devised a formal and uniform style of appraising homes by breaking neighborhoods into race classifications by letter. As Waldie states, “The Montana Land Company made it clear that lots were