By David Dayen, a lapsed blogger. Follow him on Twitter @ddayen.
Several commentators picked up on the relationship between the events in Baltimore and the dearth of economic opportunity that leads to a sense of hopelessness. But precious few added the component of the foreclosure crisis, a dislocating event that has few parallels in American history. A new paper in the American Sociological Review by Matthew Hall (Cornell), Kyle Crowder (University of Washington) and Amy Spring (Georgia State) puts numbers to this, and shows that we really had a small-scale version of the Great Migration, the shift of African-Americans from the rural south to the big cities of the north. This migration hollowed out and segregated African-American and Latino communities to an even greater degree than where they already were.
Those of us who have observed the foreclosure crisis since the end of 2006 already had a recognition of this. We knew that poor neighborhoods in Cleveland or Jacksonville would suddenly have loan brokers going door to door, usually to houses where the resident had equity, on a quest to steal it. They saddled them with high-cost mortgages or home equity lines of credit, and when everything crashed the lenders provided little to no relief, to say nothing of the government. I remember stories around the 2010 election of candidates sending out volunteers to walk precincts, and they would only find one or two occupied homes on a street. There are parts of this country that looked like ghost towns. And the burden wore heavily on people of color.
Unfortunately, only the abstract of the paper, “Neighborhood Foreclosures, Racial/Ethnic Transitions, and Residential Segregation,” is available without a subscription. But it gives a decent sense of their work:
In this article, we use data on virtually all foreclosure events between 2005 and 2009 to calculate neighborhood foreclosure rates for nearly all block groups in the United States to assess the impact of housing foreclosures on neighborhood racial/ethnic change and on broader patterns of racial residential segregation. We find that the foreclosure crisis was patterned strongly along racial lines: black, Latino, and racially integrated neighborhoods had exceptionally high foreclosure rates. Multilevel models of racial/ethnic change reveal that foreclosure concentrations were linked to declining shares of whites and expanding shares of black and Latino residents. Results further suggest that these compositional shifts were driven by both white population loss and minority growth, especially from racially mixed settings with high foreclosure rates. To explore the impact of these racially selective migration streams on patterns of residential segregation, we simulate racial segregation assuming that foreclosure rates remained at their 2005 levels throughout the crisis period. Our simulations suggest that the foreclosure crisis increased racial segregation between blacks and whites by 1.1 dissimilarity points, and between Latinos and whites by 2.2 dissimilarity points.
The press release at Eureka Alert has more, and the data on racially integrated communities is in many ways the most interesting. The “dissimilarity points” correspond to a 50 percent increase in racial segregation between Latinos and whites, and about 20 percent between blacks and whites. The study finds that white people would simply pull out of distressed areas, while minorities would move in.
This makes some sense. More families of color had the overwhelming majority of their wealth tied up in their homes; they had no escape route once the economy crashed. Whites, at least according to the study, clearly did: they were the first to leave areas with high foreclosures. They were more likely to actually contest foreclosures, too, perhaps because of greater access to the justice system. Black and Latino families simply got foreclosed on more quickly; white homeowners had more wherewithal to get out from under the carnage.
Examining virtually all urban residential foreclosures from 2005 to 2009, Hall and co-authors find that mostly black and mostly Latino neighborhoods lost homes at rates approximately three times higher than white areas, with ethnically mixed communities also deeply affected. They estimate that the typical neighborhood experienced 4.5 foreclosures per 100 homes during the crisis, but the figure rises to 8.1 and 6.2 homes in predominately black and Latino areas, respectively, while white neighborhoods lost only 2.3 homes on average.
When the foreclosure waves rushed through, the resulting buyers (or likely renters, after an investor scooped up the property) were non-white, either because they had no other options or because this represented the only plausible affordable housing. Foreclosure towns are now minority towns, with all the economic challenges you would expect to arise from that. This was particularly true in Sun Belt and sand state cities where foreclosures peaked, like Atlanta, Las Vegas and Sacramento. Where neighborhoods were once integrated, they now slipped back.
You can see how this would lead to economic depression in poor, racially homogenous areas, and how that could intersect with social tumult. The lack of community hope begins with the destruction of the wealth in the home, the biggest financial asset for the bottom half of the income distribution. The integrated communities became segregated and more poor, and aggressive policing sought to control social unrest. Foreclosure-ravaged neighborhoods were like a tinderbox waiting for a spark.
That’s what makes the foreclosure crisis a racial justice issue as much as an economic justice one. The failure to arrest this was terrible for the country economically. But it also generated a massive dislocation that reinforced existing social tensions and challenges. To do nothing in the face of millions of foreclosures out of an affinity to protect bank balance sheets led us to Michael Brown and Freddie Gray, in a very real way. The demographic makeup of the country changed for at least a generation, and it didn’t have to.
When the legacy of the Obama Administration gets written, it simply must include this point. This President presided over one of the largest destructions of wealth of people of color in history, as well as a migration unparalleled in nearly a century. The foreclosure crisis was a civil rights failure of historic proportions.
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This may also be of interest; it’s an interview with david harvey (who taught at jhu before moving to cuny) from a few years ago, in which they talk about jhu’s role in ‘urban redevelopment’/gentrification, and the way jhu went about it.
I can’t find another piece/interview (may have been video) in which he went into more detail on the how, but I recall that it involved buying up properties, letting those houses rot, and doing that until jhu (via EBDI) was able to convince the city govt that a neighborhood had become — go figure — ‘blighted’ (as I understand it, a bureaucratic category?), and that eminent domain-like powers should be used to clear the rest of the area in preparation for redevelopment.
I would bet the same dynamic could be shown to apply to other city hospitals, nation-wide.
And in other land-using institutions. In Chicago the prime examples are probably the Illinois Institute of Technology, Mercy Hospital, and above all, the University of Chicago, who have been at this for decades.
All the intelligence but perhaps wisdom hidden somewhere behind…
More like basic human sympathys
Hey, they are just taking advantage of their, ah, advantage — to do otherwise would be, ah, unAmerican, right?
The principle goes back to whatever forces pulled off the Housing Act of 1949, leading to what I saw bits of growing up in the Chicago are (albeit a white bedroom suburb, but my parents were a little adventurous so they took us into the city to see all kinds of stuff, and once to buy bricks from one of the “urban-renewed” tenements smashed by Da Mare, Richard J. Daley, in his quest for hegemony there.)
On the subject, from the National Housing Institute, 2004:
Be It Ever So Humble
In the American idiom of good things, the importance of “home” and “community” cannot be challenged. The associated images – mom, apple pie and the picket fence – serve as anchors for our images of the American Dream. The power of these symbols would seem to protect houses and communities from destruction, but in the United States, oddly enough, homes and communities are destroyed all the time. How is this possible?
The Housing Act of 1949, the legislation that started massive destruction of urban neighborhoods, called for safe and decent housing for every American. The concept of housing for everyone bespeaks a commitment to equity and is based on the condition that the housing be “safe and decent.” Inherent in this phrase was the formulation that if the home were safe and decent, then it was good. And by contrast, if the home were blighted, then it was bad. Indeed, blighted buildings were seen as a kind of cancer that threatened the health of the urban environment, and the consensus was that such blight should be excised.
George Evans, a white city councilman writing in 1943 about Pittsburgh, argued that the black ghetto neighborhood of the Hill District was one such blighted area and, therefore, should be bulldozed. He wrote,
“The Hill District of Pittsburgh is probably one of the most outstanding examples in Pittsburgh of neighborhood deterioration…There are 7,000 separate property owners, more than 10,000 dwelling units, and in all, more than 10,000 buildings. Approximately 90 percent of the buildings in the area are substandard and have long outlived their usefulness, and so there would be no social loss if they were all destroyed. The area is criss-crossed with streets running every which way, which absorb at least one-third of the area. These streets should all be vacated and a new street pattern overlaid. This would effect a saving of probably 100 acres now used for unnecessary streets.”
George Evans’ comments echo those used by today’s civic leaders to justify the destruction of communities all around the United States – in the name of urban renewal. Several key elements of his comments are worth analyzing. http://www.nhi.org/online/issues/138/rootshock.html And may I encourage readers to read on into the article — the “key areas” are telling. “Social Utility,” or do I mistake the Narrative Terminology? Of course there are apologists for the destruction of all that comity and community, but I’ll leave it to the gentrifiers to pull that up. Well, maybe one link, to illustrate the triumph of hope over experience: “Obama library offers hope for urban renewal, but no guarantees,” http://chicagoreporter.com/obama-library-offers-hope-urban-renewal-no-guarantees/
And for those who think Obama’s Chicago, particularly the University of, is any great shakes at anything but self-serving, here’s a read that’s right in line with the JHU play: “The Politics of Urban Renewal: The Chicago Findings:”
A major problem facing any central agency in charge of a plan for urban renewal is to make certain that the plan will, finally, answer not only to the broad community interest but also to the needs and desires of the individuals who live in the area. Citizen participation in the planning process traditionally has been relied on to synthesize—somehow—these two sets of interests—often conflicting. But Rossi’s and Bender’s case study of the role of citizen participation in the renewal of the Hyde Park-Kenwood neighborhood in Chicago suggests that the desired synthesis is not always achieved.
About ten years ago, the University of Chicago, which is located in the Hyde Park-Kenwood district, decided that the rapid deterioration of the adjacent residential areas was partially to blame for its declining student enrollment and steady loss of faculty. Eventually, the city of Chicago commissioned the University itself to carry out a giant renewal project for the neighborhood. The University plan was to restore Hyde Park-Kenwood as a middle class neighborhood by removing the pockets of blighted and overcrowded housing. The cleared areas were to be replaced by middle-and high-cost housing, and this, in effect, meant that the University was calling for the removal, in part at least, of the working-and lower-class occupants of the area, who would not be able to afford the higher rent….
To sum up, then: this study—and observations of other renewal projects—suggest that citizen groups in themselves generally lack the political power needed to implement their wishes and must thus work with other influential elements in the community. This is complicated by the fact that the ideology of citizen participation is usually apolitical or even anti-political, and in any case, not always adaptable to accepting the compromises inevitable in the large city power structure.
https://www.commentarymagazine.com/article/the-politics-of-urban-renewal-the-chicago-findings-by-peter-h-rossi-and-robert-a-dentler/
And here’s a little interactive graphic toy that someone way smarter than me worked out, to illustrate “change without hope” in the Mythical America of the Past: “60 Years of Urban Change: Midwest,” http://iqc.ou.edu/2014/12/12/60yrsmidwest/
The city of Chicago (public), the University of Chicago (private), and the da people of working and lower class.
That’s why we need to empower the people.
We need them to fish, not just give them fish (except if there is an emergency).
“Stop killing us. Stop stealing our newborn fiat money or our legal victory (like tobacco) money.”
Everybody’s seen Gene Smith’s “Dream Street” about Pittsburgh’s ‘urban renewal,’ destruction of Black neighborhoods, competitive family-owned business & removal to distant, hilltop projects. In the industrial Northeast, union jobs led to some sense of independence for the neighborhoods, segregated by red-lining banks & developers. Stability & self determination, dozed along with the homes (one entire business district raised, for a hockey stadium. Lives scattered, shock & awe. http://teenie.cmoa.org/interactive/index.html#theme05 http://teenie.cmoa.org/interactive/#tag02
Here, the immediate motivation was not greed.
The concern was, prince Gautama might see suffering and who knows, he might start a new religion.
And, it is important to add other forces at work in the overall system/society to this summary of the impacts of the foreclosure picture. So, e.g., in addition to the destruction of wealth and dislocation caused by foreclosures, cities such as Baltimore (and the neighborhoods within them) also experienced job losses, ongoing wage and benefit stagnation, lack of access to health care, deteriorating infrastructure, shrinking federal, state and local social service budgets, privatization of education, well-known links of toxic/pollution to low income areas — and the militarization of the police as part of a now 40 year ‘get tough on crime’ mania.
All of which, of course, arise directly from the ‘government is all bad’, ‘private sector and ‘free’ markets are all good’ chorus of economic royalists in both parties plus the red meat hatred and intolerance celebrated by the Republican right. Go ahead. Read ANYTHING coming from the likes of Scott Walker — and you’ll see his enthusiasm for more, more and still more of what’s described in this post as well as the first paragraph of this comment.
Meanwhile, the likes of Obama and Hillary do no more that express ‘concerns’ about how we must ‘tweak things at the margin’ to be less harsh while continuing to let ‘free markets’ do their magic.
Wrong. It’s a rule of law issue.
If we had a rule of law that was equal for all, and every reader here knows it’s not, then we might be able to dispense with the “insert whatever” justice issue. Whether you’re a Democrat or Republican, both have contributed to the ridiculousness lawlessness in this country, at least for the low hanging fruit classes. If you’re the fortunate crony connected few, the law simply does not apply, our (especially mine) own State Attorney Generals saw to that regarding fraudclosure (it was also profitable).
Let’s also not forget that these communities that are in a state of unrest, once upon a time had thriving industries, especially in manufacturing and we all know where those jobs went right?
But you do get that the “rule of law” in this country has a distinctly racist bent to it, right? Tread carefully when you’re trying to tell people of color that the systemic racism they are experiencing isn’t really about race…I believe the name for it is “whitesplaining” and it’s something I try to avoid.
We need better language than “really about,” I agree. On the other hand, we also need better language for systemic effects, all the way down to the perceptual level. (“Government is like a household” is a prime example of such category errors, but there are many, many others.)
Agreed. This was indeed a rule of law issue. The fraudclosure scam – aka “Foreclosure Crisis” cut across all racial and class lines. I would argue that a homeowner living in a predominantly white, middle to upper middle ckass neighborhood was more likely to have their home siezed. Remember, this was never about enforcing contracts. It was always about the money.
The numbers show that minority groups were pushed into sub-prime, predatory loans at a greater rate than middle class white people, actually. Not that people of all complexions and ethnic backgrounds weren’t effected–they were–but our non-white communities, as always, got hit the hardest.
There are too many people who have been deprived of sufficient education, training, experience (money handling experience, for example) that anything the predatory looters do, they will suffer the most.
These predators don’t even have to have that racist intention. But the consequence is guaranteed way in advance.
“It was from a distance butterfly’s flapping of its wings.”
umm, be careful with that thought. I have a sister with an MBA who was ready to believe the real estate agent involved in a purchase was “her friend”. After I showed her that the house she was “looking at” wasn’t really 1800 sq.ft (as the Broker and agent assured her) she began the journey of understanding just whom has her best interests in mind.
Caveat Emptor! is the LAW of the land.
It’s an ever dangerous world.
If you forget to read the fine print once, that food you think is safe might turn out to be full of ingredients you don’t want.
And so, we are ever busy defending ourselves (checking that square footage, read the label on the box, how much water to conserve, has the Fukushima radiation arrived yet, what is the recommended pressure on this tire?) and have no time left to see the world is being stolen from us.
There was a time, maybe 100 years ago, when you absentmindedly picked up something, it was automatically local grown, organic, not GM and free of pesticide.
You’re correct…caveat emptor.
There are only two remedies to enforce contracts: a decree of specific performance (which is discretionary and exceptional); and an award of compensation in money (the normal remedy). Sorry if I seem to quibble, but enforcing contracts is almost always about the money.
I love the discussion this sparked. The assault on rule of law is an issue of racial justice, but I think that understanding is not always explicit when people use the phrase racial justice. The legal system is the single largest source of institutionalized racism in America today. And it’s run by some of the most educated and powerful people in society
The current iteration of the drug war especially was a way to reincarnate the Jim Crow era without explicitly using race (it’s almost uncanny how swiftly the contemporary drug war ramped up with the civil rights gains of the 1960s). Once educated whites, especially Democrats, fully embraced the notion that there is a drug war exception to the Constitution, it was only a matter of time until rule of law deteriorated for white communities, too.
In a compartmentalized sense, the problem is lack of rule of law, not in-your-face personal racism. But to ‘fix’ that, we have to address the systemic racism in educated America that tolerates the assault on rule of law in the first place.
Exactly.
I do not know what will end Americans consent to this lawless and hypocritical society, driven by the few who exempt themselves from the very rule of law they subject The People to. It’s the closets thing to Feudalism I can think of.
I hope everyone likes cake.
“But it also generated a massive dislocation that reinforced existing social tensions and challenges. To do nothing in the face of millions of foreclosures out of an affinity to protect bank balance sheets led us to Michael Brown and Freddie Gray, in a very real way. The demographic makeup of the country changed for at least a generation, and it didn’t have to.”
Such hyperbole. Something tells me that Brown and Gray were not homeowners or from home owning families. I’ll bet their lives, financially, had been close to desperate from birth. Of course this economic event made things a little worse, I suppose, but it’s not as though the neighborhood in Baltimore that Gray was living in had any whites at all living there before 2006.
The point is that a city, a way of life, and the people living that way in that city were all just tossed. Major banks were too big to be allowed to fail, and too big to be forced to follow the rules, but major cities — Camden, New Orleans, Detroit, Baltimore, Chicago (?) can just be ditched. It’s OK, dump it. We have other cities.
I think the question is, though, what does the recent housing boom have to do with that? White, educated Americans left the urban cores of our major cities long before 2006. Dumping the cities is exactly the choice that was made – not by the banks, but by educated, “Middle Class America”. Detroit, for example, peaked in terms of white population over half a century ago. The white population of the city in 1960 was actually less than it was in 1930.
http://en.wikipedia.org/wiki/Demographic_history_of_Detroit
And don’t forget, the land is still there at the end of this long, horrid process.
“The point is that a city, a way of life, and the people living that way in that city were all just tossed. Major banks were too big to be allowed to fail, and too big to be forced to follow the rules, but major cities — Camden, New Orleans, Detroit, Baltimore, Chicago (?) can just be ditched. It’s OK, dump it. We have other cities.”
I have spent a lot of time in Baltimore during the past twenty years. Cool town. I disagree that this is primarily a black/white issue. Baltimore proper has a strong black working and middle class, and I’m afraid that the problem with the inner city is black flight these days. The time of white flight is long past. And I do remember that one of the hardest hit areas around Baltimore during the housing crash was Howard County, a place that the aspirational black middle class lives. Not much in the inner city, although, of course, there are problems there. But, there’s always problems there. The easy money foreclosure problem shouldn’t be blamed for that, which has been with us since the sixties, as in most major eastern and Midwest cities. That’s all about jobs, of course.
Thought you might like this article. Brown was killed near the Canfield Green apartments. His grandmother lives in the Northwinds apartment complex. Interestingly, it is owned by an out of state conglomerate that invested money in the property because they secured themselves some tax incentives (specifically, LIHTC).
I heartily agree the public policy problem runs much deeper than foreclosures.
http://www.stltoday.com/news/local/metro/why-did-the-michael-brown-shooting-happen-here/article_678334ce-500a-5689-8658-f548207cf253.html
One data point that would be helpful here is occupation. Were the workers in these communities primarily working in construction which pretty much seized up when housing crashed? Because really, it’s about jobs. People pay bills when they have decent incomes.
Parasitic lenders preyed on the idealism of the working class who just wanted to better their lot in life with the ultimate achievement of home ownership.
Its about jobs! That is the bottom line and the financial downdraft impacted lower middle class of all colors. Sooner or later the ability to create debt which is paid monthly over time and leads to default such as foreclosure needs to be seen as a job loss issue.
Macroeconomic policy says that GDP must grow, therefore consumption must grow, because gross domestic product is a function of consumption. The problem was, real income was not growing, at least labor income wasn’t, so it couldn’t fuel the growth in consumption. The solution: let credit grow instead to finance the growth of consumption that must grow; let people without income growth secure the loans with their houses, so that credit grows, so that consumption grows. What could possibly go wrong?
We know now what did go wrong.
When bad ideas fail, people are harmed. When bad ideas fail on a massive scale, people are harmed disastrously. We all get that, except for those who do not care to know.
Why are giant banks bailed out–TBTF–when cities aren’t? Because the credit issued by the giant banks is what our money is, and if giant banks are allowed to fail, then money will also fail. By no means could this be suffered! Money is the god that cannot be allowed to fail, lest reality be exposed, and we learn to see the depression that we have long been in.
Well said. The only solution I see is tax the heck out of the rich.
Don’t forget equity’s are a form of money…
Skippy… put that in your pipe and smoke it… eh…
i have no idea if brown or gray’s families owned their homes. nothing is “telling me” one way or the other. but he links to a paper, and a lot of people lost their homes, so it isn’t surprising that led to people moving.
None of this had to happen. In the crisis Obama could have declared a mortgage rate reset, a government
sponsored refinance plan that would re-fi all existing mortgages to 3%. New purchase mortgages could have been at existing market rates.
He also could have declared that all business meals be fully deductable thereby saving small family restaurants. He could have declared all interest deductable for those making under $100,000.00 . A myriad of things he could of done to help the small businessman and the average citizen. Instead in my industry alone we went from 16,000 small businesses nationally to 9,000.
Civil Rights issue? Or a “People can’t do math” issue?
Every time you heard or saw these crazy stories of a $20k year laborer getting a $800k mortgage, it was almost always some black or Hispanic guy or gal signing on the dottef line.
Its not racial. White America’s view is that someone stupid enough to sign up for a mortgage like that deserves to get hosed. Or contributed mightily to their own demise.
SOMEBODY needed to get their dinguses smacked over this fiasco. And since nobody plans on doing anything about the criminal banksters, it “trickles down” on someone else.
Just M O
The propaganda media was clearly very good at portraying most of the foreclosures as being the “fault” of $20K/year wage workers who were “stupid enough” to sign for an $800k mortgage. So, too bad for them bc they were “stupid and greedy,” so getting foreclosed on was what they “deserved.” Of course, this picture excludes ANY culpability on the part of the banks & mortgage lenders who handed out such “deals” like candy, but I digress.
What the propaganda media did NOT focus on – and what I witnessed in some very very WHITE and upscale enclaves – was a bunch of WHITE upper class upper income types who ALSO decided to buy a giant home in gated communities with high HOA fees – all at the height of the bubble. These people were WHITE, well educated and mostly had good jobs with high salaries. But these people, too, took on way more debt than what they should have. When the crash came, many of them lost their high salaried jobs and/or lost their businesses. And guess what? Due to their desire to the lead the “good life” – think about country club memberships & owning several (not just one) expensive cars & private school fees & fancy expensive vacations & designer clothes, etc – they had nothing saved up.
What happened to these people? Well some of them did short sales and moved somewhere else. Some of them were able to somehow (and it wasn’t easy, even for them) finagle something with the banks to avoid foreclosure. And some of them are now living in poverty on the poor side of town.
But we seldom hear about these WHITE people who also got foreclosed on. Most of those neighborhoods did not turn into ghost towns, but some did, albeit by now many of those “better” neighborhoods are coming back with this more recent real estate bubble.
Minorities are always dissed by our corporate fascist propaganda media and made to appear in a negative light. Whites? Not so much.
JMHO, of course.
But we seldom hear about these WHITE people who also got foreclosed on
I saw somewhere that there were more poor white people than any other groups. Percentage wise, it was likely not so.
Money knows no color (is that how you say it?) Greed seeks its victims anywhere – relatives, colleagues, co-religious brothers/sisters, fellow countrymen, etc.
Capital doesn’t know color, gender, age, religion, etc. Capitalists, however, know all those things.
I agree that the foreclosure crisis was primarily motivated by profit-seeking at any social cost, but it has indeed become a racial issue. Not in the sense that mortgage originators sat around twisting their mustaches and plotting to screw over whole minority communities out of specifically racist motivations, but the economic and social outcomes of their actions have obvious racial implications. As a result of their historical lack of access to home lending, coupled with their long-standing desire to achieve the mythic American Dream, many lower-income minority communities provided mortgage lenders with even more targets for their toxic mortgage products than majority-white communities (who were less likely to have been shut out of the conventional home-lending system in previous decades). The sole intention of mortgage lenders, shady, criminal, or otherwise, is to make money. While this profit motive may have nothing to do with race per se, as this paper’s abstract explains, it certainly had profoundly negative, de facto racial implications with which this country will have to deal for decades to come.
Too lazy to find the link, but there’s evidence that subprime targeted black communities (including Ferguson). These financial flows go all the way back to the slave trade…
Most of the major banks settled with the federal, state and local governments over the issue of targeting subprime loans to minority communities. Wells Fargo, BofA and Chase were “leaders” in the field.
I believe you’re correct, but in the end, I think the settlements ended up being mostly chump change for the banks and no more effective than a tap on the wrist. Unless I’m missing something (always likely), I also don’t believe those settlements did anything for the “average citizen” who was foreclosed on. So, imo, the fix is still “in.” IOW, what was really solved/resolved by those settlements? Not much. Window dressing.
The settlements were largely “slap on the wrist”, and not even very painful ones at that. But the settlements mean that they did the deed, the government proved that they did the deed, and the victims got, well, nothing.
This is one of the real challenges in leftist thought. When we’re talking about home ownership, we are talking about personal property, not state property.
If we are saying that the individual actor is not competent to make sensible financial decisions, then what we are doing is revolting against liberalism – against the idea that the individual is the building block of society. But to do that, you have to go all the way. You have to advocate public ownership of housing, not public subsidies to private home owners.
Like you say, it trickles down onto somebody.
However, to say that it’s not racial at all is to confuse one variable (personal responsibility) for being the only variable, which it is not. I mean, black flight itself is largely a rational byproduct of the assault on public education, the drug war, and auto-centric development sprawl and associated tax breaks and subsidies. These kinds of public policies are interesting in and of themselves because so frequently the black leadership class specifically, and Democrats more generally, enthusiastically supported these efforts.
But having said all that, people really were targeted for more intense predation on the basis of factors like race, education, income, wealth, and so forth because, in aggregate, these communities were more susceptible to the kinds of frauds at issue. It’s a numbers game.
Plus, since, in aggregate, white households are wealthier than black households, white families that run into trouble have more influential networks to tap into around them. Better legal access, better mental health services, better re-employment prospects, better government subsidies, even simply having more friends and relatives who can spot them some cash. That’s part of the sentiment you are describing. Getting hosed when you have support is a different level of punishment than getting hosed when you don’t, and one element of the lingering systemic racism in our society is an underapprecation of how much more impoverished black communities are than white ones (again, in aggregate).
It’s a bit like the communication gap between older and younger workers. A lot of older workers don’t have any experiential understanding that younger workers today make less money and have less say in the workplace than young workers had a few decades ago.
“It’s a numbers game.” Indeed.
I would agree that better educated, and usually (not always), white citizens made their decisions to take on those stupid balloon loans based partly on greed, and partly on magical thinking that their incomes would rise enough to cover the rising mortgage costs. When the crunch came, many of the more middle and upper class citizens could walk away from a foreclosure and still manage to make it by belt tightening and loans from family, etc.
It’s entirely anecdotal, but I knew at least 15 people/families who bought more house than they could afford, and then when the balloon loans came due, chose to walk. IMO, I feel those citizens have more culpability about the loans that they chose to take. I am aware that the RE industry, in general, was in a total frenzy to push these predatory lending products on everyone. I refused to get sucked into that maelstrom and avoided having to deal with ugly consequences. I feel less than sanguine about a number of people I know who chose to buy gargantuan showcase homes with very little down and then cried the blues when their notes came due. They knew the score but didn’t want to pay the price.
My point is that media almost never discussed this segment of the populace, which was large enough for me to know 15 people/families in this position (anecdotal but that’s a significant number). Yet mostly all I ever heard was tsk-tsking about minorities.
Those that I knew in the white community who went through foreclosure are mostly all doing ok today but had some rocky years in the aftermath.
It’s only one anecdote, which doesn’t make a trend, but I know a couple of people who bought those houses with those funny loans with the very express intention of flipping them and “making a killing.” Hence the attraction of the ARMs. Dare one pose a “moral relativism” frame here, as in people of color have been abused by all kinds of folks, including those TV preachers of similar color in CA and other places, http://www.theatlantic.com/magazine/archive/2009/12/did-christianity-cause-the-crash/307764/, who sucked them into not only the “prosperity gospel” bullshit, but were actually running their own mortgage brokerages and writing loans to the same people who believed the Almighty God was going to make them rich and “give them their dream hhouse.” And of course there’s the slick Willies in the rest of the go-go mortgage scammery.
The whole “it’s their own damn fault” theme seems from what I see to have been generated by a complex of Banksters, RW politicians, faux prophets of the TV huckster/”family values”/”forget about how I got caught screwing males and females I was not married to” types, very much part of the beggar-and-trash-thy-neighbor levers that our Elite use to pry us apart from forming communities and flopping about as atomized little individuals. Most people who get sucked into these holes have weaknesses that We, from our Lofty Moral Position and because We didn’t fall for the scam, can criticize. How many of us voted for local, state and federal rulers who have nailed down the forces that have ensured that Banksters and Entitled Brats and other parasites and tumors are eating our lunches and dinners and children, buying the crap about “deficits” and “terrorism” and “austerity?” Is that our bad, and so it’s ok that we bleed, collectively, and our planet is getting sicker by the day while the Blessed Ones indulge their whims and get on about the business of completing the Ownership Society under which They Own Everything?
What a stupid bunch we are. “There’s a sucker born every minute,” and a scammer born every hour I guess, people who grow up breathing and eating the notion that they should “never give a sucker an even break…” As to how that cycle can ever be broken, how nearly 8 billion of us can cooperate as well as ants and bees do to keep our species alive and stop crapping in our own nests and hives? Stay tuned — details at 11…
Shorter: Anybody stupid enough to get conned deserves it.
Incidentally (and I’m too lazy to find a link) one reason to take the risk of buying a expensive home was to get your kids into a better school district. So people with the best of motives were preyed upon; probably made the con easier.
Tragically, it’s all of us.
Not many people, including lawyers, read the fine print of every single transaction*. And very few knew anything 10 years, or today, about MERS imaginary titles.
* There will be no time left over to monitor (or more realistically, read after the fact about) those Wall Street looters.
*Sign*
I suggest you get more up to speed before making assumptions about what happened in the runup to the crisis.
It has been well documented that many brokers told clients “just sign the application, I’ll fill it out for you,” making the applicant liable for the fraudulent misrepresentations that the broker dreamed up.
Moreover, there have even been documented cases (I was sent the details by a Congressional staffer) where the applicants (Hispanic couple) had applied for a mortgage, and at the closing, were presented with paperwork for a mortgage 3X what they’d applied for. They were told if they did not go ahead and sign the mortgage company would ruin them. Of course, signing ruined them too, just not as quickly.
Um…so the guy making $20,000 a year held a gun to the head of a mortgage broker and said give me a loan I can’t repay that will later destroy my credit for years to come.
“When the legacy of the Obama Administration gets written, it simply must include this point. This President presided over one of the largest destructions of wealth of people of color in history, as well as a migration unparalleled in nearly a century. The foreclosure crisis was a civil rights failure of historic proportions.”
I would take this meta and phrase it differently: “When the legacy of the Obama Administration gets written, it may be summed up thusly: What this president did was insignificant. What he refused to do – prosecute war crimes, curtail the erosion of civil liberties, rein in Wall Street excesses and prosecute its crimes, reverse political corruption, tackle entrenched racism and the triumph of oligarchy – was crucially significant. Elected precisely to address these problems, Obama pushed aside his huge mandate for reform in favor of continuity. This refusal put a bipartisan stamp of approval on the crimes and failings of the Neo-Conservative/Neo-Liberal Era.”
Germany has a President, a ceremonial position, and a Chancellor, who runs the government. Obama is equivalent to the German President and our Chancellor is the Harvard institution. He performs what he is directed to perform from the Chancellor. I’ve stopped watching the performance of the President who is now irrelevant and watching how the legacy of the Chancellor from 2008-2016 plays out.
Was our previous Chancellor the Yale institution?
Yes. Harvard vs Yale. The Ivy League’s Ultimate Competition.
I very much agree there is a (willful) blindness to how the predation behind the housing boom disproprtionately targeted low-income and minority homeowners. People peddling fraudulent mortgages should be prosecuted just as much as people peddling fraudulent microwaves. And people claiming there is no systemic racism and injustice to be found in that are obviously part of the problem, not part of the solution.
But there’s a larger social issue here if we’re really talking about race and injustice and community and so forth that is masked by the focus on foreclosures in that kind of survey. Yes, the gap between white and minority homeowners is shocking if you’re unfamiliar with the situation. But the gap between homeowners and renters is also shocking if you’re not familiar with it. That’s the core of the matter: despite the enormous predatory behavior targeting home owners, home owners are much better off than renters in our society(!). Indeed, the very fact that being foreclosed upon is so tragic demonstrates quite vividly how far a fall it is into the lowly underclass of renting.
Was there destruction of actual wealth? With fraud rampant from appraisal to loan underwriting it seems more like there was the creation and destruction of the illusion of “wealth”.
Yes, there was destruction of actual wealth, because a foreclosed houses is less likely to be maintained, let alone a rental unit or an abandoned one. And houses demand constant maintenance.
It was often white investors buying property in minority neighborhoods that exacerbated the crisis in those neighborhoods. When the market crashed, they simply abandoned their rentals, and until 2009, when the federal Protecting Tenants at Foreclosure Act was passed, the tenants often faced instant eviction. Tenants evicted from foreclosed properties were more likely to be homeless than former owners. Renters were also more likely to move from one foreclosure to another–one woman in north Minneapolis was evicted four times in a single year, as each investor let the property go. So far as I know, the only person to research this was John Gilderbloom at the University of Louisville. He and his students looked at the mailing addresses of foreclosed owners and found that a large number of foreclosures in minority neighborhoods were foreclosures on investor-owner properties. But the foreclosure of investor-owned properties then put owner-occupiers in jeopardy, as property values in those neighborhoods collapsed and people lost their jobs.
I saw the white investors buying property in minority neighborhoods firsthand. And, yes, when things got hard, they abandoned their rentals. Some of those places are still empty.
A number of groups have studied the treatment of foreclosed properties in white and in minority neighborhoods and have found, no surprise, that those in minority neighborhoods are left vacant and unloved for much longer than foreclosed properties in white neighborhoods. But this is not only the fault of the banks and servicers–local governments also neglect the same neighborhoods.
I would also add this to that: Tenants are more likely to be evicted than delinquent homeowners. Banks may take anywhere from 2, 3 or more years to foreclose.
Where I live in an upper-middle class integrated California suburb of Sacramento with home values in 2007 of between 300K and 1 million, real estate lost 50% of its value from the foreclosure crises throwing almost everyone into “short sale” category. We still have a large number of foreclosures and “short sales” related to that event. Blackstone came in with $2 million to buy cheap rental properties for those tossed into the street. For several years owners had protection from the banks going after them for lost money and the IRS for taxes from “mortgage relief”. After 41 years licensed in CA I never imagined the carnage created by a simple Wall Street mortgage bond scam. As the Germans say, it was the “biggest heist in history”. Sadly President Obama let them walk. I stopped working for awhile due to receiving “straw man” offers from agents/lenders who were faking contracts and getting a quick $30,000 in commission and seller kick-backs. Only a few in our Russian community went to jail for that. The fish rots from the head, but it spread the rot from top to bottom.
Millions of Americans have been forced into poverty during this Endless Recession (for the not well-off). Tens of millions are being forced into poverty throughout much of the developed world still. That impoverishment was not anticipated by those who have suffered from it, just the contrary. On the other hand, the forced impoverishment of millions is a matter of policy. The consequences were anticipated and factored in by policy makers from the get-go.
The foreclosure crisis is one consequence of many (shorter lifespans among them) of the forced impoverishment of so many Americans and citizens of the world.
There is no law of nature that says it had to be this way. It was a conscious — and malicious — choice of those who are benefiting from it.
It is a form of social and economic violence — with a very strong racial component — against which the odd incidents of vandalism and looting by its victims pale by comparison.
Well stated, and I agree. Yet it’s those still somewhat isolated incidents of violence and looting that garner all the media attention and tsk-tsking by the PTB. The great propaganda Wurlitzer is surely not going to highlight how massive impoverishment of citizens was a deliberate policy/scheme/whathaveyou rammed down our throats. Divide and conquer, plus: look over there!! tsk tsk.
Citizens tend to fall for it most of the time, sad to say.
Where did the millions of people who lived in those millions of foreclosed homes move to? Did they disperse so widely that they had no noticeable effect on their new communities? Were they not counted at all? Were they simply ignored?
About 3,000,000 people migrated during the Dust Bowl days, and their migration was noticed and chronicled in news stories, books, and movies.