Opportunity Based Housing: Challenges and Opportunities in the Wake of the Subprime Lending Crisis

OPPORTUNITY BASED HOUSING: CHALLENGES AND OPPORTUNITIES IN THE WAKE OF THE SUBPRIME LENDING CRISIS GCAA 2010 SOUTHEASTERN COLLOQUIUM john a. powell, Executive Director Christy Rogers, Senior Research Associate The Kirwan Institute for the Study of Race and Ethnicity at the Ohio State University

TODAY’S PRESENTATION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

WHAT IS A HOUSE? WHAT IS OPPORTUNITY?

WHAT IS HOME? It’s not just your house – it’s your family, your friends, your neighbors, your local school, your doctor, your favorite grocery store…and all these things shape lives, especially kids’ lives.

“ HOME” IS AN OPPORTUNITY ANCHOR Housing Childcare Employment Education Health Transportation Effective Participation

OPPORTUNITY MATTERS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

SOCIAL SCIENCE CONFIRMS… ,[object Object],[object Object],Source: Sampson, R. J., P. Sharkey, et al. (2008). "Durable effects of concentrated disadvantage on verbal ability among African-American children." Proceedings of the National Academy of Sciences (PNAS) 105(3): 845-852.

LIVING IN LOW OPPORTUNITY… ,[object Object],[object Object],… links to higher levels of violent offending among juveniles … is highly correlated with childhood aggression and social maladjustment

[object Object],[object Object],OPPORTUNITY IS RACIALIZED

CONSEQUENCES FOR SEGREGATED NEIGHBORHOODS ,[object Object],[object Object],[object Object],[object Object],Policies need to both bring more sustainable choices to neighborhoods and allow people more choices on where they and their families live

RESISTANCE AND RESILIENCE ,[object Object],[object Object],[object Object],[object Object],Policies must leverage resilient and effective community & neighborhood organizations

WHAT IS AN OPPORTUNITY MAP? ,[object Object]

OPPORTUNITY COMMUNITIES PROGRAM

ATLANTA OPPORTUNITY INDICATORS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

ATLANTA OPPORTUNITY INDICATORS CON’T ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FOCUS AREA: HOME AS WEALTH BUILDING ASSET ,[object Object]

A HOUSE IS ALSO AN ASSET ,[object Object],[object Object],Source: “Net Worth and Asset Ownership 1998-2000”. Household Economic Studies. U.S. Census Bureau (2003)

LET’S TALK ABOUT HISTORY… Why bother? It’s the past! Fine…what happens to money over time?

MORTGAGE FINANCE EVOLUTION Post New Deal: The Three Party Mortgage Market Pre-Depression: The Two Party Housing Market This becomes very big business, i.e. F/F $800 Billion EACH portfolio in 2009

FEDERAL INVESTMENT TO INCENTIVIZE LENDING… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

TOOLS OF DISCRIMINATION: HOLC GRADES ,[object Object],[object Object],[object Object],[object Object],[object Object]

HOLC REDLINING MAP OF PHILADELPHIA

TOOLS OF DISCRIMINATION: UNDERWRITING ,[object Object],[object Object]

TOOLS OF DISCRIMINATION: RACIALLY RESTRICTIVE COVENANTS J. Hernandez shows how areas in Sacramento with racially restrictive covenants in the past had the fewest loan denials today…shows where prime credit was steered.

TOOLS OF DISCRIMINATION ,[object Object],[object Object]

MEANWHILE, IN MORTGAGE FINANCE… ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Source: Chris Peterson, U. of Utah Law School AFTER SECURITIZATION

EXPLOITING UNDERSERVED MARKETS (REVERSE REDLINING)

DID YOU KNOW…? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

WEALTH LOSS…. ,[object Object],[object Object],WHAT WILL THE EFFECTS BE ON ALREADY LOW OPPORTUNITY NEIGHBORHOODS?

2008 NATIONAL INITIATIVE ON SUBPRIME LENDING, FORECLOSURE AND RACE

RESEARCH TAKEAWAYS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FINDINGS FROM THE 2009 INITIATIVE ,[object Object]

2009 FUTURE OF FAIR HOUSING AND FAIR CREDIT INITIATIVE ,[object Object],[object Object],[object Object],[object Object]

A. LOCAL DIFFERENCE: CREDIT EXAMPLE

LOCAL/REGIONAL RECOMMENDATIONS ,[object Object],[object Object],[object Object],[object Object]

HOW SHOULD FEDERAL GOV’T SUPPORT LOCAL EFFORTS? ,[object Object],[object Object],[object Object],[object Object],[object Object]

MESSAGING AND ADVOCACY RECOMMENDATIONS ,[object Object],[object Object],[object Object]

WHY DID BROKERS ORIGINATE ALL THOSE SUBPRIME LOANS? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

FEES: EMBARRASSING NSF FEE FACTS ,[object Object],[object Object],[object Object],[object Object]

FEES: CIVIL RIGHTS CONCERNS ,[object Object],[object Object],[object Object],[object Object]

BIG PICTURE Source: Pastor et. al, Program for Environmental and Regional Equity “ the whole financial system has been rigged against lower income communities in general and communities of color in particular ”

WHAT IS ECONOMIC AND FINANCIAL JUSTICE? “ our financial system has a distinctly racial character, one that requires a response rooted in racial and social justice” “ if we are going to turn the financial industry back into something that benefits the consumer … WE HAVE TO SHIFT THE UNDERLYING BALANCE OF POWER” Source: Pastor et. al, Program for Environmental and Regional Equity

Need for social movements for financial equity “… the focus should not be simply on foreclosure relief, but on a new financial frame that has at its heart the restoration of opportunity for all ”

VISIT US IN MARCH…OR ON-LINE… http://www.KirwanInstitute.org www.facebook.com/kirwaninstitute www.twitter.com/kirwaninstitute March 11-13, 2010

Opportunity Based Housing: Challenges and Opportunities in the Wake of the Subprime Lending Crisis

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Opportunity Based Housing: Challenges and Opportunities in the Wake of the Subprime Lending Crisis