The foreclosure crisis has stripped Black families of more wealth than any single event in U.S. history. Although the mortgage scandal has impacted all Americans, the evidence shows it has disproportionately affected working- and middle-class Black people, stripping them of decades of wealth and causing irreparable financial damage.
It wasn’t supposed to be this way. Home-ownership has long been ballyhooed as the holy-grail of the American Dream. Throw in the white picket fence, the Golden Retriever, and a Volvo and well, things just don’t get any better — or so we were told. Home-ownership accounts for up to 80 percent of the average American family’s wealth. So as Black renters across America watched the increased gentrification of their neighborhoods, they were easy prey. A con is always built on establishing trust with the mark. So when nicely dressed, slick-talking, and well financed mortgage brokers started showing up in the Black community, meeting with leaders of Black churches, and even sponsoring events of Black civic and non-profit organizations, there was little to no internal opposition. These “authorities” represented global financial institutions like Wells Fargo, Bank of America, Citigroup and other financial titans of the Fortune 500. What risk was there? Surely this was the long hoped for way out, an opportunity to reach greener pastures. Or so we were told.
But today in places like Prince William County, VA units that sold in 2005 for $285,000 are going for $50,000 — and have been sitting on the market with no takers in sight for more than six months. In Cleveland, OH overgrown lawns, graffiti-scarred walls, and boarded-up windows mark foreclosed townhouses and complexes. In California, one-eighth of all residences, or 702,000 homes, are in foreclosure. Black and Latino families make up more than half of that number. According to figures from the Center for Responsible Lending, these groups have foreclosure rates 2.3 and 1.9 times that of non-Hispanic white families.
Despite what you heard, there is no recovery in sight for these families. Consider the long term impact on the relationships, the financial statements, and the psychological impact on individuals who were part of a group that was targeted for economic exploitation — again. In redlining like fashion, senior managers at these financial institutions developed “emerging markets” divisions that specifically targeted under-served communities of color. The spillover effects of their actions will impact their victims for generations while many of the same “banksters” who devised these schemes received billions in bailout monies from the federal government and immunity from criminal prosecution. The firms now reap record economic profits and many of these “banksters” will receive lavish year-end bonuses. Meanwhile in places like Memphis, TN Blacks have lost decades of economic gains. “The American dream for individuals has now become the nightmare for cities,” said James Mitchell, a councilman in Charlotte, NC who heads the National Black Caucus of Local Elected Officials. In the nearby community of Peachtree Hills, he says roughly 115 out of 123 homes are in foreclosure.
Now that the sub-prime market has imploded, banks have all but abandoned those communities. Prime lending in communities of color has decreased 60 percent while prime lending in white areas has fallen 28.4 percent. The banks are also disproportionately denying credit to small-business owners and are doing little to repair or build meaningful relationships with these communities. “After inflicting harm on neighborhoods of color through years of problematic sub-prime and option ARM loans, banks are now pulling back at a time when communities are most in need of responsible loans and investment,” said Geoff Smith, senior vice president of the Woodstock Institute.
It’s often said that “when white America catches a cold, Black America catches pneumonia”. For a disproportionate share of Black Americans their dream has become their nightmare — and there’s no end in sight. Remember when politicians in Washington crowed this summer about helping homeowners with a mortgage rescue bill that included $300 billion in guarantees for refinanced mortgages and $4 billion for communities to buy up and repair foreclosed houses? Sadly that boat never arrived for many Black families.
We head into the new year knowing that we’re going to have to find real solutions, new leadership, and commit to taking a new course of direct action.
What say you?