Crisis in Home Ownership for Working Families and Minorities

San Jose much for sale but few are being sold (Karl Mondon/Bay Area News Group)

Much for Sale in San Jose   (Karl Mondon/Bay Area News Group)

New Orleans   Something big is happening in housing. Maybe big and bad. Maybe big and unknown, but scary in its uncertainty for the future.

Here are the facts that frighten.

Home ownership dropped again in the last quarter of 2016 and when it did so, it fell below 63% to the lowest level in 50 years.

Mortgage loans to African-American families fell in the review period between 2004 and 2014 from 7% of total mortgages for blacks to only 5% of mortgages issued. Hispanic families budged up slightly from 7 to 8%, Asian families stayed at 5%, and mortgages to white families zoomed up from 58% to 69%.

This analysis of Home Mortgage Disclosure Act data was done by the National Association of Real Estate Brokers. They argue in their report that this drop has to do with a tightening of credit standards after the 2007 housing meltdown. Couple that information with another recent statistic that prices in the housing market now are only 2% lower than their historic highs achieved in 2006 before the bubble burst. For the real estate brokers, it is in their interest to have their cake and eat it, too. A return of high prices means happy days for them. Claiming the decrease in much of minority-based lending is based on a change of standards, rather than a clearer manifestation of discrimination is also squarely in their interest.

The Wall Street Journal reported that one of the reasons that minorities are getting a smaller share of loans is the return of the jumbo mortgages to “more affluent borrowers with loans exceeding $417,000.” Mumbo-jumbo. Report after report also indicates with this surge in pricing what used to be “jumbo,” is now just standard operating procedure. Average housing prices have now hit $1 million San Jose for example. Meanwhile other reports speak to housing and income growth in center cities around the country, including in areas like Detroit and Philadelphia and deterioration of income and housing prices and values in working class areas of cities, along with the paradox of millennials wanting to live downtown which is pushing the prices up now, while Pew Research surveys are also saying they are only committed to living downtown for five or ten years. What then?

Anyway we shake-and-bake these figures, it is hard to maintain a belief that that part of the American Dream that included home ownership is still alive. We can’t have both stagnant incomes and rising home prices with narrower lending parameters and believe that home ownership can increase among low-and-moderate income families. The conservative blame-game that tried to saddle the housing collapse not on Wall Street recklessness but on lax lending standards has mutated into a form of de facto national housing policy.

Does that mean there will be more affordability in the rental market? There’s no indication of any new trend there, and in fact market-rate construction for the millennials is still the driver. Meanwhile neither political candidate has a program around housing, much less affordable housing, and if values are falling in low-and-moderate income communities that are not on the gentrification list, that also means that citizen wealth will continue to drop like a rock.

Housing is now on the trajectory from problem to issue to crisis, and the silence around solutions is depressing and deafening.


Please enjoy East Coast Girl by Butch Walker. Thanks to KABF.


Bank Redlining Increasing and Wealth Plummeting in Minority Communities

Seattle 1964

Seattle 1964

New Orleans        The Federal Reserve report on the continued decrease in lending to African-American and Hispanic families is unambiguous.  In 2013, 4.8% of total home loans were to African-Americans, 7.3% were to Hispanics.  In 2012, the numbers were only marginally better at 5.1% and 7.2% respectively.  As recently as 2006, before the real estate meltdown the numbers were almost 50% higher when combined, exceeding 20% of the total loans.

The other thing that is clear in the total failure of the Obama Administration to provide any real relief to so many homeowners is that citizen wealth for these same families has plummeted, putting more families underwater, owing more than the value of the loans in black and brown communities. While home values have declined about 10% in white communities, values have dropped by 20% in predominantly African-American neighborhoods and 26% in Hispanic-majority communities. It is virtually impossible not to conclude that banks are neither loaning, nor are they providing relief in such communities. If that’s not redlining, then let’s come up with a new name for it, because whether you say tomATo and I say toMAto, it’s all the same thing.

Reading the Wall Street Journal on this issue the only other thing that is crystal clear is that everyone responsible wants to point the finger somewhere else, usually at the government, rather than their own behavior, and muddy the water as much as possible, rather than moving to fix the problem with more rational policies and programs. The banks want to claim that they are raising credit scores higher than required because they don’t want to pay billions of penalties for their criminal behavior in robbing and fleecing both rich and poor. Does that sound like taking responsibility for your crimes and endeavoring to do better? Hardly!

And, how can blaming the lack of lending or relief to minority neighborhoods on these homeowners when every indication is that the roots of the securitization scandals were deeply set in speculation and largely white, middle-income and suburban communities? Count on the head of the Mortgage Bankers’ Association to voice the racism inherent in these new, whitewashed policies. David Stevens, their CEO, says the hammering of minority communities is “just simple math…tightening the credit has an unusually high impact on minority borrowers.” Stevens and the MBA are the lobbyists for bankers and banking in Washington, DC, so this is scary. They seem not to have gotten the memo that underlies the Federal Reserve report required by the Community Reinvestment Act and Home Mortgage Disclosure Act, which is the fact that they are supposed to be proving that they are doing better and doing everything possible to increase lending in minority areas, not just show up, and sign the attendance list.

Home ownership for lack of any better plan in place is still the largest source of wealth for lower income and minority communities so this level of inaction, blame shifting, and rationalizing puts the heavy fist of bankers on the scale to further increase the shift of inequality between the rich and poor, towards the rich. The underlying racism insures that lower income, minority communities by damn stay that way.

It’s not simple math. It’s simple racism, and that’s what the Federal Reserve is supposed to be stopping, not enabling, and it’s what these reports are supposed to be exposing for action, not simply noting in passing.