What the Housing Crisis Can Tell Us about Racism, Sexism and Homelessness

by Lisa Swanson

Over the past decade, the United States has seen many instances of housing injustice which have disproportionately affected blacks. From the escalating subprime mortgage crisis to dwindling units of affordable housing, from increasing gentrification to decreasing funding for public housing, from the swelling homeless population of New Orleans to the progressing permanency of the Gulf Coast Diaspora, the most direct and devastating consequences of housing injustice, including the loss of homes, communities, and even lives, have consistently and overwhelmingly been borne by blacks.

This pattern is not coincidental. If we choose to view each of these problems and its race dynamics as separate issues, then we are guilty of ignoring the points of origin which connect them all together. According to Max Rameau, an organizer with the Center for Pan-African Development in Miami, Florida, the root problems of gentrification in the 2000s are the same as the root problems of segregation in the 1960s: people of colors’ lack of power and control over land, and white supremacy.

Typically, the phrase “white supremacy” is associated with hate groups such as the Ku Klux Klan and the National Alliance. This extreme mental association hinders our recognition of white supremacy, also referred to as white privilege, in our everyday lives. Many white people would be very upset by the suggestion that white supremacy is a part of their everyday lives, and I think that most white people would say very firmly that they do not believe that white people are superior to black people. I agree that white people are not superior to black people, and that people of all shades and appearances are inherently equal. The first calling of my faith as a Unitarian Universalist is to “affirm and promote the inherent worth and dignity of every person.” I believe in every corner of my heart that we are all human beings with worth and dignity, and that the color of our skin does not matter.

I also believe that, in this society, the color of our skin matters; I believe that our society functions in a way which favors people with white skin and makes things harder for people with skin that is brown or black. This favoritism reinforces the superiority of white people, and white privilege becomes a self-sustaining cycle. There is nothing inherent in skin color with makes a group with one shade superior to a group with another shade of skin. But the racism that all of us in the United States experience every day is no less real for being manufactured.

Let’s take a look at the first of the housing issues on our list: the subprime mortgage crisis. At its heart, the subprime mortgage crisis is a crisis of discrimination. Originally, subprime loans were designed as a means of helping a loan applicant with a compromised credit history which would prevent her or him from receiving a conventional loan. To cover the lender’s increased risk, subprime loans carry high interest rates which can amount to paying tens of thousands of dollars in additional interest over the term of the loan.

Subprime loans ought to represent a challenging but possible path to homeownership for those who have made mistakes with their credit in the past. But in reality, many mortgage brokers grant subprime loans in hope of turning a profit, rather than in the best interest of the aspiring homeowner. And rather than hinging on credit history, the granting of a subprime loan seems to be determined by the applicant’s race and gender. Subprime loans account for 55 percent of foreclosures—a disproportionate percentage, given that subprime loans make up only 13 percent of all existing home loans, according to the Mortgage Bankers Association. The high failure rate of subprime loans makes it clear that mortgage brokers rely on a lucrative strategy of granting loans inappropriately. And according to a 2006 Wall Street Journal article, 61% of all borrowers receiving subprime loans had high enough credit scores to qualify for conventional loans, indicating that other factors influence the quality of the loan that an applicant receives.

In February of this year, United for a Fair Economy (UFE) released a report titled Foreclosed: The State of the Dream 2008, which detailed how subprime loans have targeted people of color. As a demographic group, people of color have sustained an estimated $164 to $213 billion total loss of wealth from subprime loans taken out during the past eight years. In UFE’s analysis, this is believed to be the greatest loss of wealth for people of color in modern US history. Looking at federal data, UFE determined that people of color were more than three times more likely to have subprime loans than whites. For example, high-cost loans accounted for 55% of loans to blacks, but only 17% of loans to Whites. According to UFE, blacks lost more money in the subprime mortgage crisis than any other racial group.

In 2006, the Consumer Federation of America (CFA) found that women were 32 percent more likely to receive subprime loans that men—in spite of the fact that women and men have roughly the same credit scores. Women of color were found to be the most likely of all demographic groups to receive subprime loans, while white men were the least likely. This dynamic held true at every income level, and the disparity grew with applicants’ income levels. Among mortgage applicants who earned twice an area’s median income, black women were as much as five times more likely to receive subprime mortgages than white men.

Then there’s HOPE VI—another ostensibly well-intentioned idea gone wrong. HOPE VI is a program which was originally designed to solve some of the problems of what were referred to as “severely distressed” public housing units. Launched by the United States Department of Housing (HUD) in 1992 and formally recognized by Congress in 1998, HOPE VI was intended to revitalize public housing projects through partially or completely demolishing existing low-income housing, and replacing it with mixed-income housing. In reality, the promised mixed-income developments sometimes took almost a decade to build, diminishing any realistic likelihood of the original residents' return. Most mixed-income developments built with HOPE VI money incorporated fewer low-income units than before. Some developments redefined “low-income” as a higher percentage of the area’s median income than would allow all of the original residents to be able to afford to live in the new “low-income” units. As a result, tens of thousands of people of color, mostly black, were permanently displaced from their homes. The HOPE VI money which was intended to alleviate poverty did not benefit the demolished neighborhood’s original residents, but functioned instead as a de facto subsidy for middle class housing and as a driving force of gentrification.

Concurrent with HOPE VI and the burgeoning mortgage crisis, U.S. families have faced dwindling availability of affordable rental units and public housing. According to the National Low Income Housing Coalition, the nation is 2.8 million homes short of the needed number of affordable rental housing units. In 2007, the Center on Budget and Policy Priorities released a report stating that funding for public housing had declined by 25 percent between 1999 and 2006. In roughly the same time frame, 170,000 units of public housing were lost to deterioration.

The loss of affordable housing, in conjunction with poverty, has been one of the driving factors of homelessness. As the National Coalition for the Homeless (NCH) succinctly put it, "demographic groups who are more likely to experience poverty are also more likely to experience homelessness." Since, according to the U.S. Census Bureau, blacks experience the highest poverty rate in the United States (slightly less than a quarter of all blacks are considered to be living in poverty), it follows that they represent the highest percentage of the homeless (49%, according to NCH).

And—please—don’t even get me started on Hurricanes Katrina and Rita.

In short, owning a home, renting a home, and keeping one's home is difficult for everyone in these times—but it’s disproportionately difficult for black people, and especially for black women. And it’s not just disproportionately difficult for black homeowners applying for loans, or black tenants of public housing, or for black residents of the Gulf Coast. It’s consistently disproportionately difficult for black people everywhere in the U.S., of every class and locality. In contrast, owning a home, renting a home, and keeping a home is easiest if you’re white. The consistent disparity reveals an underlying force at work.

Speaking of which, let’s get back to the first of Rameau’s root causes of housing injustice: people of colors’ lack of power and control over land. UFE’s Foreclosed describes just how central control over land is to equality.

Homeownership is central to reaching economic equality and closing the growing divide between the wealthiest people in the US and everyone else in the country. Nearly 60 percent of the total wealth held by middle-class families resides in their home equity (the value of their home minus the amount they owe on it). Furthermore, home ownership is essential in acquiring other assets, including access to high-paying, good-quality jobs (with retirement plans, healthcare and other asset options), high-performing public schools, cleaner neighborhoods, and better health.

Home and land ownership is a vital component of upwards class mobility. Land is the most secure form of wealth, and one of the most definitive sources of power. To some extent, controlling land means that you control your body—after all, you only control your body to the extent that you control the land it sits, walks, and sleeps upon. Put another way, having power over land means having self-determination. Although even that promise of security is weakened if you are black—after all, the New Orleans’ Lower Ninth Ward, which once had the nation’s highest rate of black homeownership, is still struggling to rebuild almost three years after Hurricane Katrina.

Consistent with pattern established the previous statistics we’ve examined so far, a greater percentage of whites own homes than blacks. 48.4% of blacks own homes, compared to 75.8% of whites. However, the situation is slowly improving. Very, very slowly. According to Edward Wolff of the Levy Economics Institute of Bard College, the percentages of white and black homeownership will reach parity in year 7429 CE. That’s 5,423 years away.

I believe that that’s too long to wait.

For too much of our past—since white people arrived on this continent—white supremacy has been a driving force of North, Central, and South American society. For every disproportionate harm that people of color have experienced, white people have received a disproportionate advantage. In the United States today, some whites protest affirmative action without acknowledging or realizing that they are the beneficiaries of an “affirmative culture” of white superiority every day. A person in the U.S. is more likely to be granted a prime rate loan, just for being white. A person is less likely to be living in poverty, just by being white. A person is less likely to be homeless, displaced, or foreclosed upon . . . just by being white.

With regard to housing in our nation today, it is undeniable that racial inequality exists. So how can the playing field be leveled? A logical answer is government authorization of housing opportunities that benefit people of color. After all, white people benefited in terms of housing from the Homestead Act of the 1800s and the GI Bill of the 1940s, programs from which blacks and other people of color were either completely or largely excluded.

While we’re on the subject, we ought to acknowledge the fact that there are countless other areas in our society where white people have had, and continue to have, advantages which come at the expense of people of color. I’m willing to bet that these white advantages/color disadvantages stem from the same root causes of land ownership and white supremacy. And if so, then it seems only logical that the government should look into implementing a comprehensive set of opportunities that benefit people of color, from education to employment to media representation, so that the schools, workplaces, and culture of our nation embody racial equality.

This idea of reparations is nothing new. In his 1964 book, Why We Can’t Wait, Martin Luther King, Jr., proposed that, “Just as we granted a GI Bill of Rights to war veterans, America launch a broad-based and gigantic Bill of Rights for the Disadvantaged, our veterans of the long siege of denial.” N’COBRA, the National Coalition of Blacks for Reparations in America, was founded in 1987, and United States Congressman John Conyers has been proposing the same bill, The Commission to Study Reparation Proposals for African American Act, every year since 1989. Conyers has promised to continue to do so until it is passed into law. The bill number is H.R. 40—an acknowledgment of the never-fulfilled promise of forty acres of land and a mule as reparations to freed slaves in the 1860s.

Lately, popular momentum for the study of reparations proposals has been building. In 2006, the General Convention of the Episcopalian Church passed a resolution to “urge the Church at every level to call upon Congress and the American people to support legislation initiating study of and dialogue about the history and legacy of slavery in the United States and of proposals for monetary and non-monetary reparations to the descendants of the victims of slavery.” True to their word, representatives of the Episcopalian Church were present when H.R. 40 had its first ever Congressional hearing in December of 2007. However, without a greater number of supporters, it is unlikely that H.R. 40 will acquire sufficient momentum to be brought to the floor for a vote.

Congress, HUD, and other institutions may come up with a way to solve the shortage of affordable housing, or to remedy the harm that HOPE VI has caused. They may come up with a way to slow the pace of foreclosures or to bring the Gulf Coast Diaspora home. These are very important things to do. But these problems are symptoms, not the root cause. And without treating the cause, other symptoms are bound to crop up. In this decade, the symptoms of white superiority have meant over a thousand deaths in the Gulf Coast, the greatest collective loss of wealth that people of color have experienced in modern times, and the disruption and devaluing of hundreds of thousands of lives of people displaced. How can we, as a society, continue to let the deeper problem go untreated? And how many more “symptoms” can our national body withstand?

Although white people in the United States might not consciously think that they are better than people of color, we live in a society which rewards whiteness and puts people with brown and black skin at a disadvantage. And I believe that, on some fundamental level, each of us believes what we live.

If we, all the residents of the United States, truly believed in racial equality—if we all truly believed in justice—then we, as a nation, would acknowledge not only past injustices, but also the current injustices which continue to be an irrefutable part of our society. And then . . . we would work to change it.

Related Links:

Foreclosed: State of the Dream 2008. United for a Fair Economy. January 15, 2008.

Women More Likely to Receive Subprime Home Loans; Disparity Highest for Women with Highest Incomes. Consumer Federation of America. Dec. 7, 2006.