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How “Occupy Our Homes” Speaks to Communities of Color

How “Occupy Our Homes” Speaks to Communities of Color

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John Griffith, Jasmin Jones, and Sophia Kerby discuss how the "Occupy Our Homes" movement relates to communities of color.
John Griffith, Jasmin Jones, and Sophia Kerby discuss how the "Occupy Our Homes" movement relates to communities of color.

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Published by: Center for American Progress on Dec 20, 2011
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1Center for American Progress | How “Occupy Our Homes” Speaks to Communities of Color
How “Occupy Our Homes”Speaks to Communities o Color
Housing is Essential to Economic Equality
Sophia Kerby, Jasmin Jones, and John GriithDecember 2011
Introduction
Te 99 Percen movemen hi Main Sree earlier his monh as proesers beganreclaiming bank-owned homes and oher properies a risk o oreclosure or evicion. Aciviss are gahering a homes o people such asMary Lee Ward , an 82-year-oldBrooklyn residen who is sruggling o end o oreclosure procedures on her home o 44 years aer alling vicim o a morgage renancing scam.Te home morgage marke is a worhy arge o he collecive angs o he 99 Percen.oday’s leaden housing marke has brough unmanageable deb and economic inse-curiy o millions o American amilies, while he nancial insiuions ha pursuedreckless lending policies and brough us a global nancial crisis have been given axpayerassisance and shown governmen leniency. As hanks, hese banks and Wall Sree rms have oreclosed on millions o homes sincehe housing crisis began—nearly hree million in 2010 alone—and an esimaed 7 mil-lion more are sill a serious risk, according o analysis romMorgan Sanley . Wih homepricesdown 30 percen rom heir peak  , abouone in ourhomeowners is currenly  “underwaer,” owing more on heir homes han he properies are worh.Indeed, he “Occupy Our Homes” proesers have pleny o be angry abou. As hey call or big banks o recognize heir duy o sruggling communiies across our counry,here should be no louder voices as par o hose “human microphones” han hose o people o color, who were hi especially hard by he housing crisis.Borrowers o color like Ms. Ward were disproporionally argeed or risky subprimemorgage loans as he housing bubble grew, resuling in a lopsided number o oreclosures when he bubble burs. oday, homeowners o color are a a higher risk o 
 
2Center for American Progress | How “Occupy Our Homes” Speaks to Communities of Color
oreclosure han heir whie counerpars. A he same ime, ighened credi sandardsin he wake o he nancial crisis have made i harder or borrowers o color o accessaordable morgages, possibly creaing new barriers o homeownership.o be sure, whie households, which ook ou he majoriy o high-cos, risky, and sub-prime loans, have been shaken by recen shocks in he housing marke. Bu no mater how  you measure i, communiies o color were a he epicener o he quake, and hey’re silleeling he aershocks. Tis issue brie explores wha happened and he consequences o predaory lending among communiies o color, and hen makes a series o recommenda-ions abou how o resolve he crisis so aply highlighed by he Occupy movemen.
Communities o color were a primary target o predatory lendingduring the housing bubble
 A major conribuor o he oreclosure crisis was he inroducion and rampan spreado predaory morgage producs such as adjusable-rae morgages wih pricing gim-micks designed o encourage poenial homeowners o borrow ar more han hey couldmanage. Much o his lending was done in he so-called privae-label securiies markecreaed by Wall Sree, wih many lenders ully aware ha borrowers would no likely beable o pay back he loan in ull.Communiies o color were disproporionaely argeed or hese predaory loans. Fordecades, hese areas had sruggled o ge access o good, radiional orms o credi. Ashe housing bubble grew beween 2004 and 2008, Arican-American or Laino borrow-ers wih “good credi” were almos hree imes as likely o receive risky subprime loanscompared o heir whie counerpars, according o heCener or Responsible Lending. Asian borrowers wih good credi were almos wice as likely o receive a risky adjus-able-rae morgage. All old, borrowers o color were more han30 percen more likely  o receive more cosly morgages, despie oen boasing credi raings and oher crediqualicaions ha would have enabled hem o ge a beter morgage.
 The ongoing oreclosure crisis disproportionately hit communities o color
 Arican-American and Laino borrowers are almos wice as likely o have been harmed by he oreclosure crisis, according o heCener or Responsible Lending. For loans origi-naed beween 2004 and 2008, roughly 25 percen o Arican Americans and Lainos haveeiher los heir homes o oreclosure or are a leas 60 days behind on heir morgage pay-mens, compared o jus 12 percen o heir whie counerpars. Te gap is even larger inneighborhoods o color, where oreclosure raes are almos hree imes hose in predomi-nanly whie areas, according oHarvard’s Join Cener or Housing Sudies.
 
3Center for American Progress | How “Occupy Our Homes” Speaks to Communities of Color
Tis dispariy persiss even aer adjusing or dierences in borrower incomes. Abou 10percen o higher-income Arican-American borrowers and 15 percen o higher-incomeLaino borrowers have los heir home o oreclosure, compared wih less han 5 percen o higher-income whie borrowers, according o heCener or Responsible Lending.
Homebuyers o color are much more likely to be “underwater” today
In general, homebuyers wih high deb and low equiy in heir home are a much higherrisk o deaul because hey probably are “underwaer”—hey owe more on heir homeshan he homes are worh. As o 2007, he median morgage deb among borrowerso color was abou 14 percen higher han ha o whie borrowers, while heir medianhome equiy was 27 percen lower, according o he Join Cener or Housing Sudies. A he same ime, homeowners o color were hi especially hard when home prices begano all. Te median value o homes owned by people o color ell 20 percen beween2007 and 2009, compared o jus 13 percen or whie-owned homes, according o hesamerepor. oday homeowners o color are much more likely o be underwaer: a recensurvey rom Fannie Mae esimaed ha 31 percen o morgage borrowers o color are cur-renly underwaer, compared o 23 percen o whie borrowers.
Communities o color ace new barriers to aordableand sustainable homeownership
Racial dispariy and discriminaion in morgage lending is nohing new and has been well-documened or decades, beginning wih a waershed 1992 repor rom heFederalReserve Bank o Boson. Since hen, ederal and sae governmens have aken meaning-ul srides o pu homebuyers o color on an equal playing eld, in eors o ensure haall crediworhy Americans have access o an aordable and susainable morgage loan.Tese made slow bu sure headway in reducing he racial homeownership gap hroughhe 1990s and early 2000s.Bu in he wake o he nancial crisis, privae lenders have drasically scaled back lendingaciviy by ighening underwriing sandards or morgage loans, wih serious conse-quences or communiies o color. Te Federal Housing Adminisraion, he govern-men-run morgage insurer ha’s oen considered he morgage indusrys “lender o las resor,” insured abou60 perceno Arican-American and Laino homebuyers in2009. By comparison, FHA insured jus 10 percen o Arican-American and 6 perceno Laino home-purchase loans a he heigh o he bubble in 2006.Since heir pos-2000 peak, homeownership raes have declined by abou 4 percenagepoins or black households and 2 percenage poins or Hispanic households, compared

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