Post Classifieds
DC Public Library Ad 4

For Black homeowners, Great Recession has yet to recede

By Freddie Allen/Senior Washington Correspondent
On July 13, 2015

Subprime loan recipients like Black homeowners are struggling well after recession.
Credit: BasicGov/Creative Commons

WASHINGTON (NNPA) – Most economists agree that the Great Recession, sparked by the housing market crash, officially ended in 2009, but the fallout from the crisis will continue to hurt Black families, especially Black homeowners, for decades to come, according to a new report commissioned by the American Civil Liberties Union (ACLU).

“In 2007, median wealth excluding home equity was $14,200 for [B]lacks as compared with over six times that amount, $92,950, for [W]hites. Home equity, therefore, made up 51 percent of total wealth for the typical [W]hite homeowner in 2007. For the typical [B]lack homeowner this same year, on the other hand, home equity constituted a far larger 71 percent of total wealth,” the report found.

The report continued: “The fact that [B]lacks hold the bulk of their wealth in home equity likely explains, at least in part, why [B]lack wealth, on a percentage basis, declined more than [W]hite wealth during the housing bust and subsequent Great Recession.

The report conducted by the Social Science Research Council found that even though Black families and White families lost wealth during the Great Recession, White families lost less and recovered faster than Black families.

White wealth levels, excluding home equity, showed signs of recovery between 2009 and 2011, measuring zero losses, while 40 percent of non-home-equity wealth held by the average Black family evaporated during the same period.

And while the typical Black family shed another 13 percent of their non-home-equity wealth, from 2009-2011, White families, on average, saw their home-equity wealth losses “slow to zero.”

“Not only were Black homeowners devastated by the housing market collapse, they are now being left behind,” said Rachel Goodman, a staff attorney with the ACLU’s Racial Justice Program. “It is very much a tale of two recoveries.”

The report said that between 2007 and 2009, the average White family lost 9 percent of the equity in their homes, compared to average Black homeowner who experienced a 12 percent fall in home equity.

“This disparity may stem from the fact that [B]lacks were more exposed to predatory loans and other types of toxic mortgages and ballooning interest rates as compared to whites, leading to disparate rates of delinquency and foreclosure,” the report said.

“By 2031, White wealth is forecast to be 31 percent below what it would have been without the Great Recession, while Black wealth is down almost 40 percent,” stated the report. “Without the Great Recession, by 2050, home equity values for Blacks and Whites whose parents or grandparents owned a home at some point between 1999 and 2011 may have approached parity. As a result of discriminatory lending practices and the Great Recession, our analysis suggests that the next generations of Black families will still have home equity values only 70 percent of their white counterparts.”

When Bank of America bought Countrywide Financial in 2008, the bank’s track record of troubling mortgage-lending practices and a discrimination case came with the deal. In 2011, Bank of America settled the case with the Justice Department for $355 million. The Department alleged that Countrywide had engaged in “discriminatory mortgage lending practices against more than 200,000 qualified African-American and Hispanic borrowers from 2004 through 2008.”

In 2012, the Justice Department settled a fair lending case with Wells Fargo Bank, over allegations that the financial institution, “engaged in a pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending from 2004 through 2009,” a statement for the Justice Department said.

Investigators also found that minorities were steered into subprime mortgage loans at higher rates than similarly qualified White borrowers.

The settlement included $184.3 million for minority borrowers and another $50 million in resources for direct down payments to help residents living in communities hit the hardest during the housing crash.

In the press release about the report, Sarah Burd-Sharps, the co-director of the Social Science Research Council’s Measure of America project, said that, “Steps can be taken right now to help close the growing racial wealth divide, and to ensure that the next generation has the benefits of assets and savings that bring a more secure future.”

The report recommended that policymakers closely monitor current lending practices at banks to protect low-income and minority borrowers from discrimination. The report also suggested that lawmakers clarify legislation governing access to credit and that they give regulators more power to guard consumers against racially disparate practices in servicing mortgage loans.

Get Top Stories Delivered Weekly

More districtchronicles News Articles

Recent districtchronicles News Articles

Discuss This Article

GET TOP STORIES DELIVERED WEEKLY

FOLLOW OUR NEWSPAPER

TODAY'S PRINT EDITION

Log In

or Create an account

Employers & Housing Providers

Employers can list job opportunities for students

Post a Job

Housing Providers can list available housing

Post Housing

Log In

Forgot your password?

Your new password has been sent to your email!

Logout Successful!

You just missed it! This listing has been filled.

Post your own housing listing on Uloop and have students reach out to you!

Upload An Image

Please select an image to upload
Note: must be in .png, .gif or .jpg format
OR
Provide URL where image can be downloaded
Note: must be in .png, .gif or .jpg format