An Unstable Foundation And Racism In The Structure
July 05, 2007
Amaad Rivera is racial wealth divide director at United for a Fair Economy, a Boston-based national, independent, nonpartisan organization that puts a spotlight on the dangers of growing income, wage and wealth inequality in the United States and coordinates action to reduce the gap. This column was distributed by MinutemanMedia.org.
As we move into the future, how will this time in our country’s history be remembered? One significant memory will be how the American dream collapsed. Today, the disparities existing between the wealthy and the poor are the greatest since the Great Depression of 1929. At a time when building the American dream means owning a house, our country has completely failed to provide affordable housing, and the means to get it, to its citizens.
As the housing bubble continues to deflate, it leaves in its path a discarded group of individuals who spent the early years of the 21st Century striving to be part of the American dream. Many low-income people were led to believe that sub-prime loans—that is, loans with interest rates at least three percentage points higher than conventional loans—were their pathway to achieving the dream. But the sub-prime lending market was also the proverbial needle that popped that balloon, and its biggest victims were communities of color.
Today, there is a housing crisis in the United States.
While sub-prime lending has its place, too many practitioners use predatory and other unwise practices. Regulation has been poor. Around the country, we are seeing the results of predatory lending practices to low-income individuals and communities of color. According to the Mortgage Bankers Association, the percentage of U.S. mortgages entering foreclosure in the first three months of the year was the highest in more than 50 years.
Housing is an integral part of creating wealth for middle- and low-incomes families, as assets and wealth are the strongest determinants of current and future poverty. Historically in this country, wealth has meant the acquisition of assets, primarily land and housing. This is how the American dream has been built, but people of color have traditionally been excluded from this part of the dream.
Communities across the country are attempting to build their assets and to protect their families, partners and neighbors from predatory lending by shining a light on its dark back-alley dealings. In May alone, U.S. foreclosure filings surged 90 percent from a year earlier, as more homeowners fell behind on their monthly mortgage payments, according to RealtyTrac, Inc.
Louisiana, home to some of the most recent revelations of overt poverty and structural racism, has released several recent studies on the lending practices in its communities. The results of the studies are a reflection of a broken system that has taken dreams away from millions.
The studies found that low- to moderate-income people and minorities in Baton Rouge were more than twice as likely to receive sub-prime home loans as white non-Hispanics. Also alarming is that African-Americans in Baton Rouge have a higher percentage of sub-prime loans than in the United States as a whole.
In New Orleans, the trend is for sub-prime, high-cost loans to go to minority borrowers. Twenty-eight percent of all single-family home loans to whites in New Orleans were sub-prime, while approximately 50 percent of loans to African-Americans were sub-prime.
In the future, this country must provide real opportunities for all its children: Equality must be at the forefront. The sub-prime loan issue is a symptom of the larger disease of inequity. Two dreams, of rich and poor, black and white, cannot exist in a country that holds democracy as its cornerstone. Dr. Martin Luther King said at a National Urban League conference many years ago, "It is a trite yet urgently true observation that if America is to remain a first-class nation, it cannot have second-class citizens."
The urgency of this truth is still with us today.