1. Fair Credit and Fair Housing after the
Subprime Lending and Foreclosure Crisis
Mapping Inequity, Visioning Change:
A Forum on Fair Housing and Fair Lending
December 11, 2009
New Orleans, LA
Hosted by the Greater New Orleans Fair Housing Action
Center
Christy Rogers
The Kirwan Institute for the Study of Race and Ethnicity
The Ohio State University

2. This afternoon’s agenda
 Purpose
 To engage you and learn more about the nature of
fair housing and fair credit challenges in New
Orleans
 To incorporate your feedback into our broader
“blueprint” for the future of fair housing and fair
credit
 Agenda
Support for this the
 Short framing talk: The “Future of Fair Housing &
Kirwan Institute’s
Fair Credit” “Future of Fair
Housing” initiative is
 Small group brainstorming sessions
provided by the W.K.
 Report out and discussion Kellogg Foundation

3. About Kirwan
 Multidisciplinary applied
research institute
 Our mission is to expand
opportunity for all, especially for our
most marginalized communities
 Founded in 2003 by john powell
 Opportunity Communities Program
 Opening pathways to opportunity for
marginalized communities through
investments in people, places and
supporting linkages
 Opportunity mapping

4. Background: National Initiative on
Subprime Lending, Foreclosure and Race

5. What happened?
-Lack of loan
information or
More than Just understanding for
Foreclosures and a consumers in many of
Few Bad Borrowers: these communities
Understanding the
Credit Crisis Impact in
Communities of Color -Communities were
historically starved of
Why Were Subprime credit
Loans Concentrated
in These -Mortgage
Neighborhoods? securitization and the
growth of the subprime
industry created
incentives to target new
markets with
mortgages

6. From Redlining
to Reverse
Redlining

8. On the reverse side of the
coin, J. Hernandez shows how
areas in Sacramento with racially
restrictive covenants in the past
had the fewest loan denials
today…shows where prime credit
was steered.

9. Securitization
added layers of
complexity …
and fed
demand from
credit markets
for bundled
loans.
Figure by
Christopher L.
Peterson, Univ. of
Utah Law School

10. Research takeaways
 Unequal credit markets and segregated housing
happened together.
 Fair credit and fair housing (broadly defined) will
only happen together.
 Global finance has evolved against – and plays
out in – racially and economically segregated
neighborhoods.
 We need to know more about banking and finance
 Fair housing and fair credit is an issue for all of
us, but attention needs to be targeted to
marginalized communities.
 Otherwise, policies miss key opportunities and
challenges and miss those most affected by the
crisis.

11. Kirwan Goals and Objectives
 Make progress in fair housing in three areas:
 Improve access to fair financial options
 Affirmative community revitalization
 Opportunity-based housing
 Ensure that programs and policies responding to
the subprime crisis reach those most affected
 Connect and engage diverse stakeholders for
cross-cutting advocacy

12. Key Questions Moving Forward
 How do we best tell the story that we know? This
is important because the framing of the problem
shapes its solution.
 How do we climb out of the subprime lending and
foreclosure fiasco without worsening the already
widening opportunity gaps for communities of
color?
 Home ownership and mortgage lending
 Credit access, debt, leverage
 Banking, savings

13. Kirwan Initiative Design
 What?
 Understand new/current challenges and necessary
pathways to success
 Provide a comprehensive view of changes needed
 Provide resources and spark action among
advocates
 How?
 Input from advisory board
 Commissioned research from national experts
 Regional convenings (obtaining local expertise and
insight)
 Collaboration & policy consensus building with
national advocacy organizations

14. Activities
 Similar policy feedback from regional policy
meetings in Seattle, Detroit, and Austin (October –
November)
 Federal policy and advocacy consensus building
meeting on fair credit co-hosted by
Kirwan, PRRAC, National Council of La
Raza, Center for Responsible Lending, and
National Community Reinvestment Coalition
(Washington, DC -- November 18)
 The perspective on fair credit and fair
housing, particularly on consumer protection
advocacy, from the West Coast (Oakland, CA –
December 18)
 Final policy and advocacy “blueprint” – publicly
available (website & materials available early 2010)

15. Research directions
Commissioned work
Initial findings
Emerging areas of concern

16. Commissioned Research (Ex’s)
 Access to fair financial options (mortgage and
otherwise)
 Banks’ increasing reliance on fees…implications for
low-income customers and communities of color
 Discretionary pricing of financial products
 Consumer credit for those coming out of foreclosure
 Connect and engage diverse stakeholders
 What might an advocacy strategy around fair credit
and fair banking look like?
 What’s the role for philanthropies?

17. Commissioned Research (Ex’s)
 Affirmative community revitalization
 How has the subprime crisis exacerbated fair
housing and equitable community development
challenges?
(Minneapolis, Cleveland, Boston, Sacramento)
 How has the subprime and foreclosure crisis
affected low-income and undocumented immigrant
homeowners?
 Ensure that programs and policies responding to
the subprime crisis reach those most affected
 How do we assess the current federal policy
response with respect to fair housing and civil rights
goals? (TARP, NSP2)

18. Commissioned Research: Up
Next
 The Future of Fannie Mae and Freddie Mac
 Note, very little momentum around this in DC;
advocates busy with CFPA Act and CRA …is it
slipping out of advocates’ sights?
 Korman paper explores the (now-called) “regulated
entity” housing goals and the duty to serve
underserved markets through the lens of furthering
fair housing, both prior to and after HERA.
 Stanton paper explores how Fannie and Freddie
might support the mortgage market as government
corporations, i.e. funding new mortgages with lower
borrowing costs, improving consumer protection for
borrowers, supporting other government housing
programs, especially the FHA.

19. Early findings
Properties in Foreclosure in North Minneapolis (Mark
Ireland)
No Home in Indian Country (Janeen Comenote)
TARP Programs Must Affirmatively Further (DeeDee
Swesnick)

20. Properties in foreclosure
 Study of North Minneapolis
 Subprime lenders did disproportionate lending in
the area
 Vast majority of foreclosed mortgages issued
through mortgage broker (unregulated)
 CRL study: pay on avg. $35,000 more over life of
loan vs. sub-prime mortgage through retail lender
 Prime lenders disproportionately absent
 Foreclosed homeowners owed 4-5% more than
the original principal balance

21. Properties in foreclosure
 Under-reported, disproportionate affect on rental
families with school-age children
 Rental properties accounted for 61% of foreclosures
 40% of foreclosed households had children in
Minneapolis public schools; 60% were African
American
 Yet most foreclosure policies directed to
homeowners
 Properties lose value and endanger neighbors
 Averaged ten months to sell at average loss of
$65K
 83% of properties had 911 calls post-Sheriff’s
Sale, with an average of 8 calls per property

22. No Home in Indian Country
 On-reservation populations
 Federal government has legal and trust
responsibility to provide housing for Native people
 NAHASDA – Block grants to tribes and tribally
designated housing entities
 Currently able to meet 5% of need for housing
 Denial rate for conventional home purchase loans
of 23% -- twice that of Whites

23. No Home in Indian Country
 Off-reservation populations (majority of AI/AN
population in US)
 8-state study revealed the following barriers to
housing for urban Native people: credit checks, low
income, lack of affordable housing
stock, background checks, deposit/down payment
requirements
 Disproportionate number of Natives in homeless
shelter care, but very few projects serving the
Native community
 Little known about barriers to fair credit

24. TARP’s duty to affirmatively
further
 National Fair Housing Alliance advocacy
argument:
 Federal programs designed to mitigate the effects
of the financial crisis must meet their obligations
under the Fair Housing Act
 TARP scope close to $3 Billion
 TARP funds relate to housing and urban
development
 TARP funds must be spent in a way to
affirmatively further fair housing

25. Fair Housing Act requirements
 Federal programs designed to mitigate the effects
of the financial crisis must meet their obligations
under the Fair Housing Act
 “All executive departments and agencies shall
administer their programs and activities relating to
housing and urban development (including any
Federal agency having regulatory or supervisory
authority over financial institutions) in a manner
affirmatively to further the purposes of this
subchapter and shall cooperate with the Secretary
[of HUD] to further such purposes.” – Sec. 808(d)

26. Example: Home Affordable
Modification Program (HAMP)
 Funded by $75 Billion in TARP funds
 Incentivizes mortgage loan modifications to keep
families in their homes
 Civil rights & consumer groups had to advocate
for the collection and reporting of data on
race, ethnicity & sex of applicants for HAMP loan
modifications

27. DC Policy Roundtable:
Emerging Areas of
Concern
Overdraft fees
Remittance market

28. Embarrassing fee facts
 Half of overdraft fees are from small ATM/debit
purchases (the “$40 cup of coffee”)
 Some banks include the overdraft allowance in
the account balance shown at the ATM
 In undercover visits, GAO officials often couldn’t
get required disclosures detailing fees
 A handful of consumers pay the lion’s share of
fees (i.e. FDIC study showed that customers with
5 or more NSF transactions – 14% of customers -
- accounted for 93.4% of total NSF fees)

29. Civil rights concerns
 [Tree] People who overdraft repeatedly are more
likely than the general population to be lower
income, single, non-white, and renters
 Center for Responsible Lending. “Quick Facts on Overdraft Loans.”
April 9, 2009. http://www.responsiblelending.org/overdraft-
loans/research-analysis/
 [Forest] Incomes lag while housing, health
care, and education costs skyrocket…more
people get in more debt, but the picture is
uneven.

31. Remittance market
 Remittance transfers are segregated from other
financial services
 Remittances are largest interactions between
immigrants and the financial sector, yet the vast
majority (80-95%) goes through non-bank entities.
Results:
 Weak consumer protections (Appleseed working to get
into CFPA)
 Lack of access to other banking products
 Waste of asset building opportunities
 “Cash motivated” violence against immigrants
 High fees (Western Union and Money Gram charge
$12-50 fee per transaction)
 People are suspicious of bank pricing, don’t have
needed ID, or know of hand-to-hand alternatives
 Bank of America has offered free remittance service
since 2005…banks want new customers

32. Fair housing and fair credit in New
Orleans
 Group A: Barriers to / Best practices for access
to fair financial options, mortgage and otherwise
 Group B: Barriers to / Best practices for
affirmative community revitalization
 Group C: Barriers to / Best practices for
opportunity-based housing

33. Thank you!
Save the date; March 11-13, 2010

34. Appendix: Results from other
cities
Detroit, Seattle, and Austin

35. Topic Detroit (MI Roundtable) Seattle (Northwest Justice Project) Austin (Green Doors)
Unemployment / lack of
Sustainable education on financial options
Credit Barriers 1 (tie) Banks profit from subprime loans Access to information
Lack of relationships with
2 citizen-bankers Complexity of transactions Education (including immigrant)
Intentional bank
discrimination and targeting /
Lack of responsibility from Discrimination/lack of
3 banks for crisis (tie) People don't trust banks/ racism alternative options (tie)
Intermediary at community
Sutainable Alternative models of credit level to ensure equal treatment
Credit Solutions 1 mapped to community needs Legal enforcement of existing laws of similarly situated borrowers
Partership between health
insurers, housing (connection
Opportunity with Detroit Smaller/local banks (micro-banks, between bankruptcy and health
2 housing stock at low prices non-profits, credit unions) insurance status)
3 Local lending / micro-credit Enforce usury law Collaborations (city, NPO's)

36. Topic Detroit (MI Roundtable) Seattle (Northwest Justice Project) Austin (Green Doors)
City planning process / lack of
local resources (i.e. few local
affordable housing developers;
Neighborhood weak philanthropic
Revitalization Racism and history (job Lack of inclusion of residents in community)/ lack of resident
Barriers 1 segregation, etc.) process education and trust (tie)
Different neighborhood types
need different approaches/
Lack of access to public policy what is community
"Spatial mismatch" (jobs not leaders; minority aspiration?/Austin reality/ lack
2 in neighborhoods of need) underrepresentation of affordable housing (tie)
Lack of investment in Detroit Fragmentation of similar interest
(risk aversion) / cost of rehab groups/ revitalization is not
3 > cost of demolition (tie) creating new local jobs N/A
Neighborhood
Revitalization Stakeholder involvement early in Integrated vision for planning
Solutions 1 Education planning process and development
Education opportunities /
Employment / Re-think CRA Cultivate community leaders at inclusive housing, smart
2 (tie) grassroots level housing policies (tie)
Robust civic engagement/ more
Lack of people of color in Dedicated organizations to local funding & resources/
solutions (foundations, generate collaborative action leadership innovation /
3 development assistance) (move past 'niche' limits) stronger civic organizations

37. Topic Detroit (MI Roundtable) Seattle (Northwest Justice Project) Austin (Green Doors)
Lack of inclusionary Higher cost in high-opp'y
Opportunity- developments / Lack of neighborhoods / NIMBYism /
Based Housing knowledge of available units High-opp'y neighborhoods
Barriers 1 (tie) Discrimination -- all levels given "free ride (tie)
Housing prices, rents in high-
opportunity areas/ lack of
People don't think there is a enforcement of existing law / Affordable housing not
2 market for market-rate homes housng search suport barriers (tie) reaching intended market
Low-income people pushed out
of city / "Micro-inflation" from
Austin boom / affordable
housing is clustered in low-
Lack of affordable units in opp'y areas / gov't housing
3 suburbs N/A programs are inadequate (tie)
Opportunity-
Based Housing New economic/ financial Be more deliberate in housing Aggressive legal methods -- sue
Solutions 1 toolbox "site" methods the City and State
Come to terms w/ "gated
community, Disneyland"
phenomenon / Spend more $$
on affordable housing in high
opp'y areas / prioritize public
Make housing more central in owned land for affordable
Create inclusionary community planning (approach as housing / link job opp'ys with
2 dialogues/agendas regional issue) housing oppy's
Affordable housing targets for
each neighborhood in city /
Promote more "sweat-equity"
models / enforce existing fair
housing statutes / educate
Separate out issues to break people on integration / "sue
3 out interests N/A the ba***rds" (tie)