1. Fair Credit and Fair Housing after theSubprime Lending and Foreclosure Crisis Mapping Inequity, Visioning Change:A Forum on Fair Housing and Fair Lending December 11, 2009New Orleans, LAHosted by the Greater New Orleans Fair Housing Action CenterChristy RogersThe Kirwan Institute for the Study of Race and EthnicityThe Ohio State University

2. This afternoons 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 Institutes Fair Credit Future of FairHousing initiative is Small group brainstorming sessionsprovided by the W.K. Report out and discussionKellogg Foundation 3. About Kirwan Multidisciplinary appliedresearch institute Our mission is to expandopportunity for all, especially for ourmost marginalized communities Founded in 2003 by john powell Opportunity Communities Program Opening pathways to opportunity formarginalized communities throughinvestments in people, places andsupporting linkages Opportunity mapping 4. Background: National Initiative onSubprime Lending, Foreclosure and Race 5. What happened?-Lack of loaninformation or More than Just understanding for Foreclosures and a consumers in many of Few Bad Borrowers: these communitiesUnderstanding theCredit Crisis Impact inCommunities of Color -Communities werehistorically starved ofWhy Were Subprime credit Loans Concentrated in These -Mortgage Neighborhoods? securitization and thegrowth of the subprimeindustry createdincentives to target newmarkets withmortgages 6. From Redliningto Reverse Redlining 7. On the reverse side of thecoin, J. Hernandez shows howareas in Sacramento with raciallyrestrictive covenants in the pasthad the fewest loan denialstodayshows where prime creditwas steered. 8. Securitizationadded layers ofcomplexity and feddemand fromcredit marketsfor bundledloans.Figure byChristopher L.Peterson, Univ. ofUtah Law School 9. Research takeaways Unequal credit markets and segregated housinghappened together. Fair credit and fair housing (broadly defined) willonly happen together. Global finance has evolved against and playsout in racially and economically segregatedneighborhoods. We need to know more about banking and finance Fair housing and fair credit is an issue for all ofus, but attention needs to be targeted tomarginalized communities. Otherwise, policies miss key opportunities andchallenges and miss those most affected by thecrisis. 10. 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 tothe subprime crisis reach those most affected Connect and engage diverse stakeholders forcross-cutting advocacy 11. Key Questions Moving Forward How do we best tell the story that we know? Thisis important because the framing of the problemshapes its solution. How do we climb out of the subprime lending andforeclosure fiasco without worsening the alreadywidening opportunity gaps for communities ofcolor? Home ownership and mortgage lending Credit access, debt, leverage Banking, savings 12. 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 13. Activities Similar policy feedback from regional policymeetings in Seattle, Detroit, and Austin (October November) Federal policy and advocacy consensus buildingmeeting on fair credit co-hosted byKirwan, PRRAC, National Council of LaRaza, Center for Responsible Lending, andNational Community Reinvestment Coalition(Washington, DC -- November 18) The perspective on fair credit and fairhousing, particularly on consumer protectionadvocacy, from the West Coast (Oakland, CA December 18) Final policy and advocacy blueprint publiclyavailable (website & materials available early 2010) 14. Research directionsCommissioned workInitial findingsEmerging areas of concern 15. Commissioned Research (Exs) Access to fair financial options (mortgage and otherwise) Banks increasing reliance on feesimplications forlow-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 creditand fair banking look like? Whats the role for philanthropies? 16. Commissioned Research (Exs) Affirmative community revitalization How has the subprime crisis exacerbated fairhousing and equitable community developmentchallenges?(Minneapolis, Cleveland, Boston, Sacramento) How has the subprime and foreclosure crisisaffected low-income and undocumented immigranthomeowners? 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) 17. Commissioned Research: UpNext The Future of Fannie Mae and Freddie Mac Note, very little momentum around this in DC;advocates busy with CFPA Act and CRA is itslipping out of advocates sights? Korman paper explores the (now-called) regulatedentity housing goals and the duty to serveunderserved markets through the lens of furtheringfair housing, both prior to and after HERA. Stanton paper explores how Fannie and Freddiemight support the mortgage market as governmentcorporations, i.e. funding new mortgages with lowerborrowing costs, improving consumer protection forborrowers, supporting other government housingprograms, especially the FHA. 18. Early findingsProperties in Foreclosure in North Minneapolis (MarkIreland)No Home in Indian Country (Janeen Comenote)TARP Programs Must Affirmatively Further (DeeDeeSwesnick) 19. Properties in foreclosure Study of North Minneapolis Subprime lenders did disproportionate lending in the area Vast majority of foreclosed mortgages issuedthrough mortgage broker (unregulated) CRL study: pay on avg. $35,000 more over life ofloan vs. sub-prime mortgage through retail lender Prime lenders disproportionately absent Foreclosed homeowners owed 4-5% more than the original principal balance 20. 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 inMinneapolis public schools; 60% were AfricanAmerican Yet most foreclosure policies directed tohomeowners Properties lose value and endanger neighbors Averaged ten months to sell at average loss of$65K 83% of properties had 911 calls post-SheriffsSale, with an average of 8 calls per property 21. No Home in Indian Country On-reservation populations Federal government has legal and trustresponsibility to provide housing for Native people NAHASDA Block grants to tribes and triballydesignated housing entities Currently able to meet 5% of need for housing Denial rate for conventional home purchase loans of 23% -- twice that of Whites 22. No Home in Indian Country Off-reservation populations (majority of AI/AN population in US) 8-state study revealed the following barriers tohousing for urban Native people: credit checks, lowincome, lack of affordable housingstock, background checks, deposit/down paymentrequirements Disproportionate number of Natives in homelessshelter care, but very few projects serving theNative community Little known about barriers to fair credit 23. TARPs duty to affirmativelyfurther National Fair Housing Alliance advocacyargument: Federal programs designed to mitigate the effectsof the financial crisis must meet their obligationsunder the Fair Housing Act TARP scope close to $3 Billion TARP funds relate to housing and urbandevelopment TARP funds must be spent in a way toaffirmatively further fair housing 24. 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) 25. Example: Home AffordableModification Program (HAMP) Funded by $75 Billion in TARP funds Incentivizes mortgage loan modifications to keepfamilies in their homes Civil rights & consumer groups had to advocatefor the collection and reporting of data onrace, ethnicity & sex of applicants for HAMP loanmodifications 26. DC Policy Roundtable:Emerging Areas ofConcernOverdraft feesRemittance market 27. Embarrassing fee facts Half of overdraft fees are from small ATM/debitpurchases (the $40 cup of coffee) Some banks include the overdraft allowance inthe account balance shown at the ATM In undercover visits, GAO officials often couldntget required disclosures detailing fees A handful of consumers pay the lions share offees (i.e. FDIC study showed that customers with5 or more NSF transactions 14% of customers -- accounted for 93.4% of total NSF fees) 28. 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 skyrocketmore people get in more debt, but the picture is uneven. 29. Remittance market Remittance transfers are segregated from otherfinancial services Remittances are largest interactions betweenimmigrants and the financial sector, yet the vastmajority (80-95%) goes through non-bank entities.Results: Weak consumer protections (Appleseed working to getinto 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, dont haveneeded ID, or know of hand-to-hand alternatives Bank of America has offered free remittance servicesince 2005banks want new customers 30. Fair housing and fair credit in NewOrleans Group A: Barriers to / Best practices for accessto fair financial options, mortgage and otherwise Group B: Barriers to / Best practices foraffirmative community revitalization Group C: Barriers to / Best practices foropportunity-based housing 31. Thank you!Save the date; March 11-13, 2010 32. Appendix: Results from othercitiesDetroit, Seattle, and Austin 33. Topic Detroit (MI Roundtable)Seattle (Northwest Justice Project) Austin (Green Doors)Unemployment / lack ofSustainable education on financial optionsCredit Barriers 1 (tie)Banks profit from subprime loansAccess to informationLack of relationships with2 citizen-bankersComplexity of transactionsEducation (including immigrant)Intentional bankdiscrimination and targeting /Lack of responsibility fromDiscrimination/lack of3 banks for crisis (tie) People dont trust banks/ racismalternative options (tie) Intermediary at communitySutainableAlternative models of credit level to ensure equal treatmentCredit Solutions 1mapped to community needsLegal enforcement of existing lawsof similarly situated borrowers Partership between health insurers, housing (connectionOpportunity with Detroit Smaller/local banks (micro-banks, between bankruptcy and health2 housing stock at low pricesnon-profits, credit unions) insurance status)3 Local lending / micro-credit Enforce usury law Collaborations (city, NPOs) 34. TopicDetroit (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 philanthropicRevitalization Racism and history (job Lack of inclusion of residents in community)/ lack of residentBarriers 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 notleaders; 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/ANeighborhoodRevitalization Stakeholder involvement early inIntegrated vision for planningSolutions1 Education planning processand development Education opportunities / Employment / Re-think CRA Cultivate community leaders atinclusive housing, smart 2 (tie) grassroots levelhousing policies (tie) Robust civic engagement/ more Lack of people of color inDedicated organizations tolocal funding & resources/ solutions (foundations, generate collaborative action leadership innovation / 3 development assistance) (move past niche limits)stronger civic organizations 35. Topic Detroit (MI Roundtable) Seattle (Northwest Justice Project) Austin (Green Doors)Lack of inclusionaryHigher cost in high-oppyOpportunity-developments / Lack ofneighborhoods / NIMBYism /Based Housing knowledge of available unitsHigh-oppy neighborhoodsBarriers1 (tie) Discrimination -- all levelsgiven "free ride (tie)Housing prices, rents in high-opportunity areas/ lack ofPeople dont think there is a enforcement of existing law / Affordable housing not2 market for market-rate homeshousng search suport barriers (tie) reaching intended marketLow-income people pushed outof city / "Micro-inflation" fromAustin boom / affordablehousing is clustered in low-Lack of affordable units in oppy areas / govt housing3 suburbs N/A programs are inadequate (tie)Opportunity-Based Housing New economic/ financial Be more deliberate in housing Aggressive legal methods -- sueSolutions 1 toolbox "site" methodsthe City and StateCome to terms w/ "gatedcommunity, Disneyland"phenomenon / Spend more $$on affordable housing in highoppy areas / prioritize publicMake housing more central inowned land for affordableCreate inclusionary community planning (approach as housing / link job oppys with2 dialogues/agendas regional issue) housing oppysAffordable housing targets foreach neighborhood in city /Promote more "sweat-equity"models / enforce existing fairhousing statutes / educateSeparate out issues to breakpeople on integration / "sue3 out interests N/A the ba***rds" (tie)