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Read also: The Fair Housing Act at 45
The meltdown of the home mortgage market, the scourge of foreclosures, and the decimation of family and community assets that have ravaged the U.S. economy affect virtually every American and our nation as a whole. At the same time, communities of color have been especially hard hit by the crisis, in uniquely damaging ways that are potentially long lasting. This fact sheet documents the role that discrimination and unequal opportunity have played in the home opportunity crisis, as well as some of the harm that those practices have caused to our nation.
Key findings include:
Homeownership has long been an important steppingstone to the middle class for African Americans, Asian Americans, and Latinos, and the crisis struck at a time when access to homeownership had only recently opened up to these families on a significant scale. As politicians removed banking and consumer protections and neglected fair housing and lending enforcement, unscrupulous lenders and brokers targeted communities of color for risky subprime loans with high rates, exorbitant fees, and frequently deceptive terms. The racial targeting was made easier by America’s legacy of residential segregation, and by the relative lack of traditional banks in many communities of color. Millions of black and Latino homeowners—many of whom qualified for standard 30-year fixed mortgages—were marketed subprime loans that were destined to fail. Indeed, higher income African Americans were especially likely to receive risky loans, as compared with similarly qualified white homeowners.
Not surprisingly, then, families and communities of color have been especially hard hit by the fallout of the home opportunity crisis, in terms of lost homes and dislocation, diminished assets and credit, and neighborhoods dotted with foreclosed and shuttered properties. Some experts have predicted that the economic crisis will represent the greatest loss of wealth to the black community since the end of Reconstruction.
Conversely, effective and inclusive solutions to the crisis are especially important to the progress and equal opportunity of communities of color, as well as to the nation as a whole. This requires both general approaches that prevent foreclosures and restore communities across the board, as well as equal opportunity and civil rights approaches that target the particular harm that discriminatory practices and violations of fair housing and lending laws continue to cause in communities of color.
Housing, consumer protection, economic, and civil rights experts have assembled the most promising of those solutions in a Compact for Home Opportunity. The Compact is part of the Home for Good campaign, which calls for adopting the concrete, effective, and inclusive remedies that are needed to promote greater and more equal home opportunity for all.
What follow are the specifics of the impact of the home opportunity crisis on people of color.
Housing discrimination, residential segregation, and unfair lending practices against people of color were long a feature of the U.S. home opportunity landscape. Civil rights laws like the Fair Housing Act and Equal Credit Opportunity Act have helped to reduce those practices, but have not eliminated them. These discriminatory patterns served as the foundation for unequal home opportunity in the current era.
During the 1990s, the rise of subprime lending and mortgage securitization created the tools and incentives that led subprime specialists to target communities previously denied access to conventional credit—especially African-American and Latino communities and families. Unscrupulous lenders sold these high-cost loans, which were originally intended as a temporary credit accommodation, to people who qualified for prime loans, and also to borrowers with weak credit who could not afford the loans.  Lenders intensified these unethical practices in response to increasing demand from financial firms that bundled subprime mortgages into securities products. 
Over time, a “dual mortgage market” developed, in which different racial and ethnic communities were offered “a different mix of products and by different types of lenders,” and subprime lenders “disproportionately target[ed] minority, especially African American, borrowers and communities, resulting in a noticeable lack of prime loans among even the highest-income minority borrowers.  A large body of research documents these policies. For example:
In addition to targeting minority communities for risky subprime loans, many big and small institutions within the lending industry also discriminated against communities of color in the terms, conditions, and cost of the loans they did offer.
Discriminatory treatment continues even after foreclosure. A detailed undercover investigation by the National Fair Housing Alliance and several regional partners found not only that banks too frequently fail to maintain foreclosed properties that they own, but that they tend to neglect their properties in communities of color at a much higher rate, with devastating consequences. A large number of the neglected, bank-owned properties have broken or missing doors and windows, inviting vandalism and trespassers. And many have safety hazards that endanger the public. Those and other defects are significantly more prevalent in bank-owned properties located in communities of color. Another finding is that, on average, the banks are not marketing houses located in communities of color as aggressively to individual homebuyers as they do properties in white neighborhoods. The properties in white neighborhoods are, for example, more likely to have clear and professional “for sale” signs. When banks both poorly maintain and market foreclosed houses, the properties tend to stay vacant longer and to eventually be sold to speculators, rather than to people who would make the houses their home. 
The lack of adequate fair housing and lending rules and enforcement was a significant contributor to the foreclosure crisis and its unequal impact. This neglect was particularly egregious during the Bush Administration, but some troubling patterns continue today.
The combination of misconduct by banks and brokers, inadequate rules and enforcement, and record long-term unemployment have devastated the home opportunity and assets of millions of Americans, with communities of color shouldering a disproportionate and devastating burden.
Concrete, pragmatic solutions exist that can address these discriminatory patterns and their aftermath while expanding opportunity and economic prosperity for all Americans and rebuilding our economy. In coalition with housing, consumer protection, economic, and civil rights experts, The Opportunity Agenda has assembled a Compact for Home Opportunity, containing over a dozen strategies designed to promote successful homeownership, fair housing and lending, and the restoration of community and family assets. For more information on the Compact, visit www.opportunityagenda.org/compact_home_opportunity.
 Department of Housing and Urban Development and Department of the Treasury, Curbing Predatory Home Mortgage Lending (2000); Ira Goldstein with Dan Urevick-Ackelsberg, The Reinvestment Fund, Subprime Lending, Mortgage Foreclosures and Race: How Far Have We Come And How Far Have We To Go? (2008).See, e.g., KATHLEEN C. ENGEL AND PATRICIA A. MCCOY, The Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps 56-58 (2011).
 See, e.g., KATHLEEN C. ENGEL AND PATRICIA A. MCCOY, The Subprime Virus: Reckless Credit, Regulatory Failure, and Next Steps 56-58 (2011).
 William C. Apgar, Jr. and Allegra Calder, The Dual Mortgage Market: The Persistence of Discrimination in Mortgage Lending, in THE GEOGRAPHY OF OPPORTUNITY: RACE AND HOUSING CHOICE IN METROPOLITAN AMERICA 102 (Xavier De Souza Briggs, ed., 2005). See also William C. Apgar, Jr., Christopher E. Herbert and Priti Mathur, Department of Housing and Urban Development, Risk or Race: An Assessment of Subprime Lending Patterns In Nine Metropolitan Areas (Aug. 2009), http://huduser.org/Publications/pdf/risk_race_2011.pdf.
The report is available at http://opportunityagenda.org/home_ownership_and_wealth_building_impeded.
 Debbie Gruenstein Bocian, Keith S. Ernst and Wei Li, Center for Responsible Lending, Unfair Lending: the Effect of Race and Ethnicity on the Price of Subprime Mortgages 3 (May 31, 2006), http://www.responsiblelending.org/mortgage-lending/research-analysis/rr011-Unfair_Lending-0506.pdf.
 Debbie Gruenstein Bocian, Wei Li, Carolina Reid, and Roberto G. Quercia, Center for Responsible Lending, Lost Ground, 2011: Disparities In Mortgage Lending and Foreclosures 5 (2011), http://www.responsiblelending.org/mortgage-lending/research-analysis/Lost-Ground-2011.pdf.
Jacob S. Rugh and Douglas S. Massey, Racial Segregation and the American Foreclosure Crisis, 75 AM. SOC. REV. 629, 644 (2010).
 The consent decree, complaint, and Justice Department press release are available at http://www.justice.gov/opa/pr/2012/July/12-dag-869.html.
 The DOJ press release is available at http://www.justice.gov/opa/pr/2011/December/11-ag-1694.html.
The complaint is available at http://www.justice.gov/crt/about/hce/documents/primelendcomp.pdf.
The settlement agreement is available at http://www.justice.gov/crt/about/hce/documents/candfsettle.pdf. The complaint is available at http://www.justice.gov/crt/about/hce/documents/candfcomp.pdf.
 The settlement agreement is available at http://www.justice.gov/crt/about/hce/documents/mbcsettle.pdf. The complaint is available at http://www.justice.gov/crt/about/hce/documents/midwest_bankcentre/mbc_complaint.pdf.
 The settlement agreement is available at http://www.justice.gov/crt/about/hce/documents/citizenssettle.pdf. The complaint is available at http://www.justice.gov/usao/mie/downloads/cases/citizenscomp.pdf.
 Settlement Agreement, Thompson v. HUD, No. MJG 95-309 (D. Md. filed August 24, 2012), http://portal.hud.gov/hudportal/documents/huddoc?id=Thom_v_HUDSetAgr82412.pdf.
 Department of Housing and Urban Development, “Court Approves Final Settlement Thompson v. HUD,” press release, November 20, 2012, http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-174.
 The ACLU press release is available at http://www.aclu.org/racial-justice/morgan-stanley-sued-racial-discrimination-pushing-predatory-loans-black-homeowners. The complaint is available at http://www.aclu.org/racial-justice/adkins-et-al-vs-morgan-stanley-0.
 The NFHA press release is available at http://www.nationalfairhousing.org/Portals/33/News%20Release%20Bank%20of%20America%20Midwest%20121023%20%283%29.pdf%20final.pdf. The complaint is available at http://www.nationalfairhousing.org/Portals/33/Bank%20of%20America%20Complaint%2010%2023%202012%20FINAL.website.pdf.
 National Fair Housing Alliance, The Banks Are Back – Our Neighborhoods Are Not: Discrimination in the Maintenance and Marketing of REO Properties, April 3, 2012, http://www.nationalfairhousing.org/Portals/33/the_banks_are_back_web.pdf.
 78 Fed.Reg. 11460 (Feb. 15, 2013), available at http://portal.hud.gov/hudportal/documents/huddoc?id=discriminatoryeffectrule.pdf and GPO website at www.gpo.gov/fdsys/pkg/FR-2013-02-15/pdf/2013-03375.pdf. Department of Housing and Urban Development, “HUD Issues Rule Formalizing Standard on Discriminatory Effects in Housing,” press release, February 8, 2013, http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2013/HUDNo.13-022
 Leadership Conference on Civil and Human Rights, The Future of Fair Housing (2008), available at http://www.civilrights.org/publications/reports/fairhousing/.
 Debbie Gruenstein Bocian, Wei Li, Carolina Reid, and Roberto G. Quercia, Center for Responsible Lending, Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures (2011), http://www.responsiblelending.org/mortgage-lending/research-analysis/Lost-Ground-2011.pdf.
“AAPIs Experience Significant Loss of Home Equity,” AsianWeek.com, January 29, 2011, http://www.asianweek.com/2011/01/26/aapis-experience-significant-loss-of-home-equity/.
 Katrin B. Anacker, James H. Carr, and Archana Pradhan, Analyzing Foreclosures Among High-Income Black/African American and Hispanic/Latino Borrowers in Prince George’s County, Maryland, 39 HOUSING AND SOCIETY Issue 1, 1–28 (2012).
 Debbie Gruenstein Bocian, Wei Li, and Keith S. Ernst, Center for Responsible Lending, Foreclosures by Race and Ethnicity: The Demographics of a Crisis 11 (June 18, 2010), http://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-and-ethnicity.pdf. See also James H. Carr, Katrin B. Anacker and Michelle L. Mulcahy, National Community Reinvestment Coalition, The Foreclosure Crisis and its Impact on Communities of Color: Research and Solutions 31 (Sept. 2011) (discussing the racial wealth gap), http://www.ncrc.org/images/stories/pdf/research/ncrc_foreclosurewhitepaper_2011.pdf.
 James H. Carr and Katrin B. Anacker, National Community Reinvestment Coalition, Long Term Social Impacts and Financial Costs of Foreclosure on Families and Communities of Color: A Review of the Literature 3 (Oct. 2012), available at http://www.scribd.com/doc/117147307/Foreclosure-on-Communities-of-Color-2.
 Federal Housing Finance Agency Office of Inspector General, FHFA Should Develop and Implement a Risk-Based Plan to Monitor the Enterprises’ Oversight of Their Counterparties’ Compliance with Contractual Requirements Including Consumer Protection Laws 2, March 26, 2013, http://fhfaoig.gov/Content/Files/AUD-2013-008_0.pdf.
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