Massachusetts ranks 50th in the homeownership gap in homeownership between whites and the rest of us. Our Senate is considering a vote to worsen the situation! Even when an alternative bill would help fix it!
When it comes to the differential in homeownership by race, Massachusetts is worst in the nation whites are 2.2 times more likely to own homes than people of color (Corporation Enterprise for Development 2013 study). That differential worsened measurably because of foreclosures.
The recent Demos/Brandeis study (May 2015) shows that closing two elements of the homeownership gap would have the largest impact on closing our racial wealth divide – one of the largest in US history. If we eliminate disparities in homeownership rates, the wealth gap between black and white households would shrink 31% and that between Latino and white households 28%. If we equalize the return on homeownership – for instance, remove the enticement of people of color into subprime loans by re-writing those loans to have equivalent characteristics to loans white borrowers mostly received in the last decade and a half – the black and white household wealth gap would shrink 16% and the Latino wealth gap 41%!
Finally, the Pew Charitable Trust in an exhaustive study showed the impacts on innocent borrowers saddled with subprime mortgage during the years of the highest foreclosures. Between the four years of 2005 & 2009, the median wealth of Latinos dropped 66% or 2/3rds; among black households it dropped 53% or more than half. Although not all of the drop of wealth in Asian households can be ascribed directly to subprime lending and foreclosures, wealth in Asian households dropped 54% — 1/3 of that wealth drop being ascribed to subprime mortgages and foreclosures.
As the Demos/Brandeis study pointed out, “from the continuing impact of redlining on American home ownership to the retreat from desegregation in public education, public policy has shaped these disparities, leaving them impossible to overcome without racially aware policy change”.
This is social context within which the Massachusetts Senate is being asked to consider Title Insurance industry proposed legislation that would, in effect, bless the financial industry’s illegal lending and foreclosures over the last 15 years. According to its filers, Senate 1981 is needed to protect potential new owner-occupants of foreclosed properties. The illegal foreclosure of a home clouds its title and it actually remains the lawful home of the existing Massachusetts homeowner. However, it is these very titles to foreclosed properties this legislation claims to strip from the legal owner and “to clear” – so they can be re-bought and the title industry can start making money insuring with little risk. A disproportionate number of those foreclosed residents are people of color and women head of households who were targeted for subprime mortgages (declared illegal by our SJC in 2008 Fremont case).
The title industry’s figures acknowledge that 40,000 of the 68,000 plus foreclosed residents probably have legitimate claim to their title. Advocates argue the numbers are much higher than that. Why should our government support the denial of the full range of access to justice to those whose properties were illegally taken in such large numbers? Should we not instead facilitate the return of tens of billions of dollars in wealth stripped through these widely acknowledged, illegal foreclosures – money drained from our state by national and international banks?
Protecting the constitutional property rights for people of color remains a challenge to the psyche of our nation: we at the Mass Alliance Against Predatory Lending and our allies call upon the Massachusetts Senate to reverse, not exacerbate the tragedy that has injured communities of color throughout Massachusetts.
Policy is driving the wealth gap and it is policy that will fix it. Reversing the disparate impact of foreclosures in our state is our shared, legal and moral goal. Instead, Senate 1981, if passed, will exacerbate Massachusetts’ ignominious claim to be the worst state in the nation in terms of racially disparate homeownership.
We know our state senators are probably the most sensitive constellation of senators the state has ever had when it comes to issues of racial disparity. While advocates point to the possibility of fair housing claims being raised if Senate 1981 passes, we think the moral issue alone is sufficient to stop our senators from voting for this bill once they understand what lies behind it.
The actual solution to Massachusetts’ ignominious gap in racial and housing wealth/foreclosures is a dedicated, temporary Foreclosure Review Court. Senate 871 has already been filed; the Senate can create and put it into practice now. This court would improve protection and access to justice for everyone – all foreclosed homeowners plus those looking to purchase the homes– needing a clear title to those properties. The Court will accomplish this urgent need in accordance with our state’s standing laws and our constitutional rights which courts are increasingly enforcing. In our shared future, it provides the policy vehicle to narrow Massachusetts’ legal and moral gap in homeownership.
A new court will address racial injustice – Senate 1981 exacerbates it!
Zakiya Alake, Volunteer Organizer
Union of Minority Neighborhoods
Grace C Ross
Coordinator
Mass Alliance Against Predatory Lending
