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On October 11, 2009, when Isaac Dieudonne was two years old, his family moved into a new home in Miramar, Florida. As they began to unpack, young Isaac bounded out the front door in search of fun. The parents found him several minutes later, floating dead in the fetid pool of a foreclosed house. 

Since the financial crisis began in 2008, approximately 5.7 million properties have completed the foreclosure process, and stories like this begin to answer the critical question of what happens to all those homes. While many are resold, too often they fall into disrepair, creating blight that drags down property values and turns communities into potential deathtraps, attracting not just mosquitoes and mold, but crime and tragedy.

According to expert reports, this neglect occurs disproportionately in communities of color, part of a disturbing pattern. While the Supreme Court has reaffirmed the ability to use the Fair Housing Act to challenge discriminatory effects in neighborhoods, the nation’s neighborhood layout looks more segregated than ever, exacerbating the racial wealth gap. There’s no point in having an anti-housing discrimination law if it isn't vigorously employed to prevent a real societal division that drags down minority families. The Justice Department, free of uncertainty about the Fair Housing Act’s future, needs to work to realize the law's intended purpose.

The housing recovery has skipped more low-income neighborhoods.Fifteen percent of homes worth less than $200,000 are still underwater, where the borrower owes more on the house than it’s worth. This is compared to only six percent of homes over $200,000. Property values in low-income neighborhoods have not bounced back to the degree of their wealthier counterparts. 

An important study from Stanford University shows how this housing divide doesn’t align with socioeconomic status, but with race. Middle-class black households are more likely to live in neighborhoods with lower incomes than the average low-income white household. This creates fewer opportunities for minorities, as neighborhood poverty can predict the quality of schooling and the availability of jobs for the next generation. Areport from the American Civil Liberties Union shows that median household wealth for African-Americans continued to drop after the housing collapse, long after median wealth for whites stabilized. They project this to continue well into the next generation, with a drop in the average black family’s wealth by $98,000 more than it would have been without the Great Recession. 

Foreclosures are largely responsible for this widening disparity. Predatory lending was directed at minority homeowners. Subprime mortgages weregiven disproportionately to minority borrowers, and after the housing bubble collapsed, these loans failed at higher rates. Racial segregation prior to the crisis turned these neighborhoods into targets, with subprime lending specialists going door-to-door and luring even those who owned their homes outright into refinances with dodgy terms. Banks like Wells Fargo and Bank of America paid fines for pushing minority borrowers into subprime loans, even when they qualified for better interest rates. But these fines—$175 million and $335 million, respectively—were substantially lower than they paid for other bubble-era abuses. 

More black and Latino borrowers had their wealth exclusively tied up in their homes, and when they lost them, more of their wealth dissipated. Even after the collapse, the Federal Reserve found that from 2010-2013, net worth of nonwhite or Hispanic families fell 17 percent, compared to an increase of 2 percent for white families. 

This wealth transferred in part to Wall Street. Private equity and hedge funds scooped up hundreds of thousands foreclosed properties in low-income communities, and converted them into rentals. This prevented minority homeowners from benefiting from any return in property values, and displaced many from their neighborhoods. And a recent survey of community organizations finds that this has created higher rents and more transient neighborhoods. 

The Department of Housing and Urban Development, along with quasi-public mortgage giants Fannie Mae and Freddie Mac, auction off these homes to investors at a discount, according to a study from the Center for Popular Democracy. The U.S. Conference of Mayors recently passed a resolution urging these government lenders to sell instead to non-profits that would work to protect homes from foreclosure.

And then there is the disparate treatment of foreclosed properties repossessed by banks, known as real estate owned (REO). The National Fair Housing Alliance’s findings in 29 metropolitan areas indicate that REO in communities of color are twice more likely to have damaged doors and windows, overgrown weeds and trash on the premises and holes in the roof or structure. This violates the Fair Housing Act: Banks are responsible for maintenance and upkeep on all properties, and if they neglect that in black and Latino neighborhoods, the Justice Department can sanction them.

The failure to maintain foreclosed properties has multiple negative effects for communities. Blight creates health and safety concerns, acts asmagnets for crime, and lowers property values for neighboring homes. It also reduces the tax base for municipalities, as nobody pays property taxes on an empty house. The city of Detroit has already lost $500 million from foreclosures in the past few years; 78 percent of homes with subprime loans are know foreclosed or abandoned.

Last week, fifteen Senate Democrats, including leaders Chuck Schumerand Dick Durbin and ranking member of the Banking Committee Sherrod Brown, asked regulators to open an investigation into the treatment of foreclosed properties. “The same communities of color that were victimized by predatory lending may now be facing the double whammy of racial bias when it comes to the upkeep of foreclosed homes,” said Brown. But policing foreclosed properties would only begin to close the gap between white and non-white neighborhoods. 

The entire point of the Fair Housing Act, passed shortly after Martin Luther King’s death in 1968, was to reverse the findings of the Kerner Commission, that the country “is moving toward two societies, one black, one white — separate and unequal.” But reading through these statistics, you wouldn’t know the Fair Housing Act existed. We are further than ever from what Justice Anthony Kennedy described as the act’s “role in moving the Nation toward a more integrated society.” It has been impotent in the face of multiple discriminatory shots at people of color, which has opened up a historically large wealth gap and crippled their opportunity. 

Until we figure out another way for the middle class to build wealth other than purchasing a mortgage, the discriminatory effects of our housing system will further a permanent underclass among people of color in America. The Justice Department has an enormous amount of work to do.

Source: The New Republic

Young Philly Politics - December 18, 2012, by Councilmember Wilson Goode - As the federal government faces major decisions regarding our nation’s budget and fiscal policies, cities around the country are passing resolutions calling on the President and Congress to prioritize the revitalization of the economy, the creation of millions of new jobs, and a return to broadly-shared prosperity.

Led by members of Local Progress, the new national municipal policy network, over the past two weeks the cities of Baltimore, Cambridge, Chicago, Hallandale Beach, Philadelphia, New York, Seattle, and Yonkers have signaled their official support for a solution that avoids cuts to vital services for the most disadvantaged members of society or to Social Security, Medicare, or Medicaid benefits and that raises crucial revenue from the wealthiest two percent of Americans.

“Unwise cuts to federal spending inevitably shift costs onto states and municipalities, which, unlike the federal government, cannot cope with them through deficit spending,” said Joe Moore, a Chicago City Council Alderman. “Cuts to funding for housing, community development, public health, and public safety will deprive millions of poor Americans of basic necessities like food, medicine, and a home in a safe community.” The resolution introduced by Moore was supported by all 50 Aldermen.

“The American economy continues its slow and inadequate recovery from the Great Recession; twenty million people want to work full time but cannot; and a weak economy undermines the nation’s social fabric and deprives future generations of the opportunity to live rich and fulfilling lives,” said Chuck Lesnick, the Yonkers City Council President. “We need growth, not austerity.”

Source

KMOV St. Louis - March 5, 2015, by Steve Savard - About 12 people rallied outside the Federal Reserve Bank of St. Louis Thursday to protest the racial disparity in employment in the St. Louis region.

White unemployment in the St. Louis area is 5.7 percent, African American unemployment is 14.1 percent. Organizers said they want the Fed to adopt policies focused on getting more people get back to work.

“It’s not easy getting a job, when you are qualified even when you look the part,” one demonstrator said.

Organizers said the story of one attendee demonstrates the problem.

“When you do get the job, it’s something to get you buy, but it’s not a livable wage,” Ray Rounds said.

Rounds said he left a low paying job to go back to school at the Green Technology Training Program at St. Louis University.

“I’m certified in lead remediation, mold, asbestos, permit required confined spaces, hazardous material. I’ve got 17 of those certificates I was really proud of and I was ready to go to work,” Rounds said.

Rounds said he has not been able to land a job in the two years since he finished school.

“It’s pretty frustrating because with all I thought that I had accomplished. It’s meaningless because there are no jobs,” Rounds said.

Rounds has been attending rallies, working with churches and other organizations to try and make a difference. He hopes the contacts he has made will help him land a job.

Demonstrators also said they want to see more diversity on the Federal Reserve Board.

Source

An internal memo from a Starbucks executive this week urged store managers to "go the extra mile" to improve workers' schedules.

The letter was distributed on Tuesday and refers to a New York Times story that was set to be published the following day titled, "Starbucks falls short after pledging better labor practices."

The Times story referred to a survey by the nonprofit advocacy group Center for Popular Democracy.

Based on interviews with 200 baristas in 37 states, the survey says Starbucks "is not living up to its commitment to provide predictable, sustainable schedules to its workforce."

In 2014, Starbucks said it was changing its policies telling managers to post schedules at least a week in advance and not make store employees work an opening and closing shift back-to-back.

In this week's memo, Cliff Burrows, Starbucks (SBUX) group president of the U.S. and Americas, said the findings of the new survey "suggest" that neither commitment was being met -- "contrary to the expectations we have in place."

In his letter, Burrows urges managers to improve scheduling for coffee baristas, who the company calls partners.

"To our store managers, I want to stress that as we continue to evolve and improve the usability of our system, we have to go the extra mile to ensure partners have a consistent schedule -- free of back-to-back close and open shifts that are less than 8 hours apart -- that is posted 2 weeks in advance," he wrote.

Source: CNN Money