In her new book, Laura Gottesdiener puts faces to the facts of the subprime mortgage crisis; specifically the faces of black Americans, who are bearing the brunt of the scandal and have been thwarted from owning real property since Reconstruction.
Four months before the Civil War ended in 1865, Union General William T. Sherman issued Field Order 15, stipulating that 800,000 acres of land along the Georgia and South Carolina coast would be given to black freedmen. "Land redistribution," writes journalist Laura Gottesdiener in her new book, A Dream Foreclosed: Black Americans and the Fight for a Place to Call Home, "was central to the North's emancipation program - a recognition that land ownership was nearly synonymous with personhood in this era."
Not surprisingly, intense backlash on the part of slavery's defenders led then-President Andrew Johnson to reverse the order; it was replaced with a sharecropping system that kept the formerly enslaved in near bondage. As a result, the American dream of home and land ownership was trampled for most African Americans and as Jim Crow took hold, the Great Migration - which Gottesdiener describes as "the pursuit of freedom, full personhood and home through journey" - scattered thousands of Southern blacks, often sending them into overcrowded and impoverished urban centers, where property ownership was a close-to-impossible dream.
Almost a century later, in the aftermath of World War II, the Federal Housing Administration added insult to injury by providing low-interest loans for home purchases exclusively to whites. It was only in 1968, with passage of the Fair Housing Act, that discrimination in lending was finally declared illegal.
Sadly, the act did not end the practice. Instead, a policy called redlining rendered many low-income and minority areas out of bounds for conventional loans. Community housing activists challenged these discriminatory practices throughout the 1970s and 80s, never anticipating that predatory lending would eventually gain a toehold in economically precarious neighborhoods, especially these populated by people of color.
But it did, and Gottesdiener reports on the impact, making clear that while many disenfranchised communities have been affected, the African American community has been slammed hardest. "Black families and neighborhoods have been victimized by bankers' predatory loans and illegal mortgage servicing practices," she writes. "Compared to white Americans, African Americans are twice as likely to be forced from their homes through bank-pursued evictions." Worse, she notes, The Center for Responsible Lending has estimated that 25 percent of African American families who purchased new homes or refinanced their mortgages during the 1990s and early 2000s could lose these homes before the economic crisis ends.
It's a staggering - and scandalous – finding, and Gottesdiener interviewed scores of people who are bearing the brunt of unscrupulous lending policies. She also interviewed dozens of public housing tenants to examine the aftershocks caused by the federal government's reluctance to build and maintain permanent rental units for low-income people. She subsequently zeroes in on four households - two renters and two homeowners - all of whom eventually became advocates for housing justice. By telling their heart-rending stories, Gottesdiener exposes the fissures and cracks in domestic housing policy.
The book is an invaluable introduction to a system that has booted more than 10 million US residents out of their homes since 2007.
The story of Martha Biggs and her four children is particularly poignant. After being evicted from her apartment in a Chicago public housing complex, the family bounced between family members for several months. When the welcome began to wear thin, they started sleeping in Biggs' car. Then, an anonymous complaint to the state Department of Children and Family Services forced Biggs to split the family up, with each child going to a different relative. Thankfully, the account has a relatively happy ending - Biggs and her children ultimately reunited and began to squat in an abandoned home that they fixed up. In addition, she became a vocal organizer for tenants' rights and against foreclosure. Nonetheless, the trauma of being homeless is not something that is easily shaken off. In fact, during the worst period, Jujuanna Walker, one of Biggs' teenaged daughters, attempted suicide. "I hated what we were going through and just wanted it to stop," she told Gottesdiener. Even now, despite relative stability, the fear of again becoming undomiciled hovers over her.
However, as Gottesdiener repeatedly emphasizes, Biggs and many other foreclosed minorities (and whites) are fighting back and holding their own against the banks. It's not for the weary, but with courage, tenacity, innovation and community organizations, the predatory lenders can sometimes be outfoxed.
Other stories are similarly compelling. Like Biggs, Michael Hutchins of Chattanooga, Tennessee, found himself on the cusp of homelessness after the city announced that it was considering a plan to convert the public development he lived in into mixed-income housing with private residences abutting public ones. Hutchins, a disabled man, knew that in places where similar conversions had taken place, poor people like himself had lost their homes. In fact, in cities across the country, thousands of units of public housing have been demolished, a scheme that opened the door to the construction of high-end dwellings on newly vacant land. "In 2000," Gottesdiener writes, "Chicago launched a plan for transformation that destroyed 25,000 units of public housing." A few years later, Hurricane Katrina gave the New Orleans government the pretext to tear down an additional 5,000 units, a particular travesty given the post-storm need for shelter. Other cities have also gotten on the demolition bandwagon, razing buildings that had housed low-income tenants for 60-plus years. In many cases, the destruction of much-needed public housing provided a quick route to gentrification and profit for those who were politically well-connected.
These facts pushed Biggs to join his neighbors in challenging Chattanooga's conversion proposal, and the grassroots effort has, to date, been successful in forestalling the effort to demolish his home and community.
Then there's the example of Bertha Garrett, an elderly woman with 18 grandchildren. Bertha had lived in Detroit for decades, and she and her husband, William, had paid off their $40,000 mortgage. Somewhat surprisingly, the pair took out a second mortgage in 1998 for $45,000 after someone from Conti Mortgage and Lending called Ms. Garrett. "They told me that I needed to invest in the equity of my home, and that an adjustable-rate mortgage would set me up for investments," Bertha told Gottesdiener.
"It was a common ploy used in the late 1990s," Gottesdiener explains. "Call up someone - often an older woman - who wouldn't necessarily take out a loan and tell her all about how her money was just sitting there, wasting away, when it could be used to better her family's future. Bertha and William had children in college and ministry school, and an extra year's tuition sounded like a good idea."
Bertha signed on the dotted line and lickety-split, the $45,000 ballooned to a whopping $190,000.
The Garrett's had been duped, and the upshot was that they were suddenly at risk of losing the home their family had lived in for 22 years. More galling, it was a dwelling they had once owned outright.
But Bertha put on her boxing gloves, got support from home justice groups and the community, and fought the system. Among various acts of resistance, including what is known as a building blockade to protect homeowners from eviction, Bertha literally put her body on the line. She lay in front of downtown Detroit door of the New York Mellon Corporation, which had foreclosed on her home and was attempting to take possession of it, and Bertha wouldn't budge: the door could not be opened to allow employees out of the office.
As another eviction attempt was underway, Bertha got a call from her lawyer. Mellon had relented. The publicity and widespread organizational support that she was receiving (including from Detroit unions) was focusing a media klieg light on Mellon that it wanted turned off. They offered to sell her house back to her for $12,000. As Gottesdiener writes about the moment Bertha signed the re-ownership papers: "Her whole sixty-five-year-old body felt numb as she scrawled her signature in order to finally be safe in the place that was already her home."
Gottesdiener's reporting about the intentional targeting of communities of color is full of grotesque details and horrific anecdotes. This is made more infuriating by the fact that the main culprits - including Bank of America, Wells Fargo and Sun Trust - have gotten barely a slap on the wrist for their duplicity and various violations of the law and regulations.
It seems remarkably like a housing shock doctrine.
That it is shortsighted goes without saying. "Every single foreclosure costs the government approximately $2,000 in lost property tax revenue, according to an analysis of foreclosures in California," Gottesdiener adds. "Additionally, local city governments are forced to carry out the evictions and absorb other foreclosure-related costs, which average just over $19,000 per house. Foreclosures in the Detroit area have cost upwards of $220 million in lost property tax revenue."
Despite these heinous revelations, Gottesdiener weaves a tale of growing resistance through A Dream Foreclosed. Hundreds of housing justice organizations are joining with other activists, hunkered down for a long struggle on behalf of defrauded homeowners against the banks. Ironically, the foreclosure crisis is creating a revitalized sense of community where the struggles for home ownership turn into personal and activist defiance.
The federal government is still, to this day, generally siding with the predatory lending looters -- giving them fines that don't change behavior and the right to claim their innocence.
But the scrappy, family-oriented people Gottesdiener describes in her book are ready for a fight.
They are -- despite the wealth, power, and largely unhelpful government stacked against them -- standing their ground.