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Background: Although the rise in subprime lending and the ensuing wave of foreclosures was partly a result of market forces that have been well-documented, the foreclosure crisis was also a highly racialized process, according to a study by two Woodrow Wilson School scholars published in the October 2010 issue of the American Sociological Review.
“This study is critical to our understanding of the foreclosure crisis since it shows the important and independent role that racial segregation played in the housing bust,” said Rugh.
“While policy makers understand that the housing crisis affected minorities much more than others, they are quick to attribute this outcome to the personal failures of those losing their homes – poor credit and weaker economic position,” noted Massey. “In fact, something more profound was taking place; institutional racism played a big part in this crisis.”
The authors conclude that Hispanic and black racial segregation was a key contributing cause of the foreclosure crisis. “This outcome was not simply a result of neutral market forces but was structured on the basis of race and ethnicity through the social fact of residential segregation,” the authors note in the article.
“Ultimately, the racialization of America’s foreclosure crisis occurred because of a systematic failure to enforce basic civil rights laws in the United States,” the authors write in the article.
“In addition to tighter regulation of lending, rating, and securitization practices, greater civil rights enforcement has an important role to play in cleaning up U.S. markets. It is in the nation’s interest for federal authorities to take stronger and more energetic steps to rid U.S. real estate and lending markets of discrimination, not simply to promote a more integrated and just society but to avoid future catastrophic financial losses.”
- Jon Stewart Makes the Foreclosure Crisis Funny (observer.com)
- Study finds foreclosure crisis had significant racial dimensions (eurekalert.org)
- “”Racial Segregation and the American Foreclosure Crisis”” and related posts (isteve.blogspot.com)
- HR 3808 Veto Only Removes One Hurdle to Accountability for Foreclosure Fraud (news.firedoglake.com)
- Foreclosure Crisis Stalling Home Sales, Threatens Larger Economy (huffingtonpost.com)