{"id":1568,"date":"2011-07-31T10:29:58","date_gmt":"2011-07-31T14:29:58","guid":{"rendered":"https:\/\/tremblethedevil.com\/?p=1568"},"modified":"2011-08-26T08:06:40","modified_gmt":"2011-08-26T12:06:40","slug":"the-color-of-money","status":"publish","type":"post","link":"https:\/\/tremblethedevil.com\/?p=1568","title":{"rendered":"the color of money"},"content":{"rendered":"

\"\"<\/a><\/p>\n

(learn more about the book at the “Ask Me Anything” on Reddit<\/a>)<\/strong><\/p>\n

A newly released report from the Pew Research Center about the inescapably color-coded impact of the recent recession brought some startling data to light<\/a>: the median net-worth of a white family is now 20 times that of a black family, nearly doubling the size of the pre-recession gap.\u00a0 The wealth differential between whites and minorities in America is now at an all-time high, a startling reality that was reported on by many major news organizations.<\/p>\n

But no one explored the long-standing economic disparities that existed between races in America long before the current economic crisis emerged, or even attempts to get to the root of the issue.\u00a0 Roots which extend back to the birth of sub-prime mortgages, an industry that wasn’t about classifying the mortgages themselves but instead about categorizing and labeling the people applying for them based on one important and decisive factor.<\/p>\n

Plenty of articles<\/a> mentioned the fact that between 2005 and 2009 although white families saw their median wealth fall by 16%, blacks watched their median wealth plummet 53%.\u00a0 Much of the disparity is accounted for by the Pew Research Center as a result of declines in media home equity, but why should black and white homes have such different values?<\/p>\n

Eminem seemed to have no sense of the irony that was invoked as his self-consciously white autobiographical film, 8 Mile<\/em>, highlighted the hopeless plight of Detroit’s urban black community that’s existed for generations. The 8 Mile district was created in 1941, when a six-foot wall was built around a black enclave that was deemed unfit to accept loans from the Federal Housing Administration. This was “part of a system that divided the whole city, in theory by credit-rating, in practice by colour.” And so the segregation that emerged in Detroit “was not accidental, but a direct consequence of government policy.”1<\/a><\/sup><\/p>\n

<\/p>\n

This policy of segregated mortgages became known as “red-lining,” and by the 1950s blacks and whites were taking out mortages with drastically different interest rates.2<\/a><\/sup>\u00a0 After all, sub-prime was originally coined to describe the people receiving the loans, and was simply code for “black.”<\/p>\n

\"\"<\/a><\/p>\n

Hotlanta served as a case study for mortgage-based racism, as a Pulitzer-winning series in the Atlanta Journal and Constitution<\/em>\u00a0 so aptly captured.<\/p>\n

It showed how blacks were routinely rejected for loans which whites in a comparable economic situation were accepted for. And this phenomenon wasn’t isolated to one city, as a 1991 study showed that out of 6.4 million mortgage applications nationwide, even after income was controlled for – blacks were rejected twice as often as their white counterparts. However that wasn’t the worst of it, in urban centers such as Boston, Philly, Chicago, Minneapolis, blacks were rejected three-times<\/em> more often than whites.3<\/a><\/sup><\/p>\n

Even well-to-do blacks have been unable to escape from this institutional prejudice.<\/p>\n

Wealthy black neighborhoods in the DC suburbs have a much tougher time getting loans than low-income white areas, and in Boston blacks living on the exact same street as their white neighbors and earning similar incomes found it much tougher to get a mortgage than their white neighbors. Joe Kennedy summed up the cumulative effect of this racial injustice well, describing “an America where credit is a privilege of race and wealth, not a function of ability to pay back a loan.”4<\/a><\/sup><\/p>\n

With home equity making up 44% of an average American’s family’s net worth and fully 60% among our middle class,5<\/a><\/sup> the statistics around homeownernship help vividly delineate the racial schisms of American wealth. Not only do blacks pay higher interest rates, have higher downpayments, have less access to credit, get turned down more frequently for loans no matter what’s controlled for, and pay what amounts to an 18% “segregation tax” because homes in black neighborhoods have much less equity than homes in white neighborhoods6<\/a><\/sup> – but since 1970 black homes have appreciated in value roughly half as much as white homes.7<\/a><\/sup>
\n<\/p>\n

This policy of segregated mortgages became known as “red-lining,” and by the 1950s one in five black borrowers was paying interest at over 8%, while it was about impossible to find a white family paying more than 7%.8<\/a><\/sup><\/p>\n

And yet this economic line extends far past that generation. The fact that blacks are foreclosing at a much higher rate than whites in the current crisis was predestined by the conditions of the loans they received, as banks turn down equally-qualified blacks much more often than whites, and forced blacks to pay higher interest on their loans. Housing values are indelibly color-coded, as the average value of a white house appreciates much quicker than a black house. All of this snowballed into a collective institutional bias that cost black families at least $82 billion even before this current crisis began.9<\/a><\/sup><\/p>\n

The city of Baltimore partly captures how higher-rate loans to blacks have affected foreclosure rates, with several Wells Fargo loan officers testifying<\/a> that they targeted “mud people” for “ghetto loans,” resulting in 71% of foreclosures in that city being made on black homes in recent years. And so, even when income and credit score are controlled for, across the nation blacks are more than three-times more likely than whites<\/a> to have their home foreclosed and be thrown out into the streets.<\/p>\n

America may have nominally advanced from “separate but equal,” however the reality of racial disparity still haunts the bottomlines of black mortgages and checkbooks, holding them back from fully embracing the dream we’re all supposed to share.<\/p>\n","protected":false},"excerpt":{"rendered":"

(learn more about the book at the “Ask Me Anything” on Reddit) A newly released report from the Pew Research Center about the inescapably color-coded impact of the recent recession brought some startling data to light: the median net-worth of a white family is now 20 times that of a black family, nearly doubling the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[19,30,44,59,29,58,35],"class_list":["post-1568","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-civil-unrest","tag-income-inequality","tag-innercity-violence","tag-mortgage-crisis","tag-racial-wealth-disparity","tag-redlining","tag-the-new-jim-crow"],"yoast_head":"\nthe color of money - Tremble the Devil<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/tremblethedevil.com\/?p=1568\" \/>\n<link rel=\"next\" href=\"https:\/\/tremblethedevil.com\/?p=1568&page=2\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"the color of money - 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