The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together (One World Essentials)

by Heather McGhee

Instead of getting striving people into homeownership, the loans often wound up pushing existing homeowners out.

black and Latinx homeowners were 103 percent and 78 percent, respectively, more likely to receive high-cost mortgages.

“I wasn’t taught to doubt people who presented themselves as God-fearing people. So, I didn’t doubt.”

steering of responsible black homeowners into equity-stripping predatory mortgages—could have been cut and pasted from a report of hundreds of black middle-class neighborhoods across the country in that era.

We were laughed out of the offices of Republican members of Congress with our passé talk about regulation.

The earliest predatory mortgage lending victims, disproportionately black, were the canaries in the coal mine, but their warning went unheeded.

In 2017, the country had four hundred thousand fewer homeowners than in 2006, although the population had grown by some eight million households since then.

More than a decade after the crash, the typical family in their prime years has still not recovered the level of wealth held by people the same age in previous generations.

An accounting on the tenth anniversary of the crash showed 5.6 million foreclosed homes during the Great Recession.

The people who took Amy’s house could do so with impunity in 2013 only because they had been doing it to homeowners of color for over a decade already, and had built the practices, corporate cultures, and legal and regulatory loopholes to enable that plunder back when few people cared.

The exclusion of free people of color from the mainstream American economy began as soon as black people emerged from slavery after the Civil War.

Congress created a separate and thoroughly unequal Freedman’s Bank, managed (and ultimately mismanaged into failure) by white trustees.

In 1933, during the Great Depression, the U.S. government created the Home Owners’ Loan Corporation. Debby explained, “Its role was to buy up mortgages that were in foreclosure and refinance them, and put people back on their feet.

Perhaps this agency’s most lasting contribution was the creation of residential security maps, which used different colors to designate the level of supposed investment risk in individual neighborhoods.

the birth of redlining.

The redlining maps were subsequently used by the Federal Housing Administration, created in 1934.

the FHA would not make or guarantee mortgages for borrowers of color,” she said. “It would guarantee mortgages for developers who were building subdivisions, but only on the condition that they include deed restrictions preventing any of those homes from being sold to people of color.

The government agencies most responsible for the vast increase in home ownership—from about 40 percent of Americans in 1920 to about 62 percent in 1960—were also responsible for the exclusion of people of color from this life-changing economic opportunity.

the Fair Housing Act of 1968 outlawed racially discriminatory practices by banks,

These contracts enabled black people to buy on the installment plan—and lose everything if they missed a single payment.

Unlike a conventional mortgage, land contracts did not allow buyers to build equity;

Congress passed reforms to the discriminatory lending market in the 1970s, finally giving residents tools to combat redlining.

One reform was the 1975 Home Mortgage Disclosure Act (HMDA), which required financial institutions to make public the number and size of mortgages and home loans they made in each zip code or census tract, so that patterns of discrimination could be easily identified.

Another was the 1977 Community Reinvestment Act (CRA), which required financial institutions to make investments in any communit...

But 1978 also saw an ominous sign of a coming wave of deregulation when a Supreme Court decision interpreted the National Bank Act to mean if a lender was in one of the few states without any limits on interest rates, it could lend without limits nationwide, effectively invalidating thirty-seven states’ consumer protections—and Congress declined to amend the law.

today, most of your credit card statements come from South Dakota and Delaware, states with lax lending laws.

the financial sector had become the component of the economy that prod...

The financial sector also became the biggest spen...

The deregulatory revolution in financial services was also spurred by antigovernment, pro-market libertarian and neoliberal economic thinking

bipartisan majority voted to repeal most of Glass-Steagall, the law that had protected consumer deposits from risky investing for decades since the Great Depression.

there was no single regulator whose primary responsibility was to protect consumers; the four federal banking regulators’ primary purpose was to ensure that banks were doing well—which

The upshot for the lending market was the unchecked growth of loans and financial products that were predatory in nature,

negative financial situation for the borrower,

used deception to hide the reality of the credit terms ...

“We were supposed to try and refinance these individuals into new, expensive subprime loans with high interest rates and lots of fees and costs,”

we were told to sell these loans was to explain that we were eliminating the customer’s old debts by consolidating their existing debts into one new one.

we were actually just giving them a new, more expensive loan that put...

pressured the credit managers in my office to convince our leads to apply for a loan, even if we knew they could not afford the l...

Our district manager told us to conceal the details of the loan.

There was no compassion for these individuals who came to us trusting our advice.”

the bank applied pressure to its almost entirely African American prospects.

“We were instructed to make as many as thirty-five calls an hour and to call the same borrower multiple times each day,”

managers told us how to mislea...

Some managers…changed pay stubs and used Wite-Out on documents to alter the borrower’s income so it would look like the customer qualified for the loan.

not told about prepayment penalties

astronomic...

A common misperception then and now is that subprime loans were being sought out by financially irresponsible borrowers with bad credit, so the lenders were simply appropriately pricing the loans higher to offset the risk of default.

subprime loans were more likely to end up in default.

If a black homeowner finally answered Mario Taylor’s dozenth call and ended it possessing a mortgage that would turn out to be twice as expe...

what was risky wasn’t the borrower; it was the loan.