The Nation, AUGUST 25, 2020
The Burning House
How federal housing programs failed Black America.
By Marcia Chatelain
The reenergized movement against anti-Black violence ignited by the
deaths of George Floyd, Ahmaud Arbery, and Breonna Taylor, among others,
has inspired the reading public to turn to texts that can explain
exactly how we got here. Reading lists abound with everything from
histories of slavery to self-help guides on white privilege and
allyship. Yet few engage with the histories of urban inequality and
policing that shed light on how reporting someone using a possibly
counterfeit $20 bill at an urban corner store set in motion the public
execution of a Black man or how a series of alleged suburban break-ins
emboldened neighborhood vigilantes to murder a jogger or why a deadly
police raid authorized by a controversial no-knock warrant is entwined
with a city’s rapacious gentrification plans.
BOOKS IN REVIEW
RACE FOR PROFIT: HOW BANKS AND THE REAL ESTATE INDUSTRY UNDERMINED BLACK
HOMEOWNERSHIP
By Keeanga-Yamahtta Taylor
The nation’s rootedness in slavery and the way white Americans have
galvanized the privileges afforded them are critical to understanding
the problem of race in America, but so too is the history of housing and
racism in American cities. Property and racial inequality have been
bound up together so tightly and for so long that we often miss the
relationship, and yet we cannot understand police brutality in the
United States without it. When the king of a gentrified castle doesn’t
care to take up arms to protect his home, he can turn to the police, to
private security, and to real estate agents to keep undesired neighbors
and groups away. This form of white supremacist violence is often
indirect and receives less attention, but it is violence nonetheless and
keeps communities of color—in particular, Black communities—economically
depressed and segregated.
Recent books like Richard Rothstein’s The Color of Law and journalistic
examinations like Ta-Nehisi Coates’s “The Case for Reparations” have
helped raise awareness about the racist history of real estate in the
United States by reminding us of the intimate relationships among
housing, racial inequality, and today’s racial wealth gap. But some
parts of the story are still neglected. We are just beginning to
confront, for example, how fixtures of the inner city—the fast-food
restaurants, the payday lenders, the cash-for-homes fliers—are all
outward signs of the physical and financial exploitation that was
routinized in the post-civil-rights years and has undermined Black
advancement, despite the passage of laws that were supposed to ensure
equal treatment in housing. As Keeanga-Yamahtta Taylor shows in Race for
Profit, we are also only beginning to reckon with the complex network of
bankers, real estate agents, and federal agencies that used the rhetoric
of equality to obscure a set of race-to-the-bottom schemes that sought
to extract as much wealth as possible from poor Black Americans.
In Race for Profit, Taylor provides new insight into many of these
processes, examining one of the most exploitative attempts to bring the
Black urban poor and working class into the fold of homeownership.
Histories of Black urban life have focused on public housing, housing
discrimination, redlining, and the rise and fall of tenants’ rights
movements, but Taylor’s book shows us how tens of thousands of Black
people were manipulated by the federal government and unscrupulous
bankers and real estate agents through a program of predatory lending
that claimed to empower Black homeowners but ultimately pushed them into
greater financial insecurity. Agencies like the Federal Housing
Administration (FHA) and the Department of Housing and Urban Development
(HUD) may have been founded “to transform low-income renters into
low-income homeowners,” Taylor writes, but they ended up squeezing poor
Black homeowners while creating lucrative financial instruments for
lenders and real estate interests.
Rather than create a nation of homeowners, the housing programs of the
Great Society, which relied on public-private ventures that almost
always benefited the private interests, only helped to intensify racial
disparities. Taylor’s book offers us a warning about the dangers of
these public-private programs, which have become ever more common in our
neoliberal age. It also reminds us of just how deep the roots of
inequality and violence in our cities are—that even the efforts to
create more black homeowners were stymied by racist stereotypes and a
federal government determined to shrink its presence in the life of the
poor.
Arich economic and policy history, Race for Profit begins and ends its
account of housing inequality with people—those deemed either powerful
or powerless in their times. There are the presidents, Lyndon Johnson
and Richard Nixon, who may have diverged on civil rights but who agreed
on the importance of private sector responses to public problems and, as
a result, doomed efforts to remedy long-standing forms of racial
inequality in American cities. There are the powerful bankers, insurance
executives, and real estate traders who benefited from these private
sector solutions, as well as the often well-intentioned but wrongheaded
administration officials, especially George Romney, the Republican
governor of Michigan who became Nixon’s HUD secretary. And in crisp and
empathetic detail, Taylor also discusses the Black people who were
cynically given predatory loans to purchase dilapidated houses and who
eventually fought back.
Although most of Taylor’s study takes shape in the late 1960s and early
’70s, she is careful to discuss the larger arc of this history, too. Her
first chapters explore how housing became an outward sign of citizenship
and belonging for Black Americans in the United States and how, in the
wake of the Great Migration, efforts to challenge this citizenship and
belonging manifested themselves in a variety of insidious real estate
practices. As Taylor shows, these practices were about reinforcing the
racial order, and in doing so, they were also about supporting racial
capitalism: With Black renters generating sound profits for landlords,
there was little interest to change the status quo.
To tell this story, Taylor opens her book decades before the declaration
of the urban crisis in the mid-1960s, with the history of Black
migration to Northern cities in the first half of the century and the
development of the suburbs after World War II. As she shows, this Black
population growth sparked white fear, which inspired, in turn, a wave of
regressive policies as well as the increasing criminalization and
hyperpolicing of Black communities by many cities. From there, Taylor
traces how the growth of this urban white panic calcified redlining and
inspired the drafting of racially restrictive covenants, which led to
the rise of the suburbs as well as efforts to take the wealth from
cities and direct it to those new developments.
By the early 1950s, Black veterans had returned home from the war and
saw no racial progress offered in exchange for their service. The civil
rights movement was ascendant, and more Black leaders started to
mobilize around the issue of housing. Activists applied considerable
pressure in the North as well as the South, demanding that the federal
government intervene to create better housing for Black people and later
to prevent the further segregation of American cities. Yet despite new
anti-segregation laws and local anti-discrimination ordinances, finding
affordable housing remained a challenge. As Taylor shows, for all the
old slums cleared and new shopping districts christened, for all the
highways extended and mixed-income developments opened, housing options
for the poor remained limited.
In fact, all this development often led to fewer choices, as these urban
renewal programs simply razed cheap but necessary housing for the poor
and limited the expansion of public housing, which could have provided
some relief. Although some hoped that Supreme Court decisions like
1948’s Shelley v. Kraemer, which ended racially restrictive covenants,
and 1954’s landmark Brown v. Board of Education would revolutionize
housing practices, inequality seemed only to worsen in these years. By
the end of the 1960s, “it was becoming clear,” Taylor writes, “that
transforming the law was different from transforming the attitudes of
the federal agents charged with enforcing the new laws or of
those…private agencies where the new policies would be implemented.”
A glimmer of hope came in the late ’60s. Johnson’s massive War on
Poverty and Great Society programs had begun to wrestle with the links
between race and economic oppression, and soon Congress passed the Fair
Housing and Housing and Urban Development acts. By creating the Office
of Fair Housing and HUD, the acts empowered the federal government to
enforce equal protection laws in the area of housing; they also created
the Government National Mortgage Association to guarantee mortgages to
low-income buyers. Although Johnson seemed to take an approach similar
to Franklin Roosevelt’s by using the state, through an alphabet soup of
agencies, to create programs and expand the workforce, he did something
that FDR often did not: He delegated much of the work to the private
sector. “Subsidies, tax relief, and government guarantees,” Taylor
writes, were what Johnson relied on “to reverse course and help stem the
urban crisis.” But instead of turning the tide, these generous handouts
to the private sector just made matters worse.
Describing the early years of these programs, Taylor is careful to
document how much of their problems were structural. The motivations
behind the various initiatives were, for the most part, noble. Section
235 of the HUD Act, for example, sought to encourage homeownership for
poor families by providing mortgage subsidies to lenders that offered
these families loans despite their inability to meet credit
requirements. Section 237 sought to assist poor families that were once
ineligible for FHA-backed mortgages because of their income and credit
scores; the families could now get this FHA backing after they attended
a series of counseling programs and complied with a set of rules.
Section 221(d)(2) allowed people receiving public assistance to obtain
FHA-backed mortgages and extended the repayment period to 40 years,
which made the payments more affordable.
Yet from the outset these programs, hobbled by constant mismanagement
and neglect, never fully got off the ground. They were also swiftly
taken advantage of by private interests. The mortgage debt acquired by
first-time Black homeowners was soon viewed by banks as “oases of new
investment opportunities,” Taylor writes. Lenders and insurance
companies, now under growing scrutiny for their years of financing and
building segregated housing, tried to rehabilitate their image while
feasting off their slice of a potential $50 billion market.
Through the early ’70s, the vulnerability of these programs became more
pronounced as interest rates climbed and white suburbs continued to bar
Black homeowners. Burdened with predatory loans and without other
support, many low-income borrowers lacked the funds to maintain houses
beset by poor plumbing, faulty wiring, and other problems and soon
defaulted on their loans. Rather than solve housing inequality, these
public-private ventures ultimately enabled redlining to exist after it
was deemed illegal. To make matters worse, when some of those
participants defaulted, federal agencies and the media depicted them as
undeserving welfare recipients recklessly living a life of excess while
enjoying state benefits.
The HUD Act began with a rather ambitious idea: It called for building
stock and eradicating racial discrimination in housing by 1978. Almost
as soon as it was passed, however, housing advocates recognized how
unlikely it was that these goals would be accomplished in little more
than a decade. Nixon’s reelection in 1972 made it clearer how little
chance the FHA and HUD programs had to achieve their goals by any date.
Under his so-called New Federalism, the same states that had long denied
Black people basic citizenship rights were granted more authority over
local housing policies. Not surprisingly, rather than seek to mitigate
widening racial inequality, these states sought to extend it.
Romney’s appointment as HUD secretary in 1969 marked a brief moment of
optimism for housing advocates. While Nixon demonized Black activists
and city dwellers and offered vacuous Black capitalism initiatives in
response to calls for Black freedom, his choice of Romney led some to
believe that HUD had been given a green light to continue in its
ambitious aims. Having governed Michigan during the 1967 Detroit
uprising, Romney departed from the rest of the Republican Party in
championing federal measures to ensure Black equality and in challenging
white hostility to civil rights, especially when it came to suburban
housing.
When Romney took over HUD, however, he found himself caught between
LBJ’s failed public-private programs and Nixon’s lack of interest in
seeing any of them through, let alone improving them. Romney also could
not let go of his racist ideas about Black fitness for citizenship and
homeownership. He could be calm and levelheaded in his appeals for
compassion for the dispossessed, but he could also be alarmist, warning
the public that Black radicals might adopt the tactics of the Vietcong
if the federal government didn’t take measures to resolve urban tensions.
Taylor guides us through the litany of programs that Romney tried to
implement, including Operation Breakthrough, which sought to remedy the
public housing crisis by building homes in the efficient, assembly-line
style of the Motor City. But he discovered that the racism of the
suburbs and the deteriorated state of the cities made finding locations
for this new public housing next to impossible. Romney next looked to
Project Rehab, a plan to repair and restore existing houses, but many
were in a decrepit condition, and the costly fixes made them unappealing
to homeowners and banks, so he soon abandoned this effort as well.
Having failed to build or rehabilitate urban housing, Romney turned to
overseeing the well-chronicled Open Communities plan to integrate the
suburbs, which collapsed in the face of opposition from their residents
and little provision from the federal government. Each failed attempt
offered Nixon and Congress an opportunity to strip HUD and its leader of
more power. By the time Romney left Nixon’s cabinet, the department was
mostly gutted.
Taylor is fair and clear-eyed when she describes Romney’s travails at
HUD, but she also rightly holds that as “the outermost liberal edge of
the Nixon administration,” he still did much to undercut attempts to
“combat racism in the dissemination” of his own programs. Romney
collected no racial data on their implementation, so he could never
definitively name the discriminatory practices that were rampant across
the FHA and that effectively blocked housing opportunities for its
participants. He also allowed lenders to flout requests for data on
their practices and ignored the concerns of Black HUD employees about
discrimination within the agency. The Congressional Black Caucus and the
Urban League questioned the quality and delivery of services to Black
clients.
The disasters in HUD’s national and local offices, which were regularly
investigated for mismanagement and inefficiency, were mirrored by the
calamities in the individual houses that fell under the purview of its
programs. In Taylor’s descriptions of the faulty boilers, constant
chills, and the dangerous, sometimes life-threatening experiences of
their residents, she evokes the depraved conditions depicted in Native
Son and other Great Migration–era texts, reminding us how little had
changed from the first half of the century. The houses proved to be a
cruel joke on Black Americans who believed they were finally being
welcomed into the circle of American homeownership and prosperity but
were moving into homes that were in states of dangerous disrepair.
In its attempt to usher in a new era of fair housing, the FHA opened not
only the housing market but also employment in the agency to Black
Americans. But when Romney brought the FHA under the control of HUD,
tensions between the agency’s old faithful and the new HUD officers soon
erupted. Meanwhile, HUD’s efforts during and after Romney continued to
prove inadequate, especially in the face of white resistance in the
suburbs, where residents refused to accommodate low- and mixed-income
housing.
The powerful real estate industry also created obstacles, as developers
looked to simply repurpose segregated urban spaces instead of building
homes in undeveloped suburban ones. To address these quandaries, Romney
shifted his focus from building to rehabilitating houses in the
communities in need, but these efforts proved to do little more than
breathe faint life into slums. As Taylor notes, “The poorest people
eligible to participate in the FHA homeownership program lived in
proximity to housing that was in the lowest, often substandard condition.”
Real estate profiteers play a starring role throughout this grim affair.
Real estate agents posed as landlords and were in cahoots with
appraisers, who were friendly with contractors, who were sometimes
investors in the banks that handed out predatory loans. Discussing the
long history of property appraisals and their racist pseudoscientific
underpinnings, Taylor illustrates that the problem wasn’t just with the
lenders; more profoundly, it was also with the entire logic of the
market for mortgage-backed securities, a many-headed monster that fed on
volume and was stuffed with graft and fraud. Even if the HUD subsidies
were unattractive to traditional lenders, bankers and brokers found ways
to profit from discount points and fees and unregulated ways to resell
the mortgages.
Taylor’s book also highlights Black families—in particular, those headed
by Black women—that found themselves squeezed by these unscrupulous
practices. The tales she compiles are often gut-wrenching. We meet Alice
Mundy, who purchased a house in Detroit for $9,750, even though it was
acquired a year earlier by a local development corporation for just
$3,000. Soon after moving in, she discovered a rat infestation and holes
in the ceiling. After calling the city for help, she was fined for the
house’s poor condition and ultimately lost it because she could not
afford the penalties. A Detroit real estate company purchased a house
below market rate and then sold it the same day to Sally Fordham for a
$3,500 profit. What she found when she moved in was horrifying: The
house lacked a working furnace, and poor plumbing caused human waste to
pool in the basement. Fordham sought help from local Legal Aid
attorneys, who merely advised her to stop making mortgage payments and
search for other housing options. Such woes were not hers alone: More
than 40 percent of Black mothers who owned homes in Detroit and were
receiving Aid to Families With Dependent Children saw their homes fall
into foreclosure in a similar fashion.
Although women nationwide who received AFDC funding had only a 3.5
percent foreclosure rate, media reports often implied that many of the
Black women who lost their homes through FHA programs were on welfare,
helping create the insidious image of the welfare cheat, which served to
enhance racist stereotypes and helped hasten an end to programs like
AFDC. As Taylor documents, rather than being informed of their rights
and responsibilities as the recipients of housing assistance, these home
buyers were often given only counseling that furthered these
stereotypes. Instead of ending the sale of dilapidated houses to poor
families, the federal government issued pamphlets like “Housekeeping Job
Sheets for Use With Aspiring Homemakers” and “How to Keep a Stove
Clean.” Needless to say, housing inequality worsened under these
circumstances. As Taylor writes, the tremendous “downward pressure on
the quality of [the] housing” that Black people could secure made it
nearly impossible for FHA mortgage receivers to find themselves in a
safe home and with the resources to maintain it adequately.
Good intentions and bad outcomes run throughout Taylor’s narrative.
Whether it was Romney’s desire to see some type of racial integration in
American suburbs or the efforts of Milwaukee-based FHA program director
Lawrence Katz, who supplied Black women with sometimes helpful (but
often infantilizing) tips on homemaking, white liberal politicians
proved incapable of seeing or overcoming the limits of the
public-private programs that created greater segregation. In the absence
of substantial government funding and responsible oversight, these
programs were guaranteed never to succeed.
Some of the most powerful parts of Taylor’s book examine how Black
homeowners came together to fight back. Black women in Seattle
collectively sued HUD for its failure to ensure that the properties sold
to them met “the requirements of all state laws, or local ordinances,”
as stated in Section 235. This provision was routinely ignored as
contractors collected fees for services never rendered and repairs never
made. Eventually Congress updated the legislation to allow reimbursement
for “damages in the amounts that [home buyers] had paid to have repairs
done” after purchasing these homes.
Likewise in the early ’70s, a set of Black homeowners began to testify
before Congress and turn to other movement tactics, including mounting
picket lines outside local FHA offices. Homeowners offered interviews to
investigative journalists and risked being further embarrassed or made
to feel ashamed for their living conditions. From Kansas City, Mo., to
Paterson, N.J., their stories were eerily similar: These home buyers
were poor, Black, and desperate to find a place to live. They owned
houses that were certified as safe by HUD affiliates but were a
nightmare of neglect and disrepair.
By the mid-’70s, the federal experiment in encouraging Black
homeownership had collapsed. A deflated Romney announced in 1973 an
indefinite moratorium on any funding for housing assistance programs or
construction of low-income housing nationwide. Although he had tried to
prevent such an extreme measure, he was unable to prevail against
Nixon’s desire to keep the US government from intervening to foster
meaningful change in housing. As Taylor sums it up, “Nixon’s decisive
victory over McGovern provided a political mandate to move away from
federal involvement in cities.”
Even after Watergate forced Nixon out of office, the ghosts of his New
Federalism continued to haunt both the Republicans’ and the Democrats’
approaches to poverty. Gerald Ford signed the Housing and Community
Development Act into law, which further removed Washington from the
management of housing programs. The legislation provided for “‘no
strings attached’ revenue sharing and block grants that were touted as
new, innovative tools that would transform ‘urban renewal’ into
‘community development.’” With states allowed discretion over what
funding for housing would look like, Black home seekers found themselves
subject to the whims of localities that were more likely to protect
suburban homeowners and the value of their property, especially given
the decade’s economic instability.
The failures of HUD also set the stage for our current housing crisis by
creating a path for the convergence of “neoliberalism and
neoconservatism,” Taylor writes, around “the demonization of
working-class and poor Black people in cities to undermine the
legitimacy of a welfare state perceived to be prioritizing the care of
‘undeserving’ African Americans.”
This meeting of the center left and center right in both parties not
only resulted in smaller government for the poor, tax breaks for the
rich, and a colorblind approach toward policy; it also helped create
more draconian measures for welfare recipients and regulations on access
to public housing under Bill Clinton’s massive welfare “reform” measures
in the 1990s.
Housing inequality remains a pressing issue in the struggle for racial
justice in the United States. According to the Census Bureau, Black
families have lagged the general population in homeownership for the
past 70 years. From the post–World War II era to the start of the Reagan
years, Black homeownership rates rose from 35 to 44 percent. These rates
remained relatively steady from the 1970s to the 2008 financial crisis,
which hurt Black homeowners the most because they were more likely to
hold shaky subprime mortgages. Nor did they enjoy the benefits of the
post-recovery housing market, because they tended to own cheaper homes
in neighborhoods considered less desirable. In fact, nearly a decade
after the crisis, there remains a 30 percentage point difference in
homeownership rates for white and Black Americans. This gap exacerbates
the vulnerability of Black people to foreclosure and worsens the wealth
gap, as well as drives further criminalization and police brutality when
Black city dwellers attempt to move outside racially homogenous
neighborhoods.
Today, with short-term eviction relief due to the Covid-19 pandemic set
to expire and low interest rates fueling increases in home prices,
advocates for affordable housing may look to Taylor’s book as they
prepare themselves for another looming calamity. What is still unclear
is whether the fair housing planks of Bernie Sanders’s presidential
campaign or the leadership of Representatives Alexandria Ocasio-Cortez
and Jamaal Bowman on housing issues will inspire a wider commitment by
the Democratic Party to address this crisis. As the cries to cancel rent
become louder, progressive leaders must focus more and more of their
energy on creating policies that keep housing affordable for all people.
Over the past few years, on the anniversary of the Fair Housing Act’s
passage, a pundit or observer would invariably ask why, in light of the
long-standing legislation against housing discrimination and the
supposed growth in economic opportunity for Black Americans, the Black
homeownership rate was still at pre–Housing Act levels. In response,
some cite the lack of generational wealth transfer among Black Americans
and ongoing lending discrimination, but few consider that it might be
due to the very system of racial capitalism that exists in the United
States.
James Baldwin’s and Martin Luther King Jr.’s warnings that Black
Americans should be cautious about integrating into a “burning house”
seems an apt metaphor here. What we need is a new housing system
altogether. As the 2008 crisis reminded many Americans, as long as
housing is tied to a for-profit system that mercilessly exploits
vulnerable families instead of empowering them and as long as values
rise and fall relative to racist perceptions of what is a good or bad
school district and who makes good or bad neighbors, housing inequality
will persist—a burning house, indeed.
Marcia Chatelain is the author of Franchise: The Golden Arches in Black
America and South Side Girls: Growing Up in the Great Migration. She
teaches history at Georgetown University.
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