Inequality in Housing, Financial Services and Retirement Security in - - PowerPoint PPT Presentation

WOODSTOCK INSTITUTE | MAY 2013

KAM Isaiah Israel May 5, 2013 | Chicago, Illinois

Inequality in Housing, Financial Services and Retirement Security in the Chicago Region

Dory Rand | President Woodstock Institute | Chicago, Illinois P 312.368.0310 | F 312.368.0316 drand@woodstockinst.org @woodstockinst WoodstockInstitute

WOODSTOCK INSTITUTE | MAY 2013

• Mission: Create a just financial system

in which everyone can achieve economic security and community prosperity

• Focus: Fair lending, wealth creation &

financial systems reform at local, state & national levels

• Tools: Research, policy, coalition

building, and technical assistance

WOODSTOCK INSTITUTE | MAY 2013

Some causes of inequality in housing, financial services, and retirement security

• Legacy of institutional racism (Black Wealth/White Wealth, Oliver and Shapiro)

and sexism (Shortchanged, Mariko Chang)

• Targeting of high-cost/high-risk products to people of color
• Toxic mortgage loans
• Tax refund anticipation loans
• Payday and deposit advance loans
• Poor/no regulation of high-cost/high-risk lenders and products
• Lack of access access to retirement savings plans at work
• Outdated rules, inadequate data collection

Change in prime home purchase and refinance lending in communities of color vs. white areas, 2006 to 2008

• 55.8%
• 70.9%
• 53.7%
• 68.5%
• 64.5%
• 56.0%
• 52.5%
• 60.3%
• 16.3%
• 29.9%
• 20.3%
• 42.7%
• 33.0%
• 31.2%
• 25.3%
• 28.4%
• 80%
• 70%
• 60%
• 50%
• 40%
• 30%
• 20%
• 10%

0%

Boston Charlotte Chicago Cleveland Los Angeles New York Rochester Avg All Cities Census Tracts with 80% or More Residents of Color Census Tracts with Less Than 10% Residents of Color

Source: Home Mortgage Disclosure Act; Paying More for the American Dream VI: Racial Disparities in FHA/VA Lending (2012)

WOODSTOCK INSTITUTE | MAY 2013

Average home equity and outstanding mortgage debt per property in the Chicago six county region, 4Q11

$108,069 $101,152 $60,379 $20,761 $6,800 $35,174 $226,223 $212,429 $180,455 $140,167 $79,167 $242,989 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000 10 Percent or less Minority 10-19.9 Percent Minority 20-49.9 Percent Minority 50-79.9 Percent Minority 80 Percent or more African American 50 Percent or more Latino

Mortgage Equity

Source: Proprietary data; 2010 Decennial Census; Struggling to Stay Afloat: Negative Equity in Communities of Color (2012)

WOODSTOCK INSTITUTE | MAY 2013

Communities of color hardest hit by vacant properties

Vacant Properties and Foreclosure Vacant Properties

• 18,320 properties identified as vacant or potentially

vacant by the City of Chicago

• Nearly 70% of all vacant properties on the Chicago

Vacant Buildings Index are associated with a foreclosure

Red Flag Properties

• 1,896 properties on the Index are “red flag”

properties, many of which may be lender walk- aways or “Zombie” properties

• 71% of red flag properties are located in highly

African American communities, compared to only 6.5% in predominantly white communities

Impact

• Destabilize communities
• Burden to municipalities

WOODSTOCK INSTITUTE | MAY 2013

Source: Left Behind: Troubled Foreclosed Properties and Servicer Accountability in Chicago (2011)

Access to mortgage loan purchase and refinance loans for women in the Chicago area

• 22.0%
• 34.1%
• 12.4%
• 23.5%
• 18.9%
• 37.4%
• 43.8%
• 29.9%
• 31.7%
• 28.9%
• 50%
• 40%
• 30%
• 20%
• 10%

0% White African American Asian Other Hispanic

Differences in Origination, Female-headed Co-applicants vs. Male-headed Co-applicants

Purchase Refinance

Source: Home Mortgage Disclosure Act 2010 data; Unequal Opportunity: Disparate Mortgage origination Patterns for Women in the Chicago Area (2013)

WOODSTOCK INSTITUTE | MAY 2013

WOODSTOCK INSTITUTE | MAY 2013

Retirement insecurity in Chicago

• Fewer workers have access to

employment-based retirement plans now than in the past

• Over half of all private sector workers lack access

to employment-based retirement plans

• Assets are a small and decreasing percentage
• f retirement income for most households
• Social Security benefits are replacing a

smaller percentage of pre-retirement income

Source: Coming Up Short: The Scope of Retirement Insecurity Among Illinois Workers (2012)

Forging Solutions

WOODSTOCK INSTITUTE | MAY 2013

• Enforce fair housing/fair lending laws and regulations
• Adequately fund housing counseling, foreclosure prevention

and legal services programs

• Adopt a Qualified Residential Mortgage (QRM) rule

without a minimum down payment requirement

• Enforce vacant property ordinances

Some policies to reduce inequalities in housing, financial services, and retirement security

• Implement new Cook County Land Bank

Authority consistent with local priorities

• Enact and enforce strong consumer

protection laws and regulations (www.consumerfinance.gov)

• Revise tax policies, including the

home mortgage deduction

• Expand opportunities for workers to save

for retirement

• Protect students from excessive student

loan debt, allow discharge in bankruptcy

• Modernize the Community Reinvestment

Act (CRA)

WOODSTOCK INSTITUTE | MAY 2013

WOODSTOCK INSTITUTE | MAY 2013

• Oct. 2-3, 2013 | Chicago, Illinois

Come to Woodstock Institute’s 40th anniversary Symposium & Bash at the Sheraton!

Dory Rand | President Woodstock Institute | Chicago, Illinois P 312.368.0310 | F 312.368.0316 drand@woodstockinst.org @woodstockinst WoodstockInstitute