Inequality in Housing, Financial Services and Retirement Security in the Chicago Region KAM Isaiah Israel May 5, 2013 | Chicago, Illinois 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regulation of high-cost/high-risk lenders and products • Lack of access access to retirement savings plans at work • Outdated rules, inadequate data collection WOODSTOCK INSTITUTE | MAY 2013
Change in prime home purchase and refinance lending in communities of color vs. white areas, 2006 to 2008 Avg All Boston Charlotte Chicago Cleveland Los Angeles New York Rochester Cities 0% -10% -20% -16.3% -20.3% -25.3% -30% -28.4% -29.9% -31.2% -33.0% -40% -42.7% -50% -52.5% -53.7% -60% -55.8% -56.0% -60.3% -64.5% -70% -68.5% -70.9% -80% 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 $400,000 $226,223 $350,000 $212,429 $300,000 $242,989 $180,455 $250,000 $200,000 $140,167 $150,000 $108,069 $101,152 $79,167 $100,000 $60,379 $35,174 $50,000 $20,761 $6,800 $0 10 Percent or less 10-19.9 Percent 20-49.9 Percent 50-79.9 Percent 80 Percent or 50 Percent or Minority Minority Minority Minority more African more Latino American 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 Source: Left Behind: Troubled Foreclosed Properties and Servicer Accountability in Chicago (2011) WOODSTOCK INSTITUTE | MAY 2013
Access to mortgage loan purchase and refinance loans for women in the Chicago area Differences in Origination, Female-headed Co-applicants vs. Male-headed Co-applicants White African American Asian Other Hispanic 0% -10% -12.4% -20% -18.9% -22.0% -23.5% -30% -28.9% -29.9% -31.7% -34.1% -37.4% -40% -43.8% -50% 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
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 of 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) WOODSTOCK INSTITUTE | MAY 2013
Forging Solutions • 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 WOODSTOCK INSTITUTE | MAY 2013
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
Come to Woodstock Institute’s 40 th anniversary Symposium & Bash at the Sheraton! Oct. 2-3, 2013 | Chicago, Illinois Dory Rand | President Woodstock Institute | Chicago, Illinois P 312.368.0310 | F 312.368.0316 drand@woodstockinst.org @woodstockinst WoodstockInstitute WOODSTOCK INSTITUTE | MAY 2013
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