The Unraveling of the American Dream: Foreclosures and Communities of Color in Minneapolis Ryan Allen May 14, 2009 National Neighborhood Indicators Partnership

Research Dilemma Minority households have increased their presence in the housing market  Minority homeownership rate 1994 = 43%  Minority homeownership rate 2007 = 51%  Strong economy, looser mortgage underwriting and new mortgage products Foreclosure crisis!  Minorities disproportionately hold subprime mortgages To what extent have minority households experienced foreclosure?

Existing Research Findings Only two studies have focused on race/ethnicity and foreclosures  Boston Metro Area  California Blacks, Hispanics and Asians more likely to experience a foreclosure compared to Whites No studies have focused on nativity status or household composition

Why Study Foreclosures, Immigrants and Kids? Increased presence of immigrants in housing markets

Percentage of Foreign Born Households in Minneapolis, Source: Census 1980, 1990, 2000; American Community Survey 2007

Why Study Foreclosures and Immigrants? Increased presence of immigrants in housing markets Households with children may be especially vulnerable

Why Study Foreclosures and Immigrants? Increased presence of immigrants in housing markets Households with children may be especially vulnerable Foreclosures are increasingly common

Foreclosed Mortgages in the US Source: Mortgage Bankers Association, National Delinquency Survey

Foreclosures in Minneapolis, Year Foreclosed Housing Units * Total8613 Source: Hennepin County Sheriff Sales Data; * designates foreclosed properties rather than units

Why Study Foreclosures and Immigrants? Increased presence of immigrants in housing markets Households with children may be especially vulnerable Foreclosures are increasingly common Individual, household and community-level effects  Loss of equity, declining credit scores  Massive disruption to households Churning in schools, employment Weakened social networks  Reduced property values Increased crime and disorder Exacerbated by concentrated nature of foreclosures

Data Sources Sheriff’s Sale Data  Addresses of foreclosed properties Data from Minneapolis Public Schools  Primary language spoken in home of students  Race/Ethnicity Data from Hennepin County Assessor’s Office  Homestead status American Community Survey (2007)  Demographic profiles

Homestead Status of Foreclosed Properties in Minneapolis, FY2006- FY2007 Sources: Hennepin County Sheriff Sales Data, Hennepin County Property Tax Data

Households in Minneapolis with a Child in Public School, 2007 Source: American Community Survey 2007

Foreclosed Housing Units in Minneapolis with a Child in Public School Present, FY06-07 Sources: Hennepin County Sheriff Sales Data, Minneapolis Public Schools, American Community Survey 2007

Households in Minneapolis with a Child in Public School by Race or Ethnicity, 2007 Source: American Community Survey 2007

Foreclosures in Minneapolis with a Child in Public School by Race or Ethnicity, FY06-07 Sources: Hennepin County Sheriff Sales Data, Minneapolis Public Schools, American Community Survey 2007

Households in Minneapolis with a Child in Public School by Nativity, 2007 Source: American Community Survey 2007

Foreclosures in Minneapolis with a Child in Public School by Nativity, FY06-07 Sources: Hennepin County Sheriff Sales Data, Hennepin County Property Tax Data, Minneapolis Public Schools, American Community Survey 2007

Foreign Households in MPLS with a Child in Public School that Experienced a Foreclosure by Language, FY06-07 Sources: Hennepin County Sheriff Sales Data, Minneapolis Public Schools

Homeowner Households in Minneapolis with a Child in Public School by Nativity, 2007 Source: American Community Survey 2007

Foreclosures of Owner-Occupied Properties in Minneapolis with a Child in Public School by Nativity, FY06-07 Sources: Sheriff Sales Data (Hennepin County), Hennepin County Property Tax Data, Minneapolis Public Schools, American Community Survey 2007

How Does Predatory Lending Occur? Forceful, direct marketing (supply side)  Sophisticated demographic and geographic analyses  Recruitment from within the community (“cultural broker”) Social networks (demand side)  Expectations and the role of history  Trust of institutions vs. trust of individuals

Policy Implications Reorient focus of foreclosure prevention programs  Focus on supply side and the demand side  Rebuilding trust  Linguistically appropriate? Moratorium on foreclosures?  Evidence of disproportionate impact  Freddie and Fannie  Political will?