Shitty time to be black in Memphis

Those banks and realtors have kept shifting their games to easily outmaneuver fair housing laws, making sure that housing in this country is still largely segregated and black people pay much higher prices to buy homes or rent apartments. And they've managed to do this while removing all explicit references to segregation (redlining), blockbusting and price gouging (high-interest/risk mortgages) from their rules, regulations and written guidelines for doing business. Memphis seems to be getting it about the worst right now. It's an old story, but it looks a little different these days, with black people actually having had some real money over the last couple of decades and being able to buy houses and keep them. The recession hurricane is taking care of that though:

For two decades, Tyrone Banks was one of many African-Americans who saw his economic prospects brightening in this Mississippi River city.

A single father, he worked for FedEx and also as a custodian, built a handsome brick home, had a retirement account and put his eldest daughter through college.

Then the Great Recession rolled in like a fog bank. He refinanced his mortgage at a rate that adjusted sharply upward, and afterward he lost one of his jobs. Now Mr. Banks faces bankruptcy and foreclosure.

“I’m going to tell you the deal, plain-spoken: I’m a black man from the projects and I clean toilets and mop up for a living,” said Mr. Banks, a trim man who looks at least a decade younger than his 50 years. “I’m proud of what I’ve accomplished. But my whole life is backfiring.”

Tyrone Banks is fucked, and a lot of other people like him in Memphis are, too. They are experiencing serious downward class motion, completely against their will and largely not a product of their own doing:

The median income of black homeowners in Memphis rose steadily until five or six years ago. Now it has receded to a level below that of 1990 — and roughly half that of white Memphis homeowners...

Black middle-class neighborhoods are hollowed out, with prices plummeting and homes standing vacant in places like Orange Mound, Whitehaven and Cordova. As job losses mount — black unemployment here, mirroring national trends, has risen to 16.9 percent from 9 percent two years ago; it stands at 5.3 percent for whites — many blacks speak of draining savings and retirement accounts in an effort to hold onto their homes. The overall local foreclosure rate is roughly twice the national average.

Fucked, fucked, fucked. And look how little they have to fall back on:

For every dollar of wealth owned by a white family, a black or Latino family owns just 16 cents, according to a recent Federal Reserve study...As of December 2009, median white wealth dipped 34 percent, to $94,600; median black wealth dropped 77 percent, to $2,100. So the chasm widens, and Memphis is left to deal with the consequences.

As usual, there are some dirty banking criminals to be had, the types who will bleed people of everything they own and then lots more with no compunction:

The mayor and former bank loan officers point a finger of blame at large national banks — in particular, Wells Fargo. During the last decade, they say, these banks singled out blacks in Memphis to sell them risky high-cost mortgages and consumer loans.

The City of Memphis and Shelby County sued Wells Fargo late last year, asserting that the bank’s foreclosure rate in predominantly black neighborhoods was nearly seven times that of the foreclosure rate in predominantly white neighborhoods. Other banks, including Citibank and Countrywide, foreclosed in more equal measure...

Camille Thomas, a 40-year-old African-American, loved working for Wells Fargo. “I felt like I could help people,” she recalled over coffee.

As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. “It was all about selling your units and getting your bonus,” she said.

Ms. Thomas and three other Wells Fargo employees have given affidavits for the city’s lawsuit against the bank, and their statements about bank practices reinforce one another.

“Your manager would say, ‘Let me see your cold-call list. I want you to concentrate on these ZIP codes,’ and you knew those were African-American neighborhoods,” she recalled. “We were told, ‘Oh, they aren’t so savvy.’ ”

She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers. Agents went “fishing” for customers, mailing live checks to leads. When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral.

Yes yes, dirty banks playing dirty, complex tricks on people. Also an old story. Such is capitalism, social Darwinism at its best:

Former employees say Wells Fargo loan officers marketed the most expensive loans to black applicants, even when they should have qualified for prime loans. This practice is known as reverse redlining.

Webb A. Brewer, a Memphis lawyer, recalls poring through piles of loan papers and coming across name after name of blacks with subprime mortgages. “This is money out of their pockets lining the purses of the banks,” he said.

For a $150,000 mortgage, a difference of three percentage points — the typical spread between a conventional and subprime loan — tacks on $90,000 in interest payments over its 30-year life.

That's a lot of money. Banks love money, or more accurately, the people who run them do. They also seem to love white people:

A study by the Neighborhood Economic Development Advocacy Project and six nonprofit groups found that the nation’s four largest banks, Wells Fargo, Bank of America, Citigroup and JP Morgan Chase, had cut their prime mortgage refinancing 33 percent in predominantly minority communities, even as prime refinancing in white neighborhoods rose 32 percent from 2006 to 2008.

Sure, some black people bought big houses that they could obviously not afford because they were being greedy and materialistic and the bank would give them a loan, just like a bunch of Americans did, especially over the last decade or so. I don't believe that to be the case in much of what's going on in Memphis, or anywhere else across the country. Looking at Wells Fargo's foreclosure rates in Memphis' black neighborhoods (again, seven times higher than white neighborhoods), it's just not possible to say that black people made those kinds of really bad purchases at seven times the rate of white Memphis residents, and only with one bank.

It's easy to blame people for taking on these loans that they ultimately couldn't afford. Even if we put aside the charges of banks altering applications without applicants' knowledge and refusing to disclose all details of a loan, the fact of the matter is that many black people in this country, historically, have not had and still do not have substantial choice of where to live. Their choices are deeply circumscribed by banks and realtors, who literally determine, to a great extent, the ethnic makeup of neighborhoods. Black people were and are denied mortgages in many parts of town, or entire towns, and common racial hostility takes care of the rest.

For the greater part of the last century, racial discrimination crippled black efforts to buy homes and accumulate wealth. During the post-World War II boom years, banks and real estate agents steered blacks to segregated neighborhoods, where home appreciation lagged far behind that of white neighborhoods.

Blacks only recently began to close the home ownership gap with whites, and thus accumulate wealth — progress that now is being erased. In practical terms, this means black families have less money to pay for college tuition, invest in businesses or sustain them through hard times.

“We’re wiping out whatever wealth blacks have accumulated — it assures racial economic inequality for the next generation,” said Thomas M. Shapiro, director of the Institute on Assets and Social Policy at Brandeis University.

What it really comes down to is that, for many black people, if you want to own a home, a high-interest/risk mortgage is basically your only option:

“The more segregated a community of color is, the more likely it is that homeowners will face foreclosure because the lenders who peddled the most toxic loans targeted those communities,” Thomas E. Perez, the assistant attorney general in charge of the Justice Department’s civil rights division, told a Congressional committee.

Imagine there being only certain places you could realistically live, regardless of how much money you have? It's an unstated apartheid, and it's entirely a product of banking, realty and federal policy. This stuff is all laid out very well in a whole host of books, such as When Affirmative Action Was White, American Apartheid, Family Properties, The Origins of the Urban Crisis, and American Babylon, among many.