Discrimination in housing and lending continues to produce "extreme levels of residential segregation" 40 years after the passage of the Fair Housing Act, according to a comprehensive report by a bipartisan commission chaired by former housing secretaries Jack Kemp and Henry Cisneros.

The report, which follows on the heels of hearings in five cities from July to October, found "severe and ongoing problems" with the Department of Housing and Urban Development’s enforcement of fair-housing laws, and room for improvement in housing programs that may be promoting, rather than preventing, racial segregation.

Discrimination in housing and lending continues to produce "extreme levels of residential segregation" 40 years after the passage of the Fair Housing Act, according to a comprehensive report by a bipartisan commission chaired by former housing secretaries Jack Kemp and Henry Cisneros.

The report, which follows on the heels of hearings in five cities from July to October, found "severe and ongoing problems" with the Department of Housing and Urban Development’s enforcement of fair-housing laws, and room for improvement in housing programs that may be promoting, rather than preventing, racial segregation.

In its report, the National Commission on Fair Housing and Equal Opportunity calls for the creation of an independent fair housing enforcement agency, staffed by career employees with experience in fair-housing issues and guided by an advisory commission appointed by the president.

Ending housing discrimination should be a high priority, the report said, because within a few decades African Americans, Latinos, Asian Americans and Native Americans will collectively represent the majority of U.S. residents.

Housing discrimination makes it harder for minorities to attain homeownership, receive a quality education, land a good job, and accumulate wealth. "These groups represent our future workers, the people whose skills and talents must be harnessed to ensure the nation’s economic viability," the report said.

At hearings in Chicago, Houston, Los Angeles, Boston and Atlanta, the commission heard testimony that there are still "far too many segregated neighborhoods where skin color determines school quality and economic opportunity," and where the quality of municipal services is tied to race and income, rather than need.

While more Americans than ever are living in diverse communities and the incidence of discrimination has declined at the national level, the report estimated there are at least 4 million fair-housing violations a year.

Progress has been made — most states and many local governments have fair-housing laws, the report noted, and the ethical codes of most housing industry groups include a commitment to fair housing. State real estate licensing laws require fair-housing training and continuing education, the report noted.

In a study conducted eight years ago, HUD found a reduction in the rate of discrimination in residential sales and information on housing availability, but an increase in racial steering.

For the real estate industry, housing discrimination is not only an ethical and legal issue, but one of economics. Two-thirds of new households being formed today are either racial or ethnic minorities or immigrants, the report said, and many are looking for their first home.

Although most of the commission’s seven members have backgrounds in government or academia, the real estate industry was represented by Pat Vredevoogd, who served as 2007 president of the National Association of Realtors. Also serving as a guest commissioner was 2009 NAR President Charles McMillan.

Recommendations

In addition to creating an independent fair-housing enforcement agency, the report recommended reestablishing the President’s Fair Housing Council, created by President Bill Clinton in a 1994 executive order to review the design and delivery of federal programs and activities to ensure that they support a coordinated strategy to further fair housing.

The council "has been severely underutilized, and to our knowledge has only met once," the report said.

The Fair Housing Act and the Housing and Community Development Act of 1974 was intended ensure that the federal government not only works to put an end to discrimination, but takes proactive steps to advance fair housing in all of its programs and activities, the commission’s report said.

Some critics worry that HUD and other federal agencies are instead promoting segregation through their administration of housing, lending and tax programs, the report said.

The three largest federal housing programs — Section 8, public housing, and the Low Income Housing Tax Credit — may in some cases create or maintain segregated housing patterns, the report said.

Families using the Section 8 voucher program might have more choices about where to live if the program were reformed to include higher rents where necessary and by providing incentives to recruit new landlords into the program, the report said.

The Low Income Housing Tax Credit program has operated "with little or no civil rights oversight since its inception" in 1986, the report said, and should be reformed to include fair-housing requirements for site selection, marketing and reporting to ensure the program furthers fair-housing goals.

Enforcement

The report highlighted several areas in which HUD’s enforcement of the Fair Housing Act allegedly falls short (HUD did not respond to a request for comment by press time).

The report estimated that there are more than 4 million instances of housing discrimination a year, but only 30,000 complaints are filed. More than 90 percent of those complaints are processed by state or local fair-housing agencies and private nonprofit organizations, and less than one in 10 by HUD.

"Literally millions of acts of rental, sales, lending and insurance discrimination, racial and sexual harassment discrimination, and zoning and land-use discrimination go virtually unchecked," the report concluded.

Several studies — two conducted by HUD itself — have concluded that more than 80 percent of Americans "would do nothing when confronted with discrimination because it would do no good," the report said.

"Americans do not file complaints and use their fair-housing rights because they have concluded they are essentially useless," said John Goering, a former HUD researcher turned professor at the School of Public Affairs at Baruch College of the City University of New York, at a commission hearing in Boston.

The report maintains that HUD has "chronically understaffed" its fair-housing enforcement division, and said many employees are poorly trained and directed.

At least 750 full-time employees are needed in the Office of Fair Housing and Equal Opportunity to handle existing fair-housing work alone, the report said — a level not seen since 1994. At the equivalent of 579 full-time employees, the office’s staffing in 2007 was the lowest since 1989, the report said.

The report found that number of cases in which HUD issues a charge of discrimination fell from 125 in 1995 to 31 in 2007. While the Fair Housing Amendments Act of 1988 allowed "quick administrative hearing," no administrative law judge hearings were held in 2005 and 2006, and only two in 2007.

"HUD’s failure to properly investigate cases, make determinations and issue charges, particularly in recent years, has made a farce of the system," the report said.

The Fair Housing Act requires that complaints be investigated within 100 days if feasible and that the parties be provided a written statement of reasons when an investigation is not concluded within 100 days. In the last four years, the report said, the average age of cases in which a determination of reasonable cause was made and a charge issued was 502 days.

"Delays in the administrative processing of cases have been so severe that they have served as the basis for dismissal of cases by courts and administrative law judges," the report said.

The report said HUD has missed opportunities to initiate large-scale investigations of systemic problems like real estate steering, lending and insurance discrimination, and redlining.

"Systemic investigations are the most effective and efficient way to bring about change and end behavior that perpetuates segregation," the report said, but since 2002 HUD has resolved only three investigations that it initiated itself, and all involved individual circumstances rather than systemic discrimination across neighborhoods or communities.

Impact of downturn

Although the report was timed for release on the 40th anniversary of the Fair Housing Act, the commission is also tying its findings to the housing boom-bust and resulting foreclosure crisis.

African Americans and Latinos will lose up to $213 billion in the crisis, Kemp and Cisneros said in a letter to congressional lawmakers. The letter cited studies showing minorities received a disproportionate share of subprime loans during the boom, and said they will be hit harder by the downturn.

A HUD study analyzing first-time homeowners, for example, suggests that it takes longer for minorities to become homeowners and less time for them to lose their homes. After foreclosure, the study found whites typically rented or lived with relatives for 10.7 years, compared with 14.4 years for African-Americans and 14.3 years for Latinos.

The letter asked lawmakers to consider increased protections against discriminatory and predatory lending, and for help for troubled borrowers including amendments to the bankruptcy code to allow judges to modify the terms of mortgages.

***

What’s your opinion? Leave your comments below or send a letter to the editor.

Show Comments Hide Comments

Comments

Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×