The Foreclosure Crisis, the American Dream, and Minority Households in the United States: A Descriptive Profile

HOMEOWNERSHIP ... IT'S A SLICE OF THE AMERICAN DREAM! "AMERICANS TAKE great pride in homeownership. For many Americans, homeownership is synonymous with success, independence, and the achievement of the American Dream. Because of the importance that the United States places on homeownership, it is no surprise that the government goes to great extremes to promote it" (Brandlee 2011, 1). Owning a home is a symbol of financial responsibility and a source of security for families, especially for their children's future. Homeownership is a pathway to other aspects of the American Dream, such as paying for a college education, providing start-up capital for family businesses, or funding retirement plans (Wallack 2009). Perhaps one of the most significant features of homeownership is that it permits families to establish roots in a community and participate in its civic culture. As such, homeownership is a cornerstone of a family's and community's wealth. In 1900, 46 percent of the householders in the United States owned their homes (US Census Bureau 2011a, 2002). The emergence of a robust economy in the 1920s raised the homeownership rate to 48 percent, but the Great Depression caused a reduction in the homeownership rate to 44 percent by 1940. After World War II, the housing industry, along with homeownership rates, underwent dramatic changes due to a booming economy, favorable tax laws, a resurgent home-building industry, and flexible financing plans (Garb 2005). As a result, by 1950 US homeownership increased to 55 percent. According to Humes (2006, 90), congressional passage of the G.I. Bill allowed soldiers returning from war to purchase homes. This resulted in an expansion of homeownership rates, with homebuyers increasingly believing in the American Dream. "The American suburban exodus of the 1950s did not simply spring into existence on its own: It is no exaggeration to say that the creation of suburbia and the resulting extension of home ownership to a majority of families in America was launched, underwritten, and paid for by the G.I. Bill" (ibid.). The homeownership rate reached its highest level (69 percent) in 2004, but dropped to 65 percent by 2012 (US Census Bureau 2013). Homeownership rates vary by race and Hispanic origin. In 2000, the national homeownership rate for the United States was 67 percent. The rate for white householders was 74 percent, 47 percent for black householders, and 46 percent for Hispanic householders (US Census Bureau 2011b). In 2010, the national homeownership rate remained unchanged from 2000 (67 percent). Rates for racial and ethnic populations in 2010 changed slightly, with white householders at 74 percent, black householders at 45 percent, and Hispanic householders at 47 percent. Thus, the homeownership rate for white householders was above the national average in 2000 and 2010. In comparison, the rates for black and Hispanic householders remained below the national average and the rate for white householders. There was relatively little difference in black and Hispanic rates between 2000 and 2010. This article will examine how the US home mortgage foreclosure crisis affected racial and ethnic minority householders. We discuss the crisis generally, and then examine the home mortgage industry and minority householders, foreclosure rates for minority householders, and the social justice context for minority householders. Although the home mortgage crisis resulted in foreclosure for many American householders, relative to white householders, more equity wealth was erased from minority householders who lost their homes; minority neighborhoods experienced severe social disorganization, such as increased crime and the transition from single-family housing to rental units. The public believes that "foreclosures contribute to certain neighborhood social conditions, such as a reduction in the number of residents or increases in disorder, that ultimately lead to crime" (Katz, Wallace, and Hedberg 2011, 360). …