By Darryl Fears
Washington Post Staff Writer
Tuesday, December 9, 2008 6:16 PM
Asserting that a lack of government oversight led to the current housing crisis, two former Housing and Urban Development Secretaries joined civil rights groups today in calling for a new government agency to check predatory lending and housing discrimination.
Former HUD secretaries Henry G. Cisneros and Jack F. Kemp Jr. headlined a bipartisan commission that released a report that said housing is still segregated more than 40 years after civil rights laws were passed to remedy the problem. The two called on Congress and President-elect Barack Obama to establish an Office of Fair Housing to address abuses.
Cisneros, Kemp and experts in academia and the housing trade held public hearings in five cities over the course of six months to study lending patterns and to determine the impact of the housing crisis.
"We've had conversations with ordinary renters, homeowners, and some of the nation's most respected housing and civil rights experts," Cisneros said at a news conference to announce the report. "And we've come to the conclusion that the only way to really address this problem is to create an independent agency that won't just deal with individual cases as they come in, but one that will proactively work to make our communities more diverse and inclusive by educating the public about its rights and responsibilities under the Fair Housing Act."
The proposed Office of Fair Housing should be established at HUD, an agency that does a poor job of enforcing fair housing rules, Cisneros said. The report said that for every one person who files a housing complaint, 150 do not, Cisneros said. Based on that ratio, the report estimated about 4 million housing violations every year. HUD processed 2,500 cases.
"We deserve better," Cisneros said.
In October, conservative politicians and commentators traced the mortgage problem to the Community Reinvestment Act, or CRA, enacted in 1977 to extend loans to minorities who were historically denied homeownership. Rep. Michele Bachmann (R-Minn.) lashed out against the act, reading from an Investor's Business Daily article that said banks made loans "on the basis of race and little else."
But defenders of the act said those claims had little to do with the facts of sub prime and predatory lending. Only a tiny fraction of sub prime loans made since 2000 were ever generated to meet the goals of the reinvestment act, which requires banks and savings-and-loan institutions to provide credit to their lower-income clients as well as their wealthy ones, they said.
The report said predatory lending flourished because of a lack of government oversight over how banks and their agents crafted high-interest loans, resulting in mortgages homeowners could not afford.
The loans had a "disproportionate impact . . . on people of color as well as the continuation of historical housing segregation and lending disparities that led to our current economic meltdown," said Wade Henderson, president and chief executive of the Leadership Conference on Civil Rights, one of the sponsors of the commission and the report.
"African Africans are more likely to be steered away from buying a home in a predominately white neighborhood," said Gordon Quan, a former mayor pro-tem in Houston and a chair of a city housing commission. "Latino buyers are routinely deprived equal information and mortgage financing assistance."
Quan said that while a HUD study confirmed that white renters "are still consistently favored over African American, Latino, and Asian renters, little is done about it. While cities ask for federal assistance . . . HUD turns its back."
In addition to Quan, members of the commission included Okianer Christian Dark, an associate dean at Howard University and I. King Jordan, president-emeritus at Galludet University. Sponsors of the commission included the NAACP Legal Defense Fund and Educational Fund, the Lawyer's Committee for Civil Rights Under the Law and the National Fair Housing Alliance.
The commissioners said studies have shown that in addition to breaking down racial stereotypes, diverse neighborhoods lead their residents to better jobs, better schools and better sources of transportation.
As Americans are funneled into segregated communities that lack those attributes, "the U.S. is losing its edge in global competition," said Nandinee K. Kutty, an economist who stood in the background for most of the news conference. "The failure of U.S. schools is causing U.S. companies to find skilled labor elsewhere. It's segregated neighborhoods that have led to the failure of schools."
John Payton, president and chief counsel for the NAACP defense and educational fund, said the group has reached out to members of Congress and the Obama transition team and they seemed responsive.
"It's hard to think that we won't get a receptive audience given the housing meltdown," Payton said. "We have communities that are in catastrophe, and housing is a major source of the catastrophe."