What Does Race Have to Do With America’s Foreclosure Crisis?

>>> WE TURN NOW TO A STORY OF AMERICAN NEIGHBORS ON DIFFERENT SIDES OF THE CLASS DIVIDE.

BERNADETTE ATUAHENE IS AN AUTHOR AND LAW PROFESSOR AND HER NEW BOOK, "PLUNDERED", EXPLORES WHAT SHE CALLS THE SYSTEMIC THE TREE IN AMERICA'S TAX SYSTEM.

SHE JOINS HARI SREENIVASAN TO REVEAL WHAT SHE HAS LEARNED FOLLOWING THE LIVES OF TWO FAMILIES IN DETROIT, ONE WHITE, ONE BLACK.

>> THANKS.

BERNADETTE ATUAHENE, THANKS SO MUCH FOR JOINING US.

YOU ARE A TRAINED LAWYER FROM HARVARD AND YALE AND YOU "PLUNDERED" , HOW RACIST POLICIES UNDERMINE BLACK HOMEOWNERSHIP IN AMERICA, AND YOU MENTIONED THAT ORIGINALLY THIS IS NOT THE BOOK YOU ARE SETTING OUT TO RIGHT.

WHAT HAPPENED?

>> INITIALLY, MY FIRST ETHNOGRAPHIC PROJECT --ALL MY WORK DEALS WITH LAND STOLEN FROM BLACK PEOPLE AND SO MY FIRST ETHNOGRAPHIC PROJECT DEALT WITH LAND STOLEN IN APARTHEID IN COLONIALISM SO THAT PROJECT WAS UNCOMFORTABLE FOR ME IN MANY WAYS BECAUSE IT WAS AGAIN, BLACK PEOPLE AS VICTIMS, SO MY NEXT PROJECT, I WANTED TO LOOK AT VULNERABLE POPULATIONS DOING THE STEALING SO I DECIDED TO DO A BIG PROJECT ON SQUATTING AND I GOT A BIG NATIONAL SCIENCE FOUNDATION GRANT TO STUDY SQUATTING IN DETROIT BECAUSE DETROIT HAS ONE OF THE LARGEST MODERN-DAY SQUATTING PHENOMENONS IN AMERICA AND THEN THROUGH THE RESEARCH OF SQUATTING, I ACCIDENTALLY FOUND THE PROPERTY TAX FORECLOSURE CRISIS AND SWITCHED MY PROJECT.

>> WHAT WAS THE PROPERTY TAX FORECLOSURE CRISIS IN DETROIT ALL ABOUT?

>> SINCE 2009, ONE IN THREE HOMES HAS COMPLETED THE PROPERTY TAX FORECLOSURE PROCESS , ONE IN THREE.

WE HAVE NOT SEEN THIS NUMBER OF PROPERTY TAX FORECLOSURES IN AMERICAN HISTORY SINCE THE GREAT DEPRESSION, SO THE QUESTION IS, WHAT IS GOING ON IN DETROIT ?

WELL, I DID A STUDY THAT SHOWS BETWEEN 2009 AND 2015, AND EACH OF THOSE SEVEN YEARS, ANYWHERE BETWEEN 53 AND 84% OF HOMES, THE CITY WAS ASSESSING IN VIOLATION OF THE MICHIGAN STATE CONSTITUTION , WHICH QUITE CLEARLY SAYS NO PROPERTY CAN BE ASSESSED AT MORE THAN 50% OF THE PROPERTY'S MARKET VALUE BUT WHAT I NEED YOU TO UNDERSTAND IS, THIS IS NOT A PROBLEM UNIQUE TO DETROIT.

DETROIT IS JUST GROUND ZERO FOR A NATIONAL PROBLEM.

A RECENT STUDY FOUND THAT BLACKS AND HISPANICS PAY ON AVERAGE OF 10 TO 13% HIGHER PROPERTY TAX RATE THAN WHITES FOR THE SAME BUNDLE OF GOODS, WHICH EQUALS ON AVERAGE, THREE TO $400 MORE PER YEAR, SO RACIALIZED PROPERTY TAX ADMINISTRATION IS A RACIAL JUSTICE ISSUE THAT OUR NATION HAS NOT YET BEGUN TO ADDRESS.

>> HOW DOES IT ACTUALLY GET IMPLEMENTED?

WHAT YOU ARE DESCRIBING IS UNEQUAL CONDITIONS FOR PARCELS OF LAND THAT SHOULD OTHERWISE BE WORTH THE SAME, SO WHO OR HOW IS A PARTICULAR Z.I.P.

CODE OR AREA ON THE MAP GETTING ONE PROPERTY TAX DESIGNATION VERSUS ANOTHER?

>> THE WAY PROPERTY TAX VALUATION IS DONE, IT IS DIFFERENT.

WITH APPRAISALS, IT IS INDIVIDUAL HOUSE BY HOUSE, AND A LOT OF YOUR LISTENERS HAVE HEARD OF APPRAISAL BIAS.

THE STORY, THERE WAS THAT ONE PROFESSOR FROM BALTIMORE FOR JOHN HOPKINS WHO TRIED TO SELL HIS HOUSE, AND THEN DID IT AGAIN BY PUTTING HIS WHITE COLLEAGUE'S PICTURES THERE AND GOT A HIGHER VALUATION AND SO THAT IS CALLED APPRAISAL BIAS.

WHAT I'M TALKING ABOUT IS WHAT BLACK AND BROWN HOMES, WHEN IT COMES TIME FOR APPRAISAL, THEY ARE UNDER-VALUE BUT WHEN IT COMES TIME FOR PROPERTY TAXATION, THEY ARE OVERVALUED.

HOW DOES THAT HAPPEN?

BECAUSE PROPERTY TAXATION IS NOT DONE WITH APPRAISAL .

IT IS DONE WITH MASS APPRAISALS, SO THEY DO THE APPRAISAL FOR A LARGER AREA, AND FOR INSTANCE IN MICHIGAN, THEY HAVE SOMETHING CALLED THE ECF, AND ECONOMIC CONDITION FACTOR, WHICH IS JUST AN AREA.

WHAT THEY DO IS TAKE THE AVERAGE SO BY DEFINITION, AN AVERAGE MEANS THAT THE HIGHER VALUE HOMES ARE GOING TO BE UNDERVALUED AND THE LOWER VALUED HOMES ARE GOING TO BE OVERVALUED.

ALL RIGHT, WHO LIVES IN THOSE LOWER VALUED HOMES?

VULNERABLE POPULATIONS.

INTERSECTIONALITY TELLS US BLACK AND BROWN PEOPLE, WOMEN, POOR PEOPLE AND THAT IS THE PHENOMENON OF OVER ASSESSING LOWER VALUED HOMES IS CALLED REGRESSIVE IN THE AND THAT IS WHEN THE LOWER-VALUED HOMES ARE TAXED AT A HIGHER RATE THAN THE HIGHER ELLIOTT HOMES AND WE SEE REGRESSIVITY THROUGHOUT THE UNITED STATES.

>> RATED HERE, DETROIT AS AN EXAMPLE, THERE COULD BE OTHERS TO CITIES THIS IS HAPPENING IN AS WELL, OF PREDATORY GOVERNMENTS.

WHAT YOU MEAN BY THAT?

>> PREDATORY GOVERNANCE IS WHEN OFFICIALS INTENTIONALLY OR UNINTENTIONALLY RAISE PUBLIC DOLLARS THROUGH PROCESSES IN WRITTEN AND UNWRITTEN LAWS THAT PRODUCE RACIAL INEQUITY SO WHAT IS HAPPENING -- A CHARACTER IN MY BOOK, HER STORY REALLY EXEMPLIFIES THIS.

SHE HAD HER HOUSE, SHE INHERITED HER HOUSE FROM HER GRANDPARENTS AND THE CITY OF DETROIT THEN OVER TAXED HER HOME BECAUSE MOST OF THE HOMES THAT WERE OVERTAXED ARE THE LOWEST-VALUED HOMES AND SHE LOST THAT HOME THROUGH TAX FORECLOSURE.

WHO IS WINNING FROM THIS?

IT IS THE LOCAL GOVERNMENTS, NOT SOME KIND OF CORRUPT PUBLIC OFFICIAL.

WE ALSO SEE PREDATORY GOVERNANCE.

WE'VE SEEN IT IN FERGUSON BEYOND WHAT HAPPENS TO MICHAEL DOJ REPORT THAT SHOWS ENGAGEMENT IN UNCONSTITUTIONAL POLICING AND CHARGING AFRICAN-AMERICANS EXCESSIVE FEES AND FINES.

WHO BENEFITED FROM THAT?

NOT SOME CORRUPT POLICE OFFICER BUT THE CITY OF FERGUSON ITSELF.

WHETHER IT IS FERGUSON, NEW ORLEANS, PHILLY OR D.C. , AND NOT JUST PROPERTY TAX, BUT IT IS A PHENOMENON I IDENTIFY IN THE BOOK CALLED PREDATORY GOVERNANCE.

>> YOU HAVE THIS NICE VEHICLE, TWO FAMILIES YOU TRACK OVER TIME FROM GRANDFATHER ON DOWN AND REALLY IT BECOMES A LITTLE BIT OF THE STORY OF INTERGENERATIONAL WEALTH, AND YOU SEE HOW CRUCIAL HOMEOWNERSHIP IS IN THAT.

SUMMARIZE FOR US THE JUXTAPOSITION BETWEEN THESE TWO GENTLEMEN.

>> THE BOOK, LIKE YOU SAID, STARTS WITH TWO GRANDFATHERS.

ONE IS GRANDPA GUCCI FROM ITALY.

HE WAS A SHARECROPPER IN ITALY THEM MAKES HIS WAY EVENTUALLY TO DETROIT TO WORK AT FORD RIVER FACTORY AND THE OTHER FACTORY IS GRANDPA BROWN WHO WAS ALSO A SHARECROPPER, BUT IN NORTH CAROLINA, AND HE ALSO MAKES IT THROUGH THE GREAT MIGRATION FROM NORTH CAROLINA TO DETROIT TO WORK AT THE SAME FACTORY, FORD'S RIVER ROUGE FACTORY.

I START WITH THESE TWO MEN WHO START THEIR WITHIN A COUPLE OF YEARS OF EACH OTHER.

THEY START THE SAME JOB AND I TRACK THEIR LIVES TO SHOW YOU THAT GRANDPA BUCCI DID NOT HAVE AN EASY LIFE.

HE LITERALLY HAD ONE FINGER CUT OFF THROUGH A WORK ACCIDENT BUT GRANDPA BUCCI AT NO MOMENT HAD TO DEAL WITH RACIALLY RESTRICTED GOVERNANCE LIKE GRANDPA BROWN DID WHICH ARE DEEDS THAT PREVENT AFRICAN-AMERICANS FROM FINDING HOUSING IN THE SUBURBS WHERE HOUSES WERE LARGER, CHEAPER, BIGGER, WITH BETTER AMENITIES.

ALTHOUGH GRANDPA BUCCI DID NOT HAVE AN EASY LIFE, HE HAD NO MOMENT HAD TO DEAL WITH REDLINING, WHICH IS WHEN RACIALLY RESTRICTIVE COVENANTS SEQUESTER BLACK PEOPLE IN NEIGHBORHOODS THAN THE FEDERAL GOVERNMENT THROUGH THE FAIR HOUSING ADMINISTRATION DREW A RED LINE AROUND THE BLACK NEIGHBORHOODS JUST BECAUSE THEY WERE BLACK , SAYING THESE COMMUNITIES ARE NOW A CREDIT RISK AND THEN BANKS DID NOT LEND MONEY TO THESE COMMUNITIES, AND SO THERE WERE NO MORTGAGES, THERE WERE NO HOME IMPROVEMENT LOANS AND THE INEVITABLE RESULT OF THAT IS A DETERIORATED COMMUNITY .

ALTHOUGH GRANDPA BUCCI HAD IT HARD, HE NEVER DEALT WITH HIS COMMUNITY, THE FEDERAL GOVERNMENT CREATING A POLICY LIKE REDLINING THAT MADE THE VERY PRESENCE OF YOUR PEOPLE MAJOR VERY PRESENCE HAVE THE ABILITY TO REDUCE PROPERTY VALUES.

REDLINING MADE BLACK PEOPLE A PARIAH AND SO IT GOES THROUGH ALL OF THE RACIST POLICIES THAT GRANDPA BROWN HAD TO DEAL WITH, AND GRANDPA BUCCI DID NOT, AND IT LOOKS AT THEIR PROGENY.

GRANDPA BUCCI'S GRANDSON ROBERT CURRENTLY LIVES IN THE HOME THAT HE INHERITED FROM HIS GRANDFATHER AND I ASKED ROBERT, WHY DO YOU STILL LIVE IN THE SUM?

HE SAID I DON'T HAVE TO PAY A NOTE.

MY RISHA BROWN WHO IS THE GRANDDAUGHTER OF GRANDPA BROWN, SHE INHERITED HER GRANDFATHER'S HOME AND IT WAS NOT A VALUABLE ASSET.

IT WAS A MONEY PIT WORTH LESS THAN $10,000 AND IT REQUIRED ALL KINDS OF MAINTENANCE.

WHY?

BECAUSE THREE YEARS AND YEARS OF REDLINING, THE HOME, HER HOME AND THE HOMES AROUND IT WERE DEPRIVED OF INVESTMENT UNTIL THE MAINTENANCE WAS NOT DONE AND SO SHE INHERITED SOME MONEY PIT INSTEAD OF A VALUABLE ASSET.

>> IN YOUR RESEARCH YOU FOUND THAT BETWEEN 2010 AND 2016, HOMEOWNERS BY AT LEAST $600 MILLION AND IT YOU SAID THE CITY ITSELF IS NOT GAINING FROM ALL THIS MONEY.

WHO IS?

>> WHEN YOU FOLLOW THE MONEY IN DETROIT, JUST AS YOU SAID, IT IS NOT THE CITY OF DETROIT BENEFITING FROM THIS OVER TAXATION.

IT IS ACTUALLY A NET LOSS FOR THE CITY OF DETROIT BECAUSE WHEN YOU FORECLOSE ON A HOME, THE VALUE OF THE HOME NEXT TO IT REDUCES.

FORECLOSURE CAUSES BLIGHT, ET CETERA, SO THEN WHO IS BENEFITING AND THAT IS ONE OF THE MAIN REVEALS IN THE BOOK IS TO SHOW THE NUMBER ONE BENEFACTOR OF PROPERTY TAX FORECLOSURE AND DELINQUENCY IN DETROIT WAS WAYNE COUNTY BECAUSE A LOT OF PEOPLE KNOW THAT DETROIT WENT THROUGH THE LARGEST MUNICIPAL BANKRUPTCY IN U.S. HISTORY AND WAS TAKEN OVER BY AN EMERGENCY MANAGER BUT WHAT LOTS OF PEOPLE DO NOT KNOW IS THAT AT THE VERY SAME TIME, WAYNE COUNTY WAS IN A FINANCIAL EMERGENCY AND SAVED ITSELF FROM EMERGENCY MANAGEMENT AND BANKRUPTCY USING SOMETHING CALLED THE DELINQUENT TAX REVOLVING FUND, WHICH IS WHERE THAT 18% INTEREST ON DELINQUENT TAXES GOES, WHICH IS WHERE THE MONEY FROM ANY HOME SOLD THROUGH THE PROPERTY TAX FORECLOSURE OPTION GOES, AND SO THEY SAVE THEMSELVES FROM EMERGENCY MANAGEMENT AND BANKRUPTCY USING THIS MONEY IN THIS PARTICULAR ACCOUNT THAT COMES FROM PROPERTY TAX DELINQUENCY AND FORECLOSURE , DETROIT BUT AGAIN THAT IS THE BIGGEST MONEYMAKER BUT AGAIN AS WE TALKED ABOUT EARLIER, I GO THROUGH THE VARIOUS DIFFERENT ENTITIES ALSO IN ADDITION MAKING MONEY FROM PROPERTY TAX DELINQUENCY AND FORECLOSURE IN DETROIT.

>> IS THERE A WAY TO FIGURE OUT WHAT IS AT THE ROOT OF THIS?

IS RACISM PART OF THIS AT A HUMAN LEVEL, OR IS IT REALLY AT A POLICY LEVEL BECAUSE THAT IS WHAT YOU KINDA SEEM TO BE LOOKING AT.

>> YES, AND YOU KNOW, THE WAY COUNTRY, WE ARE LOOKING FOR THE RACIST.

HOLLYWOOD HAS TAUGHT US TO LOOK FOR BLACK HATS, WHITE HATS, GOOD GUYS, BAD GUYS.

WE NEED TO SHIFT FROM THAT TO REALLY THINKING ABOUT THIS IN TERMS OF RACIST POLICIES.

THERE ARE CERTAIN POLICIES, WHETHER IMPLEMENTED INTENTIONALLY OR UNINTENTIONALLY, IS NOT MY CONCERN.

I'M SAYING LET'S MOVE AWAY FROM INTENT AND LOOK AT THE VARIOUS POLICIES AND IF THOSE POLICIES ARE CAUSING RACIAL INEQUITY THAN I CALL THEM RACIST POLICIES.

I GET THAT TERM FROM ABRAHAM KINDE.

HIS WORK HAS INFLUENCED ME GREATLY AND IF WE HAVE THESE RACIST POLICIES THAN THE IDEA IS TO DISASSEMBLE THEM.

WHAT DO RACIST POLICIES LOOK LIKE IN THE AREA OF DETROIT?

IT LOOKS LIKE THE LOWEST VALUED HOMES IN THE CITY BEING TAXED AT A HIGHER RATE THAN A HIGHER VALUED HOME.

IT LOOKS LIKE STATUTORILY MANDATED 18% INTEREST PENALTY ON PROPERTY TAX DEBT, WHICH MAKES SENSE IF PEOPLE HAVE THE MONEY AND THEY ARE NOT PAYING, IF POOR PEOPLE ARE NOT PAYING BECAUSE THEY DON'T HAVE THE MONEY AND THAT IS WHY WE ACTUALLY HAVE TO MAKE THE SHIFT FROM TALKING ABOUT STRUCTURAL RACISM, SYSTEMIC RACISM TO TALKING ABOUT RACIST POLICIES BECAUSE RACIST POLICIES NUMBER ONE IS SOMETHING PEOPLE CAN UNDERSTAND.

NUMBER TWO, WHEN YOU TALK ABOUT STRUCTURAL RACISM, THAT IS SO OVERWHELMING.

WHAT DO I DO ABOUT THAT BUT WHEN YOU TALK ABOUT RACIST POLICIES, IT FORCES THE PERSON ARTICULATING THE IDEA TO ENUMERATE EXACTLY THE POLICIES JUST AS I HAVE DONE, SO THAT WE CAN MOVE TO THE SPACE OF TRYING TO DISASSEMBLE THOSE POLICIES.

>> THERE ARE PEOPLE WHO ARE GOING TO WATCH THIS CONVERSATION AND SAY , BUT, WHERE IS THE PERSONAL RESPONSIBILITY IN ALL OF THIS?

WHY IS IT DETROIT SEEMS TO HAVE THESE KIND OF PROBLEMS OVER AND OVER AGAIN, AND I THINK THEY'RE ALSO ARE PEOPLE WHO WANT TO SAY THIS IS YOUR FAULT.

YOU SHOULD'VE KNOWN BETTER.

YOU SHOULD'VE READ THE FINE PRINT BEFORE YOU SIGN, ET CETERA.

FROM YOUR RESEARCH, HOW DO YOU SQUARE THAT?

>> THE CHARACTER IN MY BOOK EVEN BLAMES HERSELF.

WHEN I FIRST THAT HER SHE SAID WELL, THE PROBLEM IS I WASN'T DOING WHAT I WAS SUPPOSED TO BE DOING AND WHEN I INTERVIEWED ALL OF THE VARIOUS KIND OF GOVERNMENT OFFICIALS WHO TOUCHED THE PROPERTY TAX FORECLOSURE PROCESS THEY ALSO HAD WHAT I CALL THESE NARRATIVES OF PERSONAL RESPONSIBILITY.

ONE SAID THE PROBLEM IS DETROITERS JUST DON'T WANT TO PAY THEIR TAXES.

ANOTHER SAID WELL, DO TRADERS --DETROITERS BUT HASN'T TAKEN A FORD AND ANOTHER TOLD ME INSTEAD OF PAYING THEIR TAXES , THEY CHOSE TO BUY PURSES.

MY RESEARCH TELLS ME IT IS NOT A STORY OF PERSONAL RESPONSIBILITY.

IT IS A STORY OF STRUCTURAL INJUSTICE.

I INTERVIEWED OVER 150 HOMEOWNERS WHO ARE PROPERTY TAX FORECLOSED.

I INTERVIEWED ALMOST EVERY GOVERNMENT OFFICIAL WHO TOUCHES THE PROCESS.

I INTERVIEWED INVESTORS AND EVEN TOOK A NINE MONTH COURSE AND PASS THE STATE EXAM TO BECOME A CERTIFIED MICHIGAN ASSESSOR AND SO THROUGH MY COMPREHENSIVE INVESTIGATION, I FOUND THAT AGAIN , IT IS A STRUCTURAL ISSUE.

53 TO 84% OF PROPERTIES WERE BEING ASSESSED IN VIOLATION OF THE MICHIGAN STATE CONSTITUTION.

ABOUT 30% OF DETROITERS LIVE BELOW THE POVERTY LINE SO THEY COULD NOT AFFORD THIS ILLEGALLY INFLATED PROPERTY TAXES.

THERE WAS INJUSTICE HIDDEN IN THESE VERY COMPLEX PROPERTY TAX COMPILATIONS.

RACIST POLICIES HAD YOU TRYING TO SLAY A DRAGON WITH A BUTTER KNIFE AND SO THAT IS WHAT IS HAPPENING HERE , IS AGAIN, WE NEED TO MAKE THE SHIFT FROM THESE NARRATIVES OF PERSONAL IRRESPONSIBILITY AND FOCUS ON THE RACIST POLICIES, FOCUS ON THE STRUCTURAL INJUSTICE THAT IS AT PLAY HERE.

>> SO, BERNADETTE, IF THERE ARE THESE STRUCTURAL FORCES AT PLAY, WHAT IS THE PURPOSE OF INDIVIDUAL EFFORT AGAINST THIS, RIGHT?

IF SOMEONE FINDS THEMSELVES A VICTIM OF ONE OF THESE PREDATORY POLICIES?

WHAT CAN THEY DO?

>> BEFORE I WENT TO LAW SCHOOL, I WAS A COMMUNITY ORGANIZER IN SOUTH-CENTRAL L.A.

WHEN I FOUND THAT ONE IN THREE HOMES HAD COMPLETED THE PROPERTY TAX FORECLOSURE PROCESS IN THIS 80% CITY CALLED DETROIT, I COULD NOT JUST WRITE ABOUT IT AND KEEP ON MOVING SO MY STUDENTS AND I JOINED WITH OVER A DOZEN GRASSROOTS ORGANIZATIONS TO CREATE SOMETHING CALLED THE COALITION FOR PROPERTY TAX JUSTICE AND WE HAVE THREE GOALS.

NUMBER ONE IS TO STOP THESE ILLEGALLY INFLATED PROPERTY TAXES, NOT ONLY IN DETROIT, BUT THROUGHOUT THE NATION.

NUMBER TWO IS TO MAKE SURE PEOPLE IN DETROIT, BEFORE THEY ARE FORECLOSED, WE CAN MAKE SURE THE TAXES THEY OWED ARE NOT ILLEGALLY INFLATED THE NUMBER THREE IS TO PROVIDE AND SO, WE HAVE SOMETHING WE CALL THE DIGNITY RESTORATION PROJECT, AND WE ARE RAISING $10 MILLION TO COMPENSATE THE HARDEST HIT DETROITERS, AND THIS IS A REALLY IMPORTANT MOMENT IN THE RESTORATION MOVEMENT WRIT LARGE BECAUSE THERE IS A WHOLE DEBATE.

WHERE SHOULD WE START REPARATIONS?

SLAVERY, JIM CROW?

I AM SAYING LET'S START REPARATIONS YESTERDAY WITH WHAT HAPPENED IN DETROIT, THIS 80% LAXITY BECAUSE IF WE CAN'T GET IT RIGHT IN DETROIT WHERE THE EVIDENCE IS UNCONTESTED AND IT IS SO CLEAR THEM THAT WE LIKELY WILL NOT BE ABLE TO GET IT RIGHT IN GENERAL.

>> PROFESSOR OF LAW AT THE UNIVERSITY OF SOUTHERN CALIFORNIA, BERNADETTE ATUAHENE.

ALSO, AUTHOR OF THE BOOK, "PLUNDERED" .

THANKS SO MUCH FOR JOINING US.

>> ALL RIGHT.

THANK YOU FOR HAVING ME.

THIS WAS A LOVELY CONVERSATION, THANK YOU.