I see your observation about the median net worth gap of Non-Hispanic White households and Black households; however, it is not true that this difference must be caused by differing cultures or values. A person’s net worth, or value of all of their assets minus their debts, is mostly made up by the value of their home (46:36). The cause of these differences can be traced back to the 1930s to the 1940s. These differences in median net worth are due mainly to the unfair opportunities Whites got over Blacks when it came to the housing market. During the 1930’s the Federal Housing Authority partnered with banks and backed loans on houses in order to encourage more people to buy houses (27:11). The FHA was able to bring the down-payment needed to tavke out a mortgage from 50% to 10-20%, and the amount of time needed to pay it from 5 years to 30 years (27:54). There were particular people that were allowed this opportunity and those were White people. Neighborhoods with primarily minorities were said to be volatile to invest in and therefore were “red-lined” by organizations such as The National Appraisal System (33:12). …show more content…
This forced Blacks to rent homes which did not build equity or buy homes in low valued neighborhoods. Equity is the value of a house minus the amount owed to the bank for a loan. If property values goes up, a person owns more of their house than they did before. Equity is what allowed people to refinance their houses and get money in return . Equity was only available to Whites as only they could build equity in their houses and have this wealth which they could eventually pass on to their
The landowners took advantage of their tenants by overcharging for land and underpaying for the crops. The tenants began falling deeper into debt. They could not leave until they paid off their debt, which was nearly impossible. Although former slaves had been freed, they were still facing many struggles in free life. America’s plan for reconstruction had good intent, but did not give African Americans the equality they deserved.
Nichols enhanced and streamlined the use of restrictive covenants. Using the fears of property values decreasing, Nichols added a racial restriction into the deeds. In all of the deeds for the land he developed was this restriction, “None of said lots may be conveyed to, used, owned or occupied by negroes as owners or tenants. ”1 While this might seem like an isolated instance, restrictive covenants occurred all over the United States in the early 20th century. J.C. Nichols employed an addition that would enhance the covenant and make it more appealing to the “desired” homeowner; that addition was a self-renewing contract every 25 years.2
Overall, the federal government was never really hands on in housing, that changed in the 1930’s when the Federal Housing Administration (FHA) was created to be apart of the New Deal. After the Great Depression, the FHA sought to rebuild the housing market by introducing the mortgage lending system, that is still used today. The FHA actually did quite the opposite, “instead, the FHA adopted a racial policy”, that took advantage of racial covenants and insisted properties that were insured by them to use those covenants. The FHA introduced redlining policies in many American cities and with the Home Owners Loan Coalition (HOLC), a federally-funded program created to help homeowners refinance their mortgages, it seemed that it would never end.
The idea of equality for all people, regardless of their race, is instilled in the American society of today. Unfortunately, this idea has not always been present, which ultimately has caused many issues for America’s society in the past. As discussed in the book Our Town: Race, Housing, and the Soul of Suburbia, David L. Kirp focuses on the inequality that was found between the low-income blacks and the middle class whites in a South Jersey town, Mount Laurel. At the time, the whites had a goal of running the blacks out of the town by making the costs of housing expensive enough where blacks could not afford it. This lead to unequal treatment for the blacks who lived in Mount Laurel compared to the whites when it came to housing opportunities.
According to The Editorial Board New York Time’s, “The Housing Crisis Lives on for Minorities” December 26,2016, mortgage companies such as Fannie Mae are discriminating and being racist towards African-American and Latino homes. The writer emphasizes the neglection Fannie Mae had towards these minority homeowners and specifies the contrast between white areas and black areas. The mortgage crisis that ravaged the economy eight years ago, is a driving factor of the editorial. The writer is informing New York Times readers, educated citizens, and intellectuals about the racial allegations towards Fannie Mae. The Editorial Board affectively convinces their audience that there is an unjust gap between white and minority homes through the use of
Redlining defines the act of refuting facilities to residents of particular areas based on the fact that these residents belong to a minority class. The white communities were rated “Green” which meant “desirable area” and the non-white communities or the ones under development, were rated “Red” which meant that these areas were non-desirable. They were redlined. This resulted in most of the benefits going to white communities and they progressed more as compared to other racial groups. Blockbusting: Blockbusting was a technique used by real estate agents to encourage white property owners to offer their homes at cheap values in the fear that families from other racial groups were moving in the neighborhood.
Since then it has supported almost one million mortgage applications so that more Americans can become homeowners and develop rationally patriotic feeling during the war; however, these mortgage rates were based on occupation, income, ethnicity and demand on the market that might be bias to the non-white
African Americans already had it hard enough but with the New Deal it was even harder for them. The FRA (Federal Housing Authority) was also a big part of it. “The Federal Housing Authority refused to guarantee mortgages for blacks who tried to buy in white neighborhoods”(African Americans and the New Deal). Around forty percent of black workers made their living as sharecroppers and tenant farmers which then the AAA hit African Americans like a bus. They were forced off their land and had to move somewhere else.
With all the laws, taxes and codes that the blacks had to follow, owning land was unrealistic for many. Blacks turned to a cheaper alternative, renting. Unfortunately, this also had its downfalls, such as the lack of white landowners willing to rent to blacks. This led to a system called sharecropping. Sharecropping was an arrangement between white landowners and free blacks, the landowner would provide goods like food and seeds and the blacks would farm and use a portion of their crop as a payment to the landowners.
Due to the southerners betrayal, the government geared the Homestead Act of 1866 towards freedmen and small farmers. According to Smith, “The Homestead Act (1866) opened up 46,389, 545 acres of land for public sale in Alabama, Arkansas, Florida, Louisiana, and Mississippi ( Lecture 1, Rise of Jim Crow, 06/30/2017). In Florida’s case, the free blacks would have their own townships and communities that would promote black independence. Furthermore, land sold at this magnitude would help unite blacks and help them
In “African Americans and the New Deal, the documents starts with, “Most New Deal programs discriminated against African Americans” This was only the beginning. The article goes on to say that the FHA had lower pay scales for Black Americans (African Americans and the New Deal 1). This is discrimination to give higher pay for Whites and not Blacks. One of the New Deal’s program called the AAA, “forced 100,000 blacks off the land in 1933 and 1934”
Grant black people what they wanted: land ownership. This ownership came with a price. A majority of landowners lost their labor with the Emancipation Proclamation. These landowners devised a system of land ownership that would give the black people what they wanted, however, it would come at a price. Labor contracts laid out strict working regulations and crop leans that would indebt the sharecroppers to the landowners in an endless cycle year after year.
Golash-Boza states that African Americans and Latinos have less than 8 percent of the wealth that whites have. Because African Americans as well as Latinos make less money than Whites, they are unable to own the same type of homes Whites are able to. Based on a study conducted by Shapiro, Meschede, and Osoro; the wealth gap is attributed to five factors. These factors are years of homeownership, household income, years of unemployment, college education, and inheritances or financial support from family members. Years of homeownership accounted for the largest portion of the differences between White and African American families.
For bringing the home within the reach of a black purchaser, however, the speculator extracted a considerable price.” (Jamelle Bouie,How we built the ghettos, page 2) This is like when Lena the mother of Walter and beneatha bought a new house and only had to put a small down payment on it in order to buy the
Wealth and Inequality in America Inequality The inequality in America has increased over time; the gap between the rich and the poor has become a problem that many Americans don’t see. Inequality is the extent of income which is distributed unequally among the citizenry. The inequality of the United has a large gap between the poor and the rich making it unfair to the population, the rich are becoming wealthier and the poor remain poor. The article “Of the 1%, By the 1%, For the 1%”, authored by Joseph E. Stiglitz describes that there is a 1 percent amount of American’s who are consuming about a quarter of the United States income in a year.