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The availability of credit, to individual borrowers and to communities, is an integral factor shaping the geography of housing opportunity. Cities are shaped by the housing and borrowing choices of their residents and the attendant mobility -- or lack of mobility -- of families. When lenders deny credit to neighborhoods or borrowers because of race, communities suffer. And when lenders flood these same neighborhoods with subprime or predatory loan products, the communities suffer once again. The economic gains of individuals and of communities in cities over the last several decades are threatened by massive property devaluations, loss of equity, and foreclosures. These losses threaten the ability of families to move to better neighborhoods, the continued sustainability of marginal urban communities, and the general social and economic health of cities burdened by foreclosures, declining revenues, and increased demands for local services.

Predatory lending litigation under the Fair Housing Act attacks this new threat faced by individuals, communities, and cities. This litigation also deploys a new weapon: the city as plaintiff. Cities taking proactive steps to address the effects of race and credit on the geography of the city is a promising evolution. Cities have frequently been the target of fair housing lawsuits but also the site for locally based community development efforts. The failures of housing and development policies over the years to effectively grapple with the urban institutional structures created by decades of racial segregation and animus are, in part, a political failure. But the continuing difficulty in reconciling the pernicious structural effects of racial discrimination and segregation with individual and community wealth building strategies also reflects the complexity of the problem. The city as fair-lending plaintiff offers a hope of reconciliation between race and wealth creation.

Publication Citation

18 J. Affordable Hous. & Cmty. Dev. L. 169 (2009)