Using a Public Health Lens to Understand and Address the Foreclosure Crisis

By Katherine Schaff, MPH

 This is the second in a three-part series on foreclosure and health.

 The previous blog focused on how foreclosure directly affects individual and community health. However, there’s another way that foreclosures affect health—as people lose their homes and drain their assets trying to save them or as renters cope with added expenses and displacement as landlords face foreclosure, the loss of wealth also affects health, as well as growing inequities in wealth across the country.

What’s the connection between foreclosure, wealth, and health?

Public health research clearly shows that wealth is correlated with positive health outcomes. Throughout the history of the United States, wealth has always been inequitably distributed based on race, class, and place, and the foreclosure crisis has only increased barriers to a more equitable society. It’s important to note that the origins of the foreclosure crisis are not recent—multiple sources, including a report from the Kirwan Institute for the Study of Race and Ethnicity and a recent presentation from Haas Institute for a Fair and Inclusive Society Director john powell at the Beyond Bankruptcy convening in Detroit discuss how the crisis must be viewed in its historical context, including how New Deal legislation in the 1930s opened up home ownership, but mostly for whites in suburban areas. The Kirwan report states as “these racially discriminatory federal guidelines were then absorbed into private market practices,” communities of color were isolated from mainstream banking institutions and faced an influx of high-cost credit institutions. The report continues:

Present-day sub-prime mortgage brokers targeted these communities not out of personal racial animosity, but because these neighborhoods were starved of prime credit entirely, or because families were “equity rich but cash poor,” with paid-off homes but unmet credit needs (such as college tuition or medical expenses) – a condition that drove sub-prime refinancing growth. Termed “reverse redlining,” the targeting of credit-starved neighborhoods is and was possible because prior redlining had isolated these communities from mainstream banking and lending.

Home ownership is the main source of wealth for many people, which means that as the foreclosure crisis intensifies already deeply ingrained wealth inequities in the U.S., especially along racial lines, negative health impacts will follow. By 2007, non-conventional mortgage securitization generated $3.8 trillion of assets for financial institutions, while people of color experienced a loss in wealth of an estimated 164 to 213 billion dollars from 2000 to 2008 – the greatest loss of wealth to communities of color in modern U.S. history. Through focused predatory lending in segregated communities, people of color, especially African-Americans and Latinos, have been particularly affected by the crisis and are at increased risk of adverse health outcomes given the links between housing, foreclosure, wealth, and health (for more research on this, click here, here, and here). Wealth inequity is also generally linked with poorer health for the whole population, with more unequal societies experiencing worse health outcomes on average than more egalitarian societies. As both wealth and inequities in wealth are passed on through generations, this massive redistribution of wealth foreshadows not only poorer health for the current generation, but for future generations.

Additionally, as the foreclosure crisis has been described as a modern re-redlining of neighborhoods, it may also impact health outcomes through maintaining and increasing segregation. Williams and Collins describe residential segregation as a fundamental cause of racial inequities in health through numerous pathways, such as creating differential access to transportation, quality education, neighborhoods with low crime rates, environmental hazards, quality housing, purchasing power for nearby goods and services, exposure to tobacco and alcohol advertising, and access to medical care. They examine how this contributes to higher rates of chronic diseases, such as hypertension and heart diseases; infectious diseases such as tuberculosis due to overcrowded housing; and injuries related to violence, including homicide.

What’s public health’s role in addressing the foreclosure crisis?  

Make sure to read tomorrow’s follow-up blog, which focuses why public health can play an important role in addressing the foreclosure crisis and creating solutions that improve access to housing and health.

 Katherine Schaff, MPH, is a Doctor of Public Health candidate at University of California – Berkeley and is studying how local health departments are engaging in and communicating about the foreclosure crisis. She can be reached at kschaff@berkeley.edu.