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

CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL ANCHOR: We turn now to a story of American neighbors on different sides of the racial and class divide. Bernadette Atuahene is author and a law professor and her new book, “Plundered,” explores what she calls the systemic bigotry in America’s tax system. She joins Hari Sreenivasan now to reveal what she’s learned following the lives of two families in Detroit, one white, one black.

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HARI SREENIVASAN, CORRESPONDENT: Thanks. Bernadette Atuahene, thanks so much for joining us. You are a trained lawyer from Harvard and Yale, and you recently wrote a book called “Plundered: How Racist Policies Undermine Black Home Ownership in America.” And you mentioned that you — originally, this is not the book you were setting out to write. What happened?

BERNADETTE ATUAHENE, AUTHOR, “PLUNDERED” AND PROFESSOR, USC GOULD SCHOOL OF LAW: Yes. So, initially, my first ethnographic project dealt — all my work deals with land stolen from black people. And so, my first ethnographic project dealt with land stolen and apartheid and colonialism. And so, that project was uncomfortable for me in many ways, because it was, again, black people as victims. So, my next ethnographic project, I wanted to look at vulnerable populations doing the stealing. And 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 then switched my project.

SREENIVASAN: What was the property tax foreclosure crisis in Detroit all about?

ATUAHENE: So, since 2009, one in three homes has been — has completed the property tax foreclosure process. One in three. We haven’t 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, in each of those seven years, anywhere between 53 and 84 percent 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 percent of the property’s market value. But what I need you to understand, Hari, is Detroit 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, a 10 to 13 percent higher property tax rate than whites for the same bundle of goods, which equals, on average, $300 to $400 dollars more per year. So, racialized property tax administration is a racial justice issue that our nation has not yet begun to address.

SREENIVASAN: OK. So, how does it actually get implemented? How do those — I mean, because what you’re describing is sort of unequal conditions for parcels of land that should otherwise be worth the same, right? So, who or how is a particular ZIP code or an area on a map getting one property tax designation versus another?

ATUAHENE: Yes. So, the way property tax valuation is done, it’s different. So, with appraisals, it’s individual house by house. And a lot of your listeners have heard of appraisal bias. The story where there was that one professor from Baltimore for John Hopkins who put — tried to sell his house and then did it again by putting his white colleagues’ pictures there and got a higher evaluation. And so, that’s called appraisal bias. What I’m talking about is what we call the double bind, right? So, black and brown homes, when it comes time for appraisal, they are undervalued. But when it comes time for property taxation, they are overvalued. How does that happen? Because property taxation is not done with appraisal, it’s done something with what’s called mass appraisals. So, they do the appraisal for a larger area. And for instance, in Michigan, they have something called an ECF, an Economic Condition Factor, which is just an area, and what they do is they take the average. And so, necessarily, by definition, an average means that the higher value homes are going to be undervalued and the lower value homes are going to be overvalued. Hari, who lives in those lower valued homes? Right? Vulnerable populations. Intersectionality tells us black and brown people, women, poor people. And that’s — that — the phenomenon of over assessing lower valued homes is called regressivity. And that’s when the lower valued homes are taxed at a higher rate than the higher valued homes. And we see regressivity throughout the United States.

SREENIVASAN: You write in here that, really, Detroit is an example, and again, that there could be other cities that this is happening in as well, but of predatory governance. What do you mean by that?

ATUAHENE: Yes. So, predatory governance is when public officials intentionally or unintentionally raise public dollars through processes, written and unwritten laws that produce racial inequity. So, what’s happening in — you know, Myresha is a character in my book, and her story is, it really exemplifies this. So, Myresha had her house, she inherited her house from her grandparents, and that, the City of Detroit then overtaxed her home, because most of the homes that were overtaxed are the lowest valued homes, and then she lost that home through tax foreclosure. Who’s 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 Brown. We have an excellent DOJ report that shows police in Ferguson were engaged 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’s Ferguson or New Orleans or Philly or D.C., and not just property tax, but it’s a phenomenon that I identify in the book called predatory governance.

SREENIVASAN: You have this sort of nice vehicle, two families that you track over time from grandfather on down. And really, it becomes a little bit of a story of intergenerational wealth and you see how crucial homeownership is in that. Summarize for us kind of the juxtaposition between these two gentlemen.

ATUAHENE: Yes, Hari. So, the book, like you said, starts with two grandfathers. One is Grandpa Bucci. He’s from Italy. He was a sharecropper in Italy. And then, he makes his way eventually to Detroit to work at Ford River Rouge’s factory. And the other grandpa 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 also work at the very same factory, Ford’s River Rouge factory. So, I start with these two men who start there in 1905, 1903, within a couple of years of each other, they start the same job. And I track their lives. Again, not to tell you about racist policies, but to show you that Grandpa Bucci, he did not have an easy life. Before he made it to the U.S., he worked in the coal mines of France. He literally had one finger cut off through a work accident, but Grandpa Bucci, at no moment, had to deal with racially restrictive covenants, like Grandpa Brown did, which are covenants tucked in deeds that prevented African Americans from finding housing in the suburbs where the houses were larger, cheaper, bigger, with better amenities. Although, Grandpa Bucci didn’t have an easy life, he at no moment had to deal with redlining, which is when racially restrictive covenants sequestered black people in neighborhoods, then the federal government, through the Fair Housing Administration, drew a red line around the black neighborhoods just because they were black, right, 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 — made your very presence have the ability to reduce property values, right? Redlining made black people a pariah. And so, it goes through the — 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 Focano (ph), currently lives in his grandfather’s home, the home that he inherited from his grandfather. And I asked Robert, why do you still live in this home? He said, duh, I don’t have to pay a note. Myresha Brown, who’s 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, you know, all kinds of maintenance. Why? Because through years and years of redlining, the home in — her home and the homes around it were deprived of investment. And so, the maintenance was not done. And so, she inherits a money pit instead of a valuable asset.

SREENIVASAN: You’ve — in your research, you found that between 2010 and 2016 Detroit overtaxed homeowners by at least $600 million. And yet, you say the city itself isn’t really gaining from all this money. Who is?

ATUAHENE: So, when you follow the money in Detroit, just as you said, it’s not the City of Detroit benefiting from this over taxation, it’s 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’s 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 don’t know is at the very same time, Wayne County was in a financial emergency and it saved itself from emergency management and bankruptcy using something called the Delinquent Tax Revolving Fund, which is where that 18 percent 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 the — in this particular account that comes from property tax delinquency and foreclosure in Detroit. But again, that’s the biggest moneymaker. But then, as we talked about earlier, I go through the various different entities that are also, in addition, making money from property tax delinquency and foreclosure in Detroit.

SREENIVASAN: So, is there a way then to figure out what is at the root of this? You know, is racism part of this at a human level or is it really at a policy level? Because that’s what you kind of seem to be looking at.

ATUAHENE: Yes. And you know, the way we talk about racism in this country, we’re looking for the racist, right? Hollywood has taught us to look for black cats, white hats, good guys, bad guys. And I’m trying to — we need to shift from that to really thinking about this in terms of racist policies. So, there are certain policies, whether they’re implemented intentionally or unintentionally is not my concern. I’m saying, let’s move away from intent and just look at the various policies. And if those policies are causing racial inequity, then I call them a racist policy. I get that term from Ibram Kendi. His work has influenced me greatly. And so, once we have these racist policies, then the idea is to then disassemble them. What are those racist policies look like in the area of Detroit? Well, it looks like the lowest valued homes in the city being taxed at a greater rate than the higher value home, it looks like the statutory — statutorily mandated 18 percent interest penalty on property tax debt, which makes sense if people have the money and they’re not paying, but it makes no sense if it — poor people aren’t paying because they don’t have the money. And that’s why we actually have to make the shift from talking about structural racism, systemic racism, right, to talking about racist policies, because racist policies, number one, is something that 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.

SREENIVASAN: You know, I wonder, there are people who are going to watch this conversation and say, look, where is the personal responsibility and all this? Why is it Detroit seems to have this kind of problems over and over again? And I think that there also are people who want to blame the victims, right? And say, look, this is your fault. You should have known better. You should have read the fine print before you signed, et cetera. From your research, how do you sort of square that?

ATUAHENE: The Myresha, again, the character in my book, she even blamed herself. When I first met her, she said, you know, 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 touch the property tax foreclosure process, they also had what I call these narratives of personal irresponsibility. One said, the problem is Detroiters just don’t want to pay their taxes. Another said, well, Detroiters bought houses they couldn’t afford. And another had the audacity to tell me, well, Professor, instead of buying — paying their taxes, Detroiters decided to buy purses. And so, my research tells a very different story. It’s not a story of personal irresponsibility, it’s a story of structural injustice. I’ve interviewed over 150 property — homeowners who are property tax foreclosed, I’ve interviewed almost every government official who touches the process, I’ve interviewed investors, and I even took a nine-month course and passed the state exam to become a certified Michigan assessor. And so, through my comprehensive investigation, I found that, again, it’s a structural issue, 53 to 84 percent of properties were being assessed in violation of the Michigan State Constitution. About 30 percent of Detroiters live below the poverty line. And so, they could not afford these illegally inflated property taxes. There was injustice hidden in these very complex property tax calculations. Racist policies had you trying to slay a dragon with a butter knife. And so, that’s what — that’s what’s happening here, Hari, is, again, we need to make the shift from these narratives of personal irresponsibility and focus on the racist policies, both focus on the structural injustice that’s at play here.

SREENIVASAN: So, Bernadette, if there are these structural forces at play, what is kind of — what’s the purpose of individual effort against this, right? If someone finds themselves the victim of one of these predatory policies, what can they do?

ATUAHENE: Before I went to law school, I was a community organizer in South Central L.A. So, when I found the — you know, that one in three homes had completed the property tax foreclosure process in this 80 percent city called Detroit, I couldn’t 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 that people in Detroit, before they are foreclosed, we can make sure that the taxes they owed are not illegally inflated. And number three is to provide compensation. And so, we have something that we call the Dignity Restoration Project, and we’re raising $10 million to compensate the hardest hit Detroiters. And this is a really important moment in the reparations movement, Hari, writ large, because if we can’t — you know, there’s a whole debate. Where should we start reparations? Slavery, Jim Crow. And I’m saying let’s start reparations yesterday, with what happened in Detroit, this 80 percent black city, because if we can’t get it right in Detroit, where their evidence is uncontested, and it’s so clear, then we will likely not be able to get it right in general.

SREENIVASAN: Professor of Law at the University of Southern California, Bernadette Atuahene, also author of the book “Plundered: How Racist Policies Undermine Black Home Ownership in America,” thanks so much for joining us.

ATUAHENE: Hari, tThank you for having me. This was a lovely conversation. Thank you.