A Fair Housing Strategy

This map of Cuyahoga County, Ohio is a single variant of the geography of negative equity, a
devastating reality in hundreds of minority neighborhoods across the country.
So far the policy debate about principal reduction for underwater loan balances has remained stuck in
the creditor-framed issues of moral hazard, deserving vs. undeserving homeowners, and net present
value (to investors---not to communities or the economy as a whole). Struggling within the framework
of these false dichotomies, advocates are continuing to lose ground in the debate. We think the
optimism surrounding the impending exit of Mr. DeMarco incorrectly assumes that his leaving-taking
will somehow reverse the Federal Housing Finance Agencys position in this debate.
ESOP has worked for the last three years to reframe this debate in ways that will expand the publics
understanding of the actual dynamics involved--- including the actual moral hazard of debt oppression
affecting 15 million American families. In the banker-framed debate, negative equity is a matter of
spontaneous combustion, a present somehow magically isolated from the past. Certainly lenders had
nothing to do with the housing bubble. Probably it was the fault of those damn predatory borrowers.
Oh well, whatever, they should just pay up!
But the Main Street narrative about how this happened is very different. Homeowners, who played by
the rules, had their savings, their communities, their life prospects, and their childrens futures
diminished as casualties to the speculative fury that enriched a few thousand Wall Street oligarchs. The
media is content to repeat the bankers assurances that this fundamental unfairness is somehow not
relevant. But we believe that the reality of the current wealth gap is central to how we might
understand an equitable future for those millions of wealth-stripped, debt drowning families.
We believe that a deliberate, well-publicized fair housing complaint against Edward DeMarco and the
FHFA could assist in the larger national effort to reframe the debate around the economic and social
justice inherent in principal correction.
Features to this proposed course of action:
Local fair housing claims would be filed by a representative group (say 5 to 15) of underwater,
minority homeowners, all members of a protected class under the Fair Housing Act
Administrative claims would not require the care and nurturing of lawyers girded and funded for
a years-long battle against the corporate bar
The homeowners would invoke HUDs own administrative process to investigate and pursue the
alleged legal wrongdoing.
The legal theory would be based upon the disparate impact on minority communities of the
FHFAs refusal to employ principal correction to resolve mortgage delinquencies
The collaborative filing of a Master Claim would be surrounded by as much national publicity
as could be mustered. It would be staged by the group of complainant-homeowners and their
supporters, bused into Washington to conduct a pre-filing press event outside of HUDs
headquarters, followed by a ceremonial delivery of the complaint(s) to the HUD Office of Fair
Housing and Equal Opportunity.
To be most effective, this citizen action must be supported, in both word and deed, by a healthy
cross-section of the national advocate community including legal, civil rights, fair housing and
financial policy advocates.
Key to this approach is bringing a fair housing claim, but not as litigation requiring both time and well-
funded, lawyer attorneys general. Rather, this would be a citizen-driven campaign using the legal
framework of the Fair Housing Act as an elevated platform for dissent, advocacy and education. It would
be faster, cheaper and (we hope) more effective to reverse the course of the moral debate, perhaps in
time to actually help repair the devastation both in our neighborhoods of color and the nation as a
whole.