Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:


Study finds foreclosure crisis had significant racial dimensions

Residential segregation constitutes an important contributing cause of the current foreclosure crisis

Although the rise in subprime lending and the ensuing wave of foreclosures was partly a result of market forces that have been well-documented, the foreclosure crisis was also a highly racialized process, according to a study by two Woodrow Wilson School scholars published in the October 2010 issue of the American Sociological Review.

Woodrow Wilson School Ph.D. candidate Jacob Rugh and Woodrow Wilson School's Henry G. Bryant Professor of Sociology and Public Affairs, Douglas Massey, assessed segregation and the American foreclosure crisis. The authors argue that residential segregation created a unique niche of minority clients who were differentially marketed risky subprime loans that were in great demand for use in mortgage-backed securities that could be sold on secondary markets.

The authors use data from the 100 largest U.S. metropolitan areas to test their argument. Findings show that black segregation, and to a lesser extent Hispanic segregation, are powerful predictors of the number and rate of foreclosures in the United States – even after removing the effects of a variety of other market conditions such as average creditworthiness, the degree of zoning regulation, coverage under the Community Reinvestment Act, and the overall rate of subprime lending.

"This study is critical to our understanding of the foreclosure crisis since it shows the important and independent role that racial segregation played in the housing bust," said Rugh.

A special statistical analysis provided strong evidence that the effect of black segregation on foreclosures is causal and not simply a correlation.

"While policy makers understand that the housing crisis affected minorities much more than others, they are quick to attribute this outcome to the personal failures of those losing their homes – poor credit and weaker economic position," noted Massey. "In fact, something more profound was taking place; institutional racism played a big part in this crisis."

The authors conclude that Hispanic and black racial segregation was a key contributing cause of the foreclosure crisis. "This outcome was not simply a result of neutral market forces but was structured on the basis of race and ethnicity through the social fact of residential segregation," the authors note in the article.

"Ultimately, the racialization of America's foreclosure crisis occurred because of a systematic failure to enforce basic civil rights laws in the United States," the authors write in the article. "In addition to tighter regulation of lending, rating, and securitization practices, greater civil rights enforcement has an important role to play in cleaning up U.S. markets. It is in the nation's interest for federal authorities to take stronger and more energetic steps to rid U.S. real estate and lending markets of discrimination, not simply to promote a more integrated and just society but to avoid future catastrophic financial losses."

Jacob Rugh's research focuses on urban policy and the intersection of housing markets, land use regulation, and local politics. His forthcoming dissertation will focus on the social, economic, and local regulatory roots of the recent U.S. housing crisis and their implications for public policy.

Douglas Massey's research focuses on international migration, race and housing, discrimination, education, urban poverty, and Latin America. He is the author, most recently, of Brokered Boundaries: Creating Immigrant Identity in Anti-Immigrant Times (Russell Sage Foundation, 2010), coauthored with Magaly Sanchez. He has also authored Return of the L-Word: A Liberal Vision for the New Century (Princeton University Press, 2005) and Strangers in a Strange Land: Humans in an Urbanizing World (Norton, 2005). Massey currently serves as President of the American Academy of Political and Social Science and is past-President of the American Sociological Association and the Population Association of America. He is a member of the National Academy of Sciences, the American Academy of Arts and Sciences, and the American Philosophical Society.

The research article described above is available by request for members of the media. For a copy of the full study and a two page summary, contact Daniel Fowler, ASA's Media Relations and Public Affairs Officer, at or (202) 527-7885, or Elisabeth Donahue, WWS Assistant Dean for Public and External Affairs, at or (609) 258-5988.

About the American Sociological Association and the American Sociological Review

The American Sociological Association (, founded in 1905, is a non-profit membership association dedicated to serving sociologists in their work, advancing sociology as a science and profession, and promoting the contributions to and use of sociology by society. The American Sociological Review is the ASA's flagship journal.

About the Woodrow Wilson School

Founded in 1930, the Woodrow Wilson School at Princeton University is a major international center of advanced training and research in public affairs. The Woodrow Wilson School is an institution with the energy and strength to tackle the most serious issues of the present day, and the vision and experience to prepare the leaders who will shape the public policies of the future.

Daniel Fowler | EurekAlert!
Further information:

More articles from Studies and Analyses:

nachricht Diagnoses: When Are Several Opinions Better Than One?
19.07.2016 | Max-Planck-Institut für Bildungsforschung

nachricht High in calories and low in nutrients when adolescents share pictures of food online
07.04.2016 | University of Gothenburg

All articles from Studies and Analyses >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Etching Microstructures with Lasers

Ultrafast lasers have introduced new possibilities in engraving ultrafine structures, and scientists are now also investigating how to use them to etch microstructures into thin glass. There are possible applications in analytics (lab on a chip) and especially in electronics and the consumer sector, where great interest has been shown.

This new method was born of a surprising phenomenon: irradiating glass in a particular way with an ultrafast laser has the effect of making the glass up to a...

Im Focus: Light-driven atomic rotations excite magnetic waves

Terahertz excitation of selected crystal vibrations leads to an effective magnetic field that drives coherent spin motion

Controlling functional properties by light is one of the grand goals in modern condensed matter physics and materials science. A new study now demonstrates how...

Im Focus: New 3-D wiring technique brings scalable quantum computers closer to reality

Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.

"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...

Im Focus: Scientists develop a semiconductor nanocomposite material that moves in response to light

In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.

A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...

Im Focus: Diamonds aren't forever: Sandia, Harvard team create first quantum computer bridge

By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.

"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...

All Focus news of the innovation-report >>>



Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

Agricultural Trade Developments and Potentials in Central Asia and the South Caucasus

14.10.2016 | Event News

World Health Summit – Day Three: A Call to Action

12.10.2016 | Event News

Latest News

How nanoscience will improve our health and lives in the coming years

27.10.2016 | Materials Sciences

OU-led team discovers rare, newborn tri-star system using ALMA

27.10.2016 | Physics and Astronomy

'Neighbor maps' reveal the genome's 3-D shape

27.10.2016 | Life Sciences

More VideoLinks >>>