For all the talk about gentrification, much of Detroit is still reeling from a housing crisis that decimates neighborhoods and displaces residents.
That’s the grim conclusion of Eric Seymour, a Brown University post-doctorate researcher who has extensively studied Detroit’s neighborhoods. While most think of the 2007 mortgage crisis in past tense, Seymour argues it’s still unfolding.
Seymour describes a multi-act tragedy that saw more than a third of city homes go into foreclosure, transforming Detroit from one of the leading cities for black homeownership to being a majority of rentersand topping the nation in eviction rates (more than 30,000 per year.)
The dominoes fell like this, Seymour argued: First, Detroit was targeted for subprime mortgage refinances. When homes foreclosed, they were sold for cheap to investors who didn’t pay taxes. Then the homes were tax foreclosed by Wayne County to less scrupulous buyers who either sold them on land contracts or converted them to rentals. In the process, many of the homes have become unlivable, but when renters withhold payment for repairs, they are evicted, Seymour said.
And yet, a majority of tax subsidies go downtown.
Bridge Magazine recently talked to Seymour, who wrote papers for the University of Michigan about how land contracts have hampered Detroit neighborhoods. He’s now studying evictions, foreclosures and water shutoffs for Brown. The conversation was edited for length and clarity.
What are you seeing at the neighborhood level?
Predatory actors have been able to accumulate large numbers of properties with inventory and extract more money from neighborhoods using land contracts or through being predatory landlords.
In neighborhoods, there were large number of subprime mortgage refinances. Almost all of those properties were repossessed, and then Fannie Mae and Freddie Mac, Wells Fargo and Bank of America sold those properties in bulk to investors. They got rid of the ones they could through land contracts and the ones they couldn’t, they just let go into tax foreclosure.
Does the city or county have policies to address these issues?
The city and the county should have acted to keep these properties out of the hands of these predatory landlords. They could do more things related to code enforcement or rental registries. But in short, no, the city and county really haven’t done anything.
Neighborhoods were set on a path by the mortgage foreclosure crisis. But instead of being helped out with interventions to stabilize them, they’re being pushed off the cliff.
In fairness, it wasn’t just neighborhoods that were collapsing during the housing crisis. City Hall was too, with the resignation of Kwame Kilpatrick and then bankruptcy. Are you expecting too much?
I don’t blame the city alone. The city, the county, the state, the federal government, and lending institutions all interacted together.
We’re feeling the aftershocks. The federal government, Fannie Mae and Freddie Mac, should not have been selling properties for pennies on the dollar to anonymous, dark moneyed speculators. The federal government downloaded responsibilities to cities like Detroit that are already greatly distressed, in large part because of subprime loans created by deregulation from the federal government.
That’s not a city problem, per se. The city could have raised more of a stink about it. Some cities sued subprime lenders. Detroit didn’t do a lot about (But) it’s hard to say it’s just the city’s fault.