Don't forget this story from last year

Md. Attorney General Frosh Overrules 22 Racist Opinions of Predecessors

The 22 rulings, previously rendered unconstitutional by courts, had enabled state agencies to uphold segregation, discriminate against people of color, and deny marriage licenses based on race. While Frosh’s office noted the opinions are not legal, formally overruling them "helps Maryland atone for generations of racist policies." Read his new opinion here.

“The laws were abhorrent and ultimately held to be unconstitutional,” Frosh (D) commented. “We hope that our opinion today will help remove the stain of those earlier, harmful and erroneous works. We will continue to fight to stamp out racism and hate in all of our work for Maryland.” 

He started the effort to review these old legal opinions after Virginia’s outgoing attorney general, Democrat Mark Herring, in 2022 overturned 58 legal opinions upholding racial discrimination issued by past attorney generals. Maryland's Office looked at opinions as old as 1916, the first year they were compiled in published volume. “As much as we might prefer otherwise, our research showed that the Office of the Maryland Attorney General was sometimes complicit in the State’s history of racial discrimination,” Frosh wrote.

Some examples of the overruled opinions are: (1) After the U.S. Supreme Court ruled schools could not be segregated by race under the “separate but equal” doctrine, one argued that Maryland could separate Black and White children in trouble with the law and assigned by courts to remedial boarding schools known as “training schools;” and (2) In 1928, Maryland’s attorney general opined a clerk should deny a marriage license to a White man and a woman whose paternal grandparents were Black.

*****

Source: Read the Attorney General's legal brief.

Read the November 2022 Washington Post article.

 Mortgage Inequities

New Research Finds Black Seniors are Disproportionately Denied Mortgage-Based Loans

Many seniors have built up considerable wealth in their homes. Some 78% of 65-to-74-year-olds own their homes, as do 82% of those 75 and older. As of 2019, 47% of homeowners’ median net worth was in their home equity:  58% percent for Hispanic homeowners and 59% for Black homeowners.

The Urban Institute's just-released research report found that the Home Equity Conversion Mortgage (HECM) option tapping home equity could financially help Black senior homeowners, but they are disproportionately denied access at every age and income level. Black HECM applicants experience higher denial rates than white applicants for all age groups, and this denial gap persists at all loan amount levels across all neighborhood incomes.

Using 2021 HMDA data, it was found that the denial rate for Black HECM applicants is the highest across all age groups: 21.5% of Black applicants ages 62 to 74 are denied, compared with 12.0% for white applicants. The overall denial rates for applicants over 75 decrease for white, Black, and Hispanic borrowers, but the Black-white denial gap persists and is 6.9 percentage points. 

Regarding loan amount and neighborhood income, Black applicants persistently experience higher denial rates. For Black applicants with loan amounts under $100,000, 36.4% living in low- and moderate-income neighborhoods are denied HECMs, compared with 19.5% of white applicants. This gap continues even for those living in upper-income neighborhoods: 14.7% of Black applicants with $200,000-$300,000 loan amounts are denied, compared with 9.3% of white applicants. Another study (Lindsey-Taliefero and Kelly, 2021), using 2019 HMDA data had consistent findings that Black applicants are more likely to be denied a reverse mortgage after controlling for age, gender, and income. 

One reason Black applicants have higher denial rates could be financial precarity associated with limited liquid wealth and postretirement income. In 2021, 33.8% of Black HECM applicants were denied because of insufficient cash. The median liquid net worth for Black homeowners over 62 is only $3,500, compared with $104,000 for white homeowners. Only 29.3% of Black homeowners over 62 have individual retirement accounts compared to white homeowners' 54.8%. Although HECMs provide flexible payment plans, they have high up-front costs and high annual mortgage insurance premiums (MIPs). The average Black applicant cannot afford these up-front costs. For a Black homeowner HECM applicant with a median value of $125,000, the 2% up-front MIPs plus the costs for home appraisal and counseling requires the applicant to pay at least $3,175 at closing, excluding other costs such as the annual MIPs and third-party charges. But the median liquid net wealth owned by a Black senior homeowner is only $3,500. For a white owning a home with a $220,000 median value, this cost structure incurs $5,075 in the first year, far less than the $104,000 median liquid wealth of white senior homeowners.

Another reason for the higher denial rates is that Black senior homeowners have much less housing wealth in late life than white senior homeowners. Among Black applicants over 62, 25.0% of all denials are because of insufficient collateral. Research shows that Black homeowners are more likely than white homeowners to have mortgage debt, even in late life. This mortgage burden limits the amount of collateral value Black households could tap to qualify for a HECM. 

Because Black borrowers tend to have low incomes and low credit scores attributable to structural barriers and historic discrimination, the financial assessment further decreases the amount of home equity Black senior homeowners can borrow, making them less likely to tap home equity and less likely to get approved for a HECM loan. 

The report sums that homeowners of color are disproportionately "denied for these loans because of decades of historical and structural racism in our financial system. Structural barriers in the mortgage finance system make it less likely for Black homeowners to refinance when interest rates are low, which increases their debt burden over time (Gerardi, Willen, and Zhang 2023). In addition, Black people are disproportionately likely to have thin or no credit files, increasing the likelihood of escrowing future property tax and insurance payments required in the financial assessment, which, in turn, limits the amount of home equity they can borrow."

*****

Read the February 23, 2023 Urban Institute research brief.

Read the January 14, 2023 Urban Institute report.

Read the February 23, 2023 Research Mortgage Daily article.

 BAZELON CENTER PRESENT BLACK DISABLED LEADERS TRIBUTE ON 2/23/23

TOMORROW Bazelon Center’s Jalyn Radziminski Joins White House Roundtable Celebrating the Contributions of Black Disabled Leaders; 2/23/23; 10:30 AM ET; Livestream.

During Black History Month, the White House and the Biden-Harris Administration will celebrate the contributions of Black disabled leaders to American history. The Administration will host a roundtable with the next generation of Black disabled young leaders, and highlight Administration actions to promote equity. Jalyn Radziminski, Director of Engagement at the Bazelon Center, evening law student at Fordham University School of Law, founder of Count Us IN and longtime social justice advocate, will be speaking at the event.   WHAT: Black History Month Roundtable with Young Black Leaders with Disabilities  WHEN: Thursday, February 23 10:30 AM ET  WHERE:  Register for the webinar.  ASL and CART will be provided. Please share with your networks! ***** Source: Bazelon Center mailing, February 22, 2023.

 Fair Lending

NCRC Announces $50 Billion Community Benefits Agreement With TD Bank

By NCRC / February 15, 2023 / Press Releases

TD Bank will commit $50 billion in investments, lending, philanthropy and other services for diverse and underserved communities, the National Community Reinvestment Coalition (NCRC) announced Wednesday, pursuant to a community benefits plan the organization facilitated between the bank and NCRC members. 

“TD Bank brought dedication and open minds to the meetings with NCRC members that brought us to this strong and promising agreement,” said Jesse Van Tol, President and CEO of the National Community Reinvestment Coalition President. “The deal we just signed will ensure that communities of need see tangible increases in resources and economic opportunity in their neighborhoods — as every bank merger is legally required and morally bound to do. This agreement reflects the hard work of our members and the bank’s staff in numerous ways, including TD’s commitment to opening 25 new physical bank branches in marginalized communities — the largest such pledge to date by any of the 20-plus banks that have signed onto a community benefits agreement with NCRC members. I applaud everyone involved for bringing the candid, constructive energy these deals require to our meetings and producing such a robust final package.”

To identify areas of greatest need in communities across 22 states and Washington, D.C., the bank solicited feedback from NCRC leadership and non-profit groups from both TD and First Horizon markets from the time it announced its definitive agreement to acquire First Horizon Corporation in February 2022. TD will meet annually with NCRC to discuss and measure progress on the elements of the plan. 

“Banks have an important role in providing economic opportunity and supporting changes that help low- and moderate-income (LMI), diverse and underserved communities achieve their financial goals,” said Leo Salom, President and CEO of TD Bank. “This is rooted in the belief that our business only does well when the people we serve are flourishing. Our Community Benefits Plan builds on TD Bank’s and First Horizon’s longstanding focus on our communities. We are excited to continue this focus in First Horizon markets as we move forward with combining our two organizations. Thank you to NCRC and its member organizations for their collaboration and critical insight as we developed an effective plan that addresses the priorities and needs of the communities we serve.”

Since 2016, NCRC has facilitated 27 community benefits agreements with bank groups that committed more than $639 billion for mortgage, small business and community development lending, investments and philanthropy in LMI and under-resourced communities.

*****

Source: National Community Reinvestment Coalition newsletter, February 17, 2023.

 Book Review

The Whiteness of Wealth: How the Tax System Impoverishes Black Americans--and How We Can Fix It 

by Dorothy A. Brown. Crown, 2021. 288 pages. $27.00, hardcover.

This book is a powerful - and very influential - exposé of racism in the American taxation system. Named as one of the best books of the year by NPR and Fortune, it is by a tax lawyer and Georgetown University Law Center professor.

“Important reading for those who want to understand how inequality is built into the bedrock of American society, and what a more equitable future might look like.”—Ibram X. Kendi, author of How to Be an Antiracist.

The author uses evidence from her long decades of cross-disciplinary research to show that U.S. tax law isn’t color-blind. This book includes the personal stories of white and black cross-income Atlanta families, to demonstrate how American tax law rewards the preferences and practices of whites while pushing black people further behind. In essence, tax policies build and protect intergenerational white wealth and exacerbate the racial wealth gap by subsidizing activities and personal choices that disproportionately benefit white taxpayers. Brown's data shows institutional tax disparities in education, workplace subsidies, and wealth building - among several other slices of the economy.

For instance, according to the Federal Reserve’s 2019 Survey of Consumer Finances, white median wealth ($188,200) was approximately eight times the wealth of the typical Black family ($24,100). The racial wealth gap has almost not changed since the 1950s and 1960s, has continued as U.S. overall household wealth increased, and currently persists because of the huge share of white wealth.

Brown advocates the following changes:

• Publish tax data by race.
• Maintain a progressive income tax system but with no exclusions; a single deduction; and no preferential rates, such as on capital gains.
• Establish a tax credit to compensate for historical racism.

Proposals for using wealth to impose tax policy are nothing new. Prominent politicians, such as Bernie Sanders and Elizabeth Warren, have promoted a wealth tax on high-wealth Americans. However, Brown’s wealth-based tax credit would avoid many of the pitfalls of wealth taxes.

*****

Sources: 

Read the March 2021 Michigan Law School book review.

Read the April, 2021 Appalachian Journal of Law article.

 Racial Economic Inequality

New Study Finds Significant Racial Bias in IRS Tax Audits

A new study led by a laboratory at Stanford that found that there is significant racial bias in audits. It founds that Black taxpayers receive IRS audit notices at least 2.9 times (and perhaps as much as 4.7 times) more often than non-Black taxpayers. It was done by staff of the Stanford Law School, Stanford RegLab, Stanford Institute for Human-Centered Artificial Intelligence, Stanford Institute for Economic Policy Research, University of Chicago, and the U.S. Department of the Treasury’s Office of Tax Analysis.

They found that the main source of the disparity is differing audit rates by race among taxpayers claiming the Earned Income Tax Credit (EITC). Also, it is shown that maximizing the detection of underreported taxes would not lead to Black taxpayers being audited at higher rates. In contrast, certain policies tend to increase the audit rate of Black taxpayers: (1) designing audit selection algorithms to minimize the "no-change rate"; (2) targeting erroneously claimed refundable credits rather than total under-reporting; and (3) limiting the share of more complex EITC returns that can be selected for audit. 

Because the IRS does not collect data by race, the authors had to develop a sophisticated model to identify and analyze racial differences. This absence of IRS data is why such an analysis of audits has not been possible before this. Tax policy expert Dorothy A. Brown opposes having a racial identifier on IRS form 1040, because she "believes unconscious and conscious biases on the part of our tax administrators could unfairly target black taxpayers for audits, could subject black Americans to even worse treatment than they're already receiving. So I completely oppose any racial identifier on the face of the tax return, but there's more many ways to collect the information. So, not having it on the 10 40 doesn't mean you can't get it. The IRS statistics of income, um, division, which publishes statistics, they do surveys. They could ask information on their surveys. They could cross check the tax return data with social security race." 

*****

Sources:

Read the February 14, 2023 Forbes article.

https://siepr.stanford.edu/publications/measuring-and-mitigating-racial-disparities-tax-audits.

https://taxjustice.net/wp-content/uploads/2021/04/TaxcastExtraScript0421.pdf.

Lessening Racial Inequality

President Joe Biden Orders Federal Government to do More to Address Racial Inequality

 

The President's new Executive Order requires that an initial review into long-standing disparities in government services and treatment that he issued as Executive Order #13985 on his first day in office become an annual requirement for federal agencies. The reviews are aimed at increasing access to federal programs, services, and activities for disadvantaged communities. The new order also directs federal agencies to have equity teams and name senior leaders who would be accountable for increasing equity and addressing bias. 

As the Order states:

"When any segment of society is denied the full promise of America, our entire Nation is held back. But when we lift each other up, we are all lifted up. As the President has said: 'Advancing equity is not a one-year project. It’s a generational commitment.'"

The Executive Order:

• Launches a new annual process to strengthen racial equity and support for underserved communities.
• Empowers Federal equity leaders. 
• Strengthens community partnerships and engagement. 
• Invests in underserved communities. 
• Improves economic opportunity in rural and urban communities. 
• Addresses emerging civil rights risks. 
• Promotes data equity and transparency. 

Federal agencies would need to improve the quality and frequency of their engagement with communities that have faced systemic discrimination. Also, the order formalizes Biden’s goal of a 50% bump in federal procurement dollars that go to small and disadvantaged businesses by 2025. Under the order, agencies must also focus on new civil rights threats, such as discrimination in automated technology and access for people with disabilities and for those who speak languages other than English. It also includes a push to improve the collection, transparency and analysis of data to help improve equity.

To read more about additional steps agencies have taken and the Administration’s efforts to advance equity and justice for underserved communities, go to www.whitehouse.gov/equity. See agency 2022 Equity Action Plans and relevant links at www.performance.gov/equity.

*****

Sources:

Read the April 16, 2023 Associated Press article.

https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/16/fact-sheet-president-biden-signs-executive-order-to-strengthen-racial-equity-and-support-for-underserved-communities-across-the-federal-government/.