The foreclosure crisis has disproportionately impacted communities of color because people of color were sold adjustable rate mortgages at a higher rate than whites, even where income levels and financial risk were on par. The upshot of this predatory lending practice has been a massive dislocation of workers and families (most of whom considered their homes their only economic asset) side by side with an unprecedented transfer of wealth to financial institutions and the private sphere.
Advocates abroad call this type of activity by a name more familiar to the third world—a land grab. Multinational corporations have acquired 15 to 20 million hectares of land in wholesale purchases in the global south to establish large-scale industrial farms for food and biofuels.
Closer to home, in the Detroit area, speculator John Hantz is trying to purchase 200 acres to create a large corporate farm. Indeed, land grabs have been afoot for some time within postindustrial landscapes from where capital has fled in search of cheaper labor. What makes the current land grabs especially troubling is the opportunistic use of the tsunami of foreclosures by banks to seize properties. Their willful enablers in this transfer of assets have been the states and their housing policies, ostensibly created to reduce the number of vacant bank-owned properties by converting them into rental units.
Foreclosures: Excellent Investment for Some
A handful of fast-growing real estate management corporations are now stepping into the foreclosure crisis. Backed by billions of dollars in private equity, property management companies are viewing the crisis as a rare opportunity to amass tens of thousands of single-family homes and convert them into rentals—i.e. long-term high-yield investments. Beyond the stresses on families in neighborhoods experiencing the land grab, this nascent industry—promoted by federal policies—will in all likelihood facilitate the transfer of tens of billions in wealth from distressed homeowners—largely Black and Latino—to a few wealthy private equity firms.