[Senate Hearing 117-273]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 117-273

                  SEPARATE AND UNEQUAL: THE LEGACY OF 
                    RACIAL DISCRIMINATION IN HOUSING

=======================================================================

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                   BANKING,HOUSING,AND URBAN AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                                   ON

             EXAMINING THE LEGACY OF HOUSING DISCRIMINATION

                               __________

                             APRIL 13, 2021

                               __________

  Printed for the use of the Committee on Banking, Housing, and Urban 
                                Affairs
                                
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                                


                Available at: https: //www.govinfo.gov /

                               __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
47-751 PDF                 WASHINGTON : 2022                     
          
-----------------------------------------------------------------------------------   

            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                     SHERROD BROWN, Ohio, Chairman

JACK REED, Rhode Island              PATRICK J. TOOMEY, Pennsylvania
ROBERT MENENDEZ, New Jersey          RICHARD C. SHELBY, Alabama
JON TESTER, Montana                  MIKE CRAPO, Idaho
MARK R. WARNER, Virginia             TIM SCOTT, South Carolina
ELIZABETH WARREN, Massachusetts      MIKE ROUNDS, South Dakota
CHRIS VAN HOLLEN, Maryland           THOM TILLIS, North Carolina
CATHERINE CORTEZ MASTO, Nevada       JOHN KENNEDY, Louisiana
TINA SMITH, Minnesota                BILL HAGERTY, Tennessee
KYRSTEN SINEMA, Arizona              CYNTHIA LUMMIS, Wyoming
JON OSSOFF, Georgia                  JERRY MORAN, Kansas
RAPHAEL WARNOCK, Georgia             KEVIN CRAMER, North Dakota
                                     STEVE DAINES, Montana

                     Laura Swanson, Staff Director

                 Brad Grantz, Republican Staff Director

                       Elisha Tuku, Chief Counsel

                 Beth Cooper, Professional Staff Member

                Megan Cheney, Professional Staff Member

                 Dan Sullivan, Republican Chief Counsel

                   Elie Greenbaum, Republican Counsel

                  Jonathan McKernan, Republican Detail

                      Cameron Ricker, Chief Clerk

                      Shelvin Simmons, IT Director

                    Charles J. Moffat, Hearing Clerk

                                  (ii)


                            C O N T E N T S

                              ----------                              

                        TUESDAY, APRIL 13, 2021

                                                                   Page

Opening statement of Chairman Brown..............................     1
        Prepared statement.......................................    39

Opening statements, comments, or prepared statements of:
    Senator Toomey...............................................     4
        Prepared statement.......................................    40

                               WITNESSES

Richard Rothstein, Senior Fellow, Emeritus, NAACP Legal Defense 
  and Educational Fund, Inc......................................     6
    Prepared statement...........................................    42
    Responses to written questions of:
        Senator Sinema...........................................   198
Lisa Rice, President and Chief Executive Officer, National Fair 
  Housing Alliance...............................................     8
    Prepared statement...........................................    61
Jason Reece, Assistant Professor, City and Regional Planning 
  Section, Knowlton School of Architecture, The Ohio State 
  University.....................................................    10
    Prepared statement...........................................    75
Howard Husock, Executive Senior Fellow, Philanthropy Roundtable, 
  and Adjunct Fellow, American Enterprise Institute..............    11
    Prepared statement...........................................    95
Tobias J. Peter, Director of Research, Housing Center, and 
  Research Fellow, American Enterprise Institute.................    13
    Prepared statement...........................................   102

                                 (iii)

 
  SEPARATE AND UNEQUAL: THE LEGACY OF RACIAL DISCRIMINATION IN HOUSING

                              ----------                              


                        TUESDAY, APRIL 13, 2021

                                       U.S. Senate,
          Committee on Banking, Housing, and Urban Affairs,
                                                    Washington, DC.
    The Committee met at 10 a.m., via Webex, Hon. Sherrod 
Brown, Chairman of the Committee, presiding.

          OPENING STATEMENT OF CHAIRMAN SHERROD BROWN

    Chairman Brown. The hearing of the Senate Banking, Housing, 
and Urban Affairs Committee will come to order. This hearing is 
in the virtual format. A few reminders as we begin.
    Once you start speaking, there will be a slight delay 
before you are displayed on the screen. To minimize background 
noise, please click the mute button until it is your turn to 
speak or ask questions.
    You should have one box on your screens labeled ``Clock'' 
that will show you how much time is remaining. For witnesses, 
you will have 5 minutes for opening statements. For all 
Senators, the 5-minute clock still applies to questions.
    At 30 seconds remaining for your statements and questions, 
you will hear a bell ring to remind you that your time has 
almost expired. It will ring again when your time has expired.
    If there is a technology issue, we will move to the next 
witness or Senator until it is resolved. To simplify the 
speaking order process, Ranking Member Toomey and I have agreed 
to go by seniority for this hearing.
    On Sunday, we marked the 53rd anniversary of the passage of 
the Fair Housing Act. Fifty-three years ago, jarred by the 
assassination of the Reverend Dr. Martin Luther King, our 
country finally made it illegal to refuse to sell a home or 
rent an apartment to someone based on the color of their skin. 
It was a historic moment. It was a hard-fought victory for 
civil rights advocates. And it was not so long ago when you 
look at the long arc of history.
    Black Americans had endured centuries--that is generation 
after generation after generation--of slavery, only to be 
locked into second-class citizenship by the Black Codes and Jim 
Crow laws that made it nearly impossible to get a good-paying 
job, to keep a reliable bank account, and, as we all know, even 
to vote. As my friend Joyce Beatty said recently, we cannot 
change our history. But we can learn from it, and we can build 
a far better future--one that brings us closer to making our 
founding ideals real for everyone.
    Fair housing took longer to pass through Congress than did 
voting rights or desegregation of public spaces, even equal 
opportunities for employment. As important as these 
advancements were, they did not come in time to help 
communities of color benefit from the historic investments that 
our Government made, that we as a society made, in American 
families and communities in the last century. Beginning with 
the New Deal and continuing through the 1960s, we tried a new, 
grand experiment in this country. We invested in workers and in 
the infrastructure that they needed to succeed. In the process, 
we built the largest, broadest middle class the world had ever 
seen.
    But that deal remains unfinished because too many were 
purposefully left out.
    We created the Federal Housing Administration to make the 
dream of home ownership, and the wealth that comes with it, 
available to millions more families. But FHA limited its loans 
to neighborhoods that were deemed ``good'' investments--
neighborhoods with White, non-immigrant residents. 
Neighborhoods with Black and Brown immigrant residents and near 
industrial sites were ``redlined'' and called ``hazardous.''
    From 1934 to 1968, FHA helped finance more than $120 
billion worth of loans; 98 percent--think of that--98 percent 
of that $120 billion, 98 percent of that went to White 
borrowers. We put Americans to work building the interstate 
highway system, the infrastructure that would unleash new 
levels of American prosperity.
    But Federal highways cut right through Black and minority 
neighborhoods in cities like Cleveland and Baltimore and New 
York, severing tight-knit communities, destroying homes and 
small businesses, replacing them with traffic and pollution. 
Following these decades of exclusion and destruction, the Fair 
Housing Act offered enormous promise. It did not just ban 
racial discrimination; it also required that new Federal funds 
be used in ways that would affirmatively further fair housing. 
In other words, we recognized it was not possible to start from 
scratch. Our housing system had our history woven into it, and 
we would need to take active steps to include Black Americans 
and all those left out.
    George Romney, the father of our colleague Mitt, became HUD 
Secretary the year after the Fair Housing Act was passed. He 
set out to fulfill that mission: to require communities to use 
their Federal grants to build better housing and take active 
steps to include everyone, as required by the new law.
    But Secretary Romney did not get very far. President Nixon 
and his Southern Strategy blocked Secretary Romney's 
implementation of the Fair Housing Act, and it stayed that way 
for decades. Housing discrimination was illegal beginning in 
1968, but communities of color lived in the cities we had 
already built and then abandoned, and lived with the wealth 
inequality we had already grown.
    Minority communities continued to lose out on investment. 
FHA no longer used redlining maps--they were illegal--but 
communities of color still saw banks take their deposits and 
still refused to make them mortgage loans. Congress passed the 
Community Reinvestment Act, requiring banks to serve the 
communities whose money they relied in part on to make profits. 
But the same neighborhoods--the ones that had red lines drawn 
around them a few decades earlier--never got the same 
investment that others did. And after nearly three decades 
later, lenders seemed to finally discover the minority 
communities they had been neglecting for decades. But that 
discovery did not lead to positive investments to help 
communities build wealth and grow new businesses. Instead, 
predatory lenders wiped out the hard-won gains Black and Brown 
families had made in the years since 1968. They targeted people 
in lower-income and minority communities for predatory subprime 
loans and refinances. In 2003, President Bush's HUD Secretary, 
Mel Martinez, told this Committee that predatory lending posed 
``a significant danger to minority and women homeowners 
targeted for equity-stripping loans,'' and he went on to say 
that some loans had ``abusive terms and conditions'' that may 
violate the Fair Housing Act.
    Of course, we know what happened. We remember the 
foreclosures that swept through neighborhoods in waves. We 
remember the signs that went up on home after home. Black and 
Latino homeowners were 70 percent more likely to face 
foreclosure. Today Black, Latino, and Asian families are far 
less likely to own a home than White families. The Black home 
ownership rate is as low as it was 53--think about that. The 
Black home ownership rate is as low as it was 53 years ago, 
when housing discrimination was still legal. The wounds of 
redlining remain as fresh as ever. We know where you live 
determines so much about your life--what schools you go to, the 
kinds of jobs available, how far you have to travel to get to 
work, the air you breathe, the water you drink, even how long 
you live.
    Residents in those neighborhoods that were systematically 
excluded from investment--many of them people of color--have 
lower life expectancies and are more likely to have preexisting 
conditions. Take a walk around the city where Mr. Husock and I, 
where he grew up, where I live now, look and you can still see 
the scars of the foreclosure crisis in the same neighborhoods 
that were colored in red in the maps of the 1930s. Come to my 
Zip code, 44105, in the city of Cleveland; we had more 
foreclosures in that Zip code in the first half of 2007 of any 
place in the country.
    In these neighborhoods, you will find higher rates of lead 
exposure, toxic pollution, and infant mortality. Take a look at 
maps of COVID-19 deaths; they just happen to match up with 
those redlining maps pretty well.
    Our past is still determining people's lives today. That is 
the reason for this hearing. That is why the work of this 
Committee matters. We cannot change our history, but it does 
not mean we throw up our hands and tell millions of Americans, 
``Sorry, this is the best we can do.'' Because we know it is 
not. Remember all those infrastructure investments we made in 
the 1930s and in the years after World War II? Remember how we 
created millions of new homeowners and created the middle class 
in this country? Something the world had never seen.
    There is no reason we cannot do the same thing again, but 
this time we bring along everyone.
    On this Committee, we have an opportunity to address the 
legacy of housing discrimination. We have an obligation, under 
the law that this body passed more than five decades ago, in 
the wake of Dr. King's assassination. I look forward to hearing 
from today's witnesses about how we can begin to do just that.
    Ranking Member Toomey, you are recognized. Thank you.

         OPENING STATEMENT OF SENATOR PATRICK J. TOOMEY

    Senator Toomey. Thank you, Mr. Chairman. And let me say 
from the outset that a history of racial discrimination in 
housing is a real and sad part of our Nation's history. We 
cannot ignore that. It is a fact. It is also a fact that 
Government policies contributed to this discrimination very 
significantly.
    Some Federal Government policies were, in fact, designed to 
increase segregation. We all know and the Chairman alluded to 
fact that the FHA engaged in redlining practices, where for 
decades, FHA insurance was often limited to newer developments 
outside of inner-city neighborhoods, exacerbating segregation.
    We also know that Davis-Bacon wage requirements were 
designed to protect White union labor and to prevent Blacks 
from competing for federally funded construction jobs. Even 
today, Davis-Bacon continues to impede lower-income and 
minority workers from opportunities, and it drives up the 
construction costs for Government-assisted housing.
    We also know that some State and local government policies 
have contributed to exacerbating segregation. Some zoning 
practices--such as prohibitions on multifamily housing and 
minimum lots sizes--can have legitimate purposes for many 
communities. However, they sometimes do great harm. They can 
price low-income and minority families out of neighborhoods, 
and they reduce the supply of affordable housing for these 
families. Many of the markets with the most severe shortages in 
affordable housing have the most restrictive regulatory 
barriers to housing development.
    In San Francisco, for example, zoning regulations may have 
been responsible for more than 50 percent of total housing 
costs, according to one National Bureau of Economic Research 
study. In my view, this history shows us that when it comes to 
housing in America, including housing discrimination, 
Government has often been the problem, not the solution. And, 
unfortunately, the Biden administration does not seem to have 
learned this lesson. Its new multitrillion-dollar welfare plan, 
with a bit of infrastructure sprinkled in, seems designed to 
repeat many of the great mistakes of the New Deal and Great 
Society. After Congress has just finished spending more than 
$80 billion for housing in response to COVID--on top of the $50 
billion we spend annually on HUD programs alone, not to mention 
the many billions we spend on other housing programs, then 
there is the tens of billions at least that we forgo in tax 
revenues to subsidize housing--now, in addition to all of that, 
the Biden administration is calling for $213 billion in new 
spending for housing in its so-called infrastructure plan.
    Amazingly, the Administration wants Congress to spend $40 
billion to restore public housing projects--places where people 
generally do not want to live. Housing projects are notorious 
concentrations of poverty, crime, and other social ills. And 
research shows that moving families out of housing projects and 
integrating them into broader communities decreases violent 
crime. But rather than focusing on sensible alternatives, the 
Biden administration wants to keep families in housing 
projects. More public housing will only commit more Americans 
to a substandard living arrangement and increase Government 
dependency.
    We also should not rush to put families in homes they 
cannot afford. Relaxing underwriting requirements or expanding 
downpayment assistance programs for low-income families, 
especially in an overheated housing market, is a recipe for 
disaster. If home values drop--and eventually they very well 
may--these borrowers run the very real risk of losing their 
homes and any wealth they thought they had accumulated. And we 
have seen this happen before, most recently during the 2008 
housing crisis when Government monetary and housing policy 
created a housing bubble, the bursting of which caused the 
financial crisis and then the Great Recession.
    The Administration's infrastructure plan also calls for $20 
billion in tax credits for building and rehabilitating homes 
and making them more energy efficient. These tax credits will 
inevitably predominantly benefit developers and investors 
largely because they are not targeted to low-income families. 
In fact, homes built with tax credits can be sold to purchasers 
with incomes up to 140 percent of the area median income, not 
the poverty level.
    The Administration's plan also prioritizes using union 
labor to upgrade homes, and this unfairly excludes lower-
income, non-unionized laborers, and it increases construction 
costs that will inevitably be passed on to homeowners.
    Today we are going to hear from two witnesses who will 
discuss how Government intervention, even when well-meaning, 
has contributed to inequality. Howard Husock is a housing 
researcher and scholar. As Mr. Husock will note, many ``race-
conscious'' policies have not actually increased home ownership 
opportunities or wealth in underserved communities. Public 
housing has deprived many minority communities of the 
opportunity to build wealth. The Community Reinvestment Act is 
out of date and poorly designed to encourage lending in 
minority neighborhoods, and it does not track whether 
investments actually help or hurt families. And overly 
prescriptive Affirmatively Furthering Fair Housing requirements 
that put only a handful of low-income families in subsidized 
rental homes in affluent areas does little to support minority 
families or help them build wealth through home ownership.
    We will also hear from Tobias Peter, an expert in housing 
finance. He notes that policies aggressively encouraging low-
income or minority people to buy homes--especially during a 
boom when houses are very expensive--expose borrowers to 
greater default risk during dips in the market. He argues that 
risky lending harms low-income borrowers who purchase homes 
when home prices are inflated. And he believes that local 
governments need to remove zoning restrictions and other 
regulatory barriers to housing that artificially constrain the 
supply of housing and drive up costs.
    It is important to remember that the legacy of 
discrimination is often a direct result of Government-supported 
policies. As we consider how to address the housing challenges 
we face, we should not repeat the mistakes of the past. Now is 
not the time to double down on failed efforts, and that means 
we should not keep American families in dilapidated and 
segregated housing projects; we should not let bureaucrats in 
Washington make local housing decisions that undermine 
communities; and we should not inappropriately push families to 
purchase homes they cannot afford in the long run.
    The lesson we need to learn and apply is: When it comes to 
housing in America, Government has often been the problem, not 
the solution.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey, for your 
comments. I will now introduce the five witnesses.
    Richard Rothstein, who is testifying for Sherrilyn Ifill, 
who could not be with us today, is a senior fellow, emeritus, 
with the NAACP Legal Defense and Educational Fund. He is also a 
distinguished fellow of the Economic Policy Institute, a senior 
fellow at the Haas Institute at the University of California, 
Berkeley, and author of the book ``The Color of Law''. Those of 
you who know this Committee know I have recommended this book 
many, many times, as well as the book ``Evicted''.
    Lisa Rice is the president and CEO of the National Fair 
Housing Alliance. I count her as an Ohioan. Prior to her work 
at NFHA, Ms. Rice spent 21 years at the Toledo Fair Housing 
Center where she had become president and CEO.
    Jason Reece is an assistant professor of city and regional 
planning at the Knowlton School of The Ohio State University. 
He previously served in multiple research positions at Ohio 
State's Kirwan Institute for the Study of Race and Ethnicity 
and worked with communities as a capacity builder as part of 
the HUD's Sustainable Communities Initiative.
    Howard Husock, from Cleveland, as I said, is an adjunct 
scholar at the American Enterprise Institute. Prior to joining 
AEI, Mr. Husock held multiple positions at the Manhattan 
Institute and served as director, author, and executive 
education program instructor at Harvard's Kennedy School of 
Government.
    Tobias Peter is a research fellow and director of research 
at the American Enterprise Institute Housing Center. He 
previously served as a senior research analyst with the Housing 
Center.
    We will begin with Mr. Rothstein. Thank you for joining us.

STATEMENT OF RICHARD ROTHSTEIN, SENIOR FELLOW, EMERITUS, NAACP 
            LEGAL DEFENSE AND EDUCATIONAL FUND, INC.

    Mr. Rothstein. Good morning, Chairman Brown, Ranking Member 
Toomey, and Members of the Committee. Thank you for this 
opportunity. I am, as the Chairman said, Richard Rothstein, a 
distinguished fellow of the Economic Policy Institute and a 
senior fellow, emeritus, of the NAACP Legal Defense and 
Educational Fund, Inc. I am here on behalf of myself and of 
Sherrilyn Ifill, the president and director-counsel of LDF that 
was founded in 1940 by Thurgood Marshall and separated from the 
NAACP in 1957.
    The LDF has long worked to promote racial integration and 
opportunity in housing. Ms. Ifill and I have submitted written 
testimony that expands on my brief remarks.
    I am also, as you heard, the author of a book, ``The Color 
of Law'', that disproves the myth of de facto segregation. In 
truth, we are residentially segregated not naturally or for 
private bigotry, but primarily by racially explicit Federal 
policies, State and local as well, designed to prevent African-
Americans and Whites from living as neighbors. These 20th 
century policies were so powerful that they determine much of 
today's residential, social, and economic mobility.
    Because powerful Government policies segregated us, racial 
boundaries violate the Fifth, Thirteenth, and Fourteenth 
Amendments. Our Nation thus has a positive constitutional 
obligation to redress segregation with policies as intentional 
as those that segregated us.
    The Federal Government made housing and home ownership 
critical to families' economic stability and upward mobility, 
but we routinely excluded Blacks from Government benefits that 
propelled Whites into the middle class. Perhaps Government's 
most powerful unconstitutional policy was the Federal Housing 
Administration's guarantee of developers' bank loans to 
suburbanize the city-dwelling White working class and returning 
World War II veterans into single-family homes in all-White 
communities, creating a White noose around Black city 
neighborhoods. The homes were affordable, about $100,000 in 
today's dollars, to both Black and White veterans and urban 
residents who had jobs in the post-war boom. But African-
Americans were prohibited by explicit policy from 
participating. This was not done by rogue bureaucrats at the 
FHA or Veterans Administration, an agency that followed FHA 
policy. It was spelled out in the FHA's underwriting manual, 
distributed to appraisers who evaluated builders' applications. 
The manual said a proposal could not benefit from Federal 
subsidy if it included African-Americans in a White project. 
The manual even required denial of loans for all White projects 
located near where Black families lived because that would 
``risk infiltration by inharmonious racial groups.'' This 
notion of de facto segregation is utter nonsense.
    These inexpensive federally subsidized Whites-only homes 
now sell for $300,000, $400,000, in some areas $1 million or 
more. Whites gained wealth from equity appreciation and used it 
to send children to college, to finance short-term layoffs or 
medical treatment, to enhance retirement, and to bequeath 
wealth to children and grandchildren who then had downpayments 
for their own homes.
    African-Americans were prohibited by explicit Federal 
policy from doing the same. Today Black family incomes are 
about 60 percent of White incomes. You would think Black wealth 
would also be about 60 percent of White wealth. Households can 
save the same amounts from the same incomes. But, in reality, 
Black wealth is only about 5 percent of White wealth. That 
enormous disparity between a 60-percent income ratio and a 5-
percent wealth ratio largely results from unconstitutional 
Federal policy that we have an obligation to remedy, one we 
have never embraced.
    Another Federal policy that segregated us was public 
housing, something we now think is for the poor, but it began 
in the New Deal for families who remained employed and could 
pay full rent. Government built it to meet a housing shortage, 
but did not subsidize it. Yet Government segregated it, 
creating separate projects for Whites and Blacks, frequently 
segregating previously integrated neighborhoods. The great 
African-American poet, novelist, and playwright Langston Hughes 
wrote in his autobiography that he lived in an integrated 
downtown Cleveland neighborhood. In high school, his best 
friend was Polish, and he dated a Jewish girl. It was an 
integrated school in an integrated neighborhood. But the Public 
Works Administration cleared part of it to build separate 
projects--one for Whites, one for Blacks--creating segregation 
where it had not existed. This policy was followed nationwide, 
creating segregated patterns that persist today.
    It was only after Whites were subsidized to leave public 
housing for all-White suburbs that public housing became almost 
all black. When industrial jobs disappeared from cities, 
residents no longer had access to good jobs and required 
subsidies.
    Contemporary land use has been layered atop an 
infrastructure created by decades of racially discriminatory 
policies. Failure to remedy these injustices has created 
multiple crises. Home ownership is out of reach for many. 
Renters are overburdened by costs. Wages are inadequate for 
housing costs in many cities. Affordable public housing is 
scarce, and housing infrastructure is neglected. These issues 
remain at the core of our Nation's inequality.
    Bold Federal action to ensure equal opportunity in home 
ownership and affordable housing is long overdue. This body can 
ensure that our housing infrastructure finally reflects the 
nondiscriminatory and inclusive vision of the Fair Housing Act.
    Thank you very much.
    Chairman Brown. Thank you, Mr. Rothstein.
    Ms. Rice, welcome.

STATEMENT OF LISA RICE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, 
                 NATIONAL FAIR HOUSING ALLIANCE

    Ms. Rice. Chairman Brown, Ranking Member Toomey, and other 
Members of the Senate Committee on Banking, Housing, and Urban 
Affairs, on behalf of the National Fair Housing Alliance, thank 
you for inviting me to speak today about the history and 
current state of housing discrimination. Our mission is to 
eliminate all forms of housing discrimination and ensure 
equitable housing opportunities for all. NFHA is also the trade 
association for over 200 fair housing organizations throughout 
the United States.
    Many of the economic challenges facing our Nation--the 
racial wealth, income, and home ownership gaps, the racial 
health disparities that preexisted and are exacerbated by the 
COVID-19 pandemic, educational and employment gap, and equities 
in credit access and other disparities--have their origins in 
discriminatory housing and economic policies implemented from 
the colonial period through present times.
    Throughout U.S. history, people of color have been 
restricted from owning land or homes. Federal laws and policies 
as well as private market practices created residential 
segregation. The dual credit market institutionalized 
redlining, exclusionary zoning policies, and other structural 
barriers that block people from opportunities to advance in 
life. These systemic barriers have never been eliminated. They 
are still with us. U.S. neighborhoods are more segregated today 
than they were 100 years ago. Consumers of color are still 
denied for mortgage loans at twice or more the rate of White 
borrowers. The Black-White home ownership gap is as wide today 
as it was when redlining was legal. And without interventions, 
people of color will never reach economic parity with White 
residents.
    Because of these structural inequities, where a person 
lives can make all the difference in their lives. Your address 
impacts everything about you. In fact, your Zip code is a 
better determinant of your health than your genetic code. 
Neighborhoods of color are more likely to have poorly resourced 
schools, fewer amenities like health care facilities, grocery 
stores, green spaces, and bank branches. But these communities 
of color are more likely to have hazardous toxic waste plants 
as well as polluted land, air, and water.
    There are over 4 million instances of housing 
discrimination that occur each year, and, unfortunately, most 
of these go unreported. But I want to give you a sense of the 
cases that do come through our doors.
    In New York, a young Asian American woman taking her trash 
out had acid thrown in her face, causing serious injuries.
    In Alabama, we are working with our members to assist 
victims of sexual assault, including a woman who was raped by 
her landlord and who got no assistance at all from law 
enforcement when she reported the incident.
    In Tennessee, we recently settled a redlining cases in 
which a local lender failed to serve Black residents in 
Memphis.
    In Maryland, we are currently investigating an appraisal 
bias case in which an appraiser stated that an affluent Black 
community in Prince George's County could not sustain a high-
income housing development, stymieing a multimillion-dollar 
project.
    NFHA recently filed a major lawsuit against Redfin alleging 
systemic real estate sales discrimination in Philadelphia, 
Kansas City, Baltimore, Chicago, Milwaukee, Louisville, 
Memphis, Long Island, and Essex County, New Jersey.
    NFHA and its members are addressing discrimination manifest 
in algorithmic-based technologies used in the housing and 
financial services space, including the use of tenant 
screening, risk-based pricing, credit scoring, digital 
marketing, and automated underwriting systems.
    When thinking about solutions to overcome housing and 
lending discrimination, we must consider the extensive 
resources this Nation has invested in creating a deeply 
inequitable society. Thousands of laws, ordinances, and 
policies have been passed that either explicitly were race-
based, such as the Indian Removal Act, the Chinese Exclusion 
Act, and Jim Crow laws, or laws that were implemented with 
racialized policies, such as the Federal Highway Administration 
Act and the Home Owners Loan Corporation Act.
    This Nation has spent hundreds of trillions of dollars 
implementing unfair policies which created deep-seated racial 
inequality that we see today. It is, therefore, imperative that 
the Federal Government now support equitable investments for 
marginalized groups. Discrimination is crippling this Nation. 
Research shows that if we eliminated racial inequality, the 
U.S. GDP would increase by $5 trillion over a 5-year period. So 
it is in our collective interest to expand opportunities for 
marginalized groups, and I thank you for allowing me to share 
with the Committee.
    Chairman Brown. Thank you, Ms. Rice.
    Mr. Reece, welcome, and you are recognized for 5 minutes.

    STATEMENT OF JASON REECE, ASSISTANT PROFESSOR, CITY AND 
REGIONAL PLANNING SECTION, KNOWLTON SCHOOL OF ARCHITECTURE, THE 
                     OHIO STATE UNIVERSITY

    Mr. Reece. Chairman Brown, Ranking Member Toomey, and 
Members of the Committee, thank you for the opportunity to 
testify today on the legacy of racial discrimination in 
housing. I commend you for hosting a hearing on this important 
topic and elevating the issue of housing equality as a top 
priority of this Committee. I am an assistant professor of city 
and regional planning in the Knowlton School at The Ohio State 
University. My two decades of teaching, research, and 
scholarship have focused on city planning history, land use 
policy, and their implications for racial and social equity.
    Contemporary housing segregation often correlates with 
isolation into neighborhoods that lack critical opportunity 
structures, such as strong schools, healthy environments, and 
economic resources. Research by the Diversity Data Kids 
initiative at Brandeis University has found that nearly one in 
two African-American children and one in three Latinx children 
are disproportionately isolated into the most unhealthy and 
underresourced neighborhoods in our Nation's largest 
metropolitan areas. These disparities are even more pronounced 
for low-income African-American and Latinx youth.
    Segregation in our housing market was not a natural 
occurrence but enforced by a systemic arrangement of policies 
and practices throughout the 20th century by both the private 
and public sector. Local practices such as racial zoning, 
racially restrictive covenants, exclusionary zoning, and 
expulsive zoning all played a role in enforcing segregation 
into the early 20th century city. These existing patterns of 
segregation created by local practices would be reinforced by 
redlining practices and housing policies emerging from the New 
Deal. Redlining of urban neighborhoods would produce decades of 
disinvestment, while FHA guidelines mandated racial separation 
in the rapidly growing post-World War suburbs.
    Post-war policies such as urban renewal and the Federal 
Highway Act would further damage redlined urban neighborhoods, 
causing widespread disruption and displacement. Landmark civil 
rights legislation, such as the 1968 Fair Housing Act, have 
helped open housing markets, but segregation persists. For 
example, the Federal Fair Housing Act has been effective at 
reducing private discrimination in the market but has been 
unable to counter ongoing exclusionary land use policies.
    The legacy of discrimination has a direct impact on the 
challenges facing the housing sector, cities, and our society. 
Research has linked these historic policies to depressed 
wealth, health, and housing outcomes for marginalized 
communities today. Three-quarters of the formerly redlined 
neighborhoods from the 1930s low- to moderate-income today. 
Historic patterns of redlining have been associated with 
increased risk for predatory lending and foreclosure during the 
2008 housing crisis. Studies have documented the relationship 
between historic redlining, contemporary social vulnerability, 
income, and also gun violence. New studies emerging from public 
health indicate historic redlining can be linked to a number of 
contemporary health challenges. Redlining has been empirically 
linked to disparities in preterm birth, cancer, infant 
mortality, and life expectancy.
    Many policy innovations and reforms could proactively 
counter the legacy of segregation on the housing market. 
Federal leadership and investment are needed to support 
communities and local governments who are attempting to grapple 
with these challenges. Leadership is needed in building 
capacity, fostering collaboration, fostering local innovation, 
while assuring protection of civil rights.
    Federal leadership could be beneficial in aligning critical 
infrastructure investments, supporting the implementation of 
fair housing programs, and fostering regional planning 
activities. Many of the policy tools needed to counter the 
legacy of discrimination exist, but need to be brought to 
scale. For example, recent programs such as the U.S. Department 
of Housing and Urban Development's housing choice voucher 
mobility demonstration could be expanded to assist local 
housing authorities in providing better access to safe and 
healthy neighborhoods for voucher holders.
    In addition to housing mobility, direct investment is 
needed in formerly redlined communities. Proposed Federal 
programs, such as the formerly introduced Livable Communities 
initiative, could be transformative in sparking the synergistic 
investment in infrastructure and affordable housing needed for 
neighborhood transformation.
    Metropolitan housing markets are most effectively planned 
for through regional planning strategies. Regional housing 
approaches can align local government land use regulations and 
help reform local exclusionary housing policies. Regional 
planning is critical to build consensus, build capacity, and 
develop strategy among multiple local governments. Programs 
such as the Regional Planning Competitive Grant Program from 
the HUD Sustainable Communities Initiative could be 
reintroduced to support the capacity for regional planning.
    In conclusion, housing is a critical form of infrastructure 
serving families, neighborhoods, and regions. Stable housing 
and healthy neighborhood environments are critical to family 
well-being and child development. Efforts to reduce 
contemporary discrimination in the housing market and directing 
investment into historically disinvested neighborhoods provides 
an investment into the next generation of American society, 
supporting equity but also improving the Nation's health, 
wealth, and economic competitiveness.
    Thank you for the opportunity to testify today. I look 
forward to your questions.
    Chairman Brown. Thank you, Mr. Reece.
    Mr. Husock, welcome.

     STATEMENT OF HOWARD HUSOCK, EXECUTIVE SENIOR FELLOW, 
     PHILANTHROPY ROUNDTABLE, AND ADJUNCT FELLOW, AMERICAN 
                      ENTERPRISE INSTITUTE

    Mr. Husock. Thank you, Chairman Brown, Ranking Member 
Toomey, and distinguished Members of the Committee. It is a 
special honor to testify before the Senator from Ohio, the 
State where I was born and raised.
    That the United States has been marked by an ugly history 
of race-related housing discrimination is beyond dispute. 
Private deed restrictions barred African-Americans from buying 
or renting in neighborhoods of their choice, including such 
iconic American places as Levittown. Government policies 
reinforced and encouraged such bias, as with the redlining 
policies we have discussed. A new direction was set by the 
landmark Fair Housing Act of 1968 and its key guiding 
assumption: that race discrimination should not preclude any 
American household from buying or renting a home it can afford.
    We reversed course from what might be called ``negative 
discrimination,'' but the history of Government efforts to 
combat the effects of racism on housing policy have also 
included what can be called ``positive discrimination'' 
policies, Government interventions in the marketplace conceived 
to help racial and ethnic minorities. I will discuss the 
historical evidence as to how and whether such policies have 
worked and how they might be modified today.
    The first such broad intervention was public housing, 
initiated as part of the New Deal. What was meant as Government 
benevolence did not turn out that way. In Detroit, as well as 
Chicago, St. Louis, Pittsburgh, Cleveland, and elsewhere, 
historical African-American neighborhoods were bulldozed to 
make way for explicitly racially segregated public housing. 
That meant the clearance of hundreds of Black-owned businesses 
and owner-occupied homes.
    In Detroit, the New Bethel AME Church, where Aretha 
Franklin first sang and her father preached, was torn down. So 
too was Pittsburgh's Hill neighborhood, immortalized in the 
plays of August Wilson. These neighborhoods were repositories 
of African-American wealth, small but growing. Perhaps more 
importantly, they were also communities in which wealth 
accumulation was possible.
    In contrast, ownership in public housing is a contradiction 
in terms. That has unfortunately played a role in the tragic 
lag in wealth descried earlier, and, of course, much of the 
original public housing stock has rapidly deteriorated and was 
itself bulldozed--with no compensation for residents.
    The well-intended but misguided policy to set public and 
subsidized housing rents at 30 percent of income today means 
that as one's income increases, so does one's rent. What a 
punishment. That has set a trap to hold back tenants, and that 
disproportionately affects African-American tenants who 
comprise 47 percent of all public and subsidized households 
today. Median tenure in New York City public housing, 19.7 
years.
    Consider, too, the Community Reinvestment Act, passed in 
1978 at a time when competition in the financial sector was 
sharply limited by unwise regulation. Redlining was plausible. 
In the years since then, however, lending has been 
revolutionized by technology and competition, including by 
nonbank lenders. It has become fierce. It is no longer clear 
that, absent regulation, bank redlining would persist. But 
there is reason to believe that such positive discrimination as 
the CRA can harm the prospects of those it sets out to help.
    A 2013 National Bureau of Economic Research paper found 
that loans made in the run-up to CRA exams defaulted by about 
15 percent more often than those in other periods. My concern 
is not for the profits of the big banks but, rather, about the 
minority homeowners who find themselves living on a block where 
homes have gone into default and foreclosure.
    Consider as well the Affirmatively Furthering Fair Housing 
Initiative, an understandable response to the fact that too 
many of our municipalities have adopted draconian zoning laws. 
But the emphasis of AFFH on using Federal HUD funding as a 
stick to force the construction of more subsidized rental 
housing aimed at increasing residential racial diversity 
precludes the household wealth appreciation gained through 
property ownership, and it can benefit developers more than 
low-income housing households.
    A University of California at Berkeley study has found that 
low-income housing tax credit-financed construction in that 
State costs $480,000 per unit. That is a lot of infrastructure.
    In conclusion, there are three policy changes I will leave 
you with. Let us consider more imaginative approaches to 
improve public housing than simply spending more. For instance, 
buying out public housing tenants, financed through the sale of 
those properties that are on valuable sites. Let us permit 
fixed-rent leases for public and other subsidized housing 
tenants so they can accumulate wealth.
    Second, include regular loan performance reviews 
specifically for CRA-qualified lending and make clear to 
lenders that performance, not just the extension of credit, 
matters. And let us use HUD to provide models, not mandates, 
for local communities to reform zoning in ways that will 
accommodate a wider range of missing middle-income groups 
without subsidies. These approaches will effectively provide 
vehicles of opportunity for those of all races, especially 
minorities who have been harmed by a history of ill-conceived 
Government assistance policies.
    It is an honor to testify in front of you, and I look 
forward to your questions. Thank you very much.
    Chairman Brown. Thank you, Mr. Husock.
    Mr. Peter, welcome. You are recognized for 5 minutes.
    Thank you.

  STATEMENT OF TOBIAS J. PETER, DIRECTOR OF RESEARCH, HOUSING 
   CENTER, AND RESEARCH FELLOW, AMERICAN ENTERPRISE INSTITUTE

    Mr. Peter. Chairman Brown and Ranking Member Toomey, thank 
you for the opportunity to testify today.
    Many of the housing problems we face today as a Nation have 
occurred not in spite of Federal policies, but because of them. 
Two policies in particular have been major contributors to the 
separate and unequal housing legacy we find ourselves in today. 
Racial discrimination in residential zoning policies espoused 
by the Federal Government may be traced back to 1921 and 
foreclosure-prone affordable housing policies back to 1954. 
These two policies continue to contribute to disparate outcomes 
and put low-income and minority borrowers needlessly in harm's 
way and severely limit their opportunities to build 
generational wealth.
    Zoning policies espoused by the Federal Government and 
widely adopted around the country have constrained the private 
sector's ability to build adequate housing, thus fueling 
housing unaffordability.
    Starting in 1921, one-unit detached zoning policies became 
widespread through the actions of the Federal Government. 
Justified as actions ``promoting health, safety, morals, or the 
general welfare,'' they were, in fact, thinly veiled efforts to 
promote racial segregation of residential development.
    These policies have created an artificial supply shortage. 
We estimate without these policies an additional 8 million 
homes would have and can still be built without subsidy by 
private enterprise.
    This supply shortage has resulted in higher home prices, 
higher rents, and greater levels of debt in order to become a 
homeowner.
    Worsening affordability has severely affected low-income 
households, especially Black ones, by severely restricting the 
opportunity to sustainably purchase a home.
    Foreclosure-prone affordable housing policies began in 
1954, when Congress authorized FHA to use the 30-year loan. 
These policies have been primarily targeted at low-income and 
minority borrowers and have subsidized debt by providing 
excessive leverage and have not built wealth.
    Coupled with the supply shortage, the increased demand from 
additional leverage has fueled unsustainable lending and higher 
home prices. This is the paradox of affordable lending: When 
supply is constrained, credit easing will make entry-level 
homes less not more affordable.
    During the financial crisis, these policies contributed to 
8.7 million of foreclosures and other forced dispositions, 
which were one and a half times higher in lower-income and two 
times higher in minority neighborhoods than in high-income or 
more White neighborhoods.
    Today the Nation finds itself in the midst of the second 
home price boom in less than a generation. The national 
seller's market is now in its 101st month, and levels of supply 
are at record lows. Home prices are rising in the 10 to 15 
percent range compared to a year ago.
    Home price appreciation is being propelled by the Fed's low 
interest rate policies and quantitative easing, the desire for 
more space as more people work from home, and a wide credit 
box, particularly at FHA.
    Across the States you represent, affordability has 
worsened, especially for low-income and minority households. 
You can trace just how bad affordability has become from key 
housing market indicators for your State that you can find in 
the appendix.
    The COVID-19 pandemic has revealed the same fault lines 
that were present before the financial crisis, thus maintaining 
separate and unequal outcomes in the housing market.
    Delinquencies are still largely geographically concentrated 
in low-income and minority neighborhoods, where Federal 
policies provide widespread access to default-prone leverage.
    Most importantly, these Federal policies have impeded the 
creation of generational wealth for lower-income and minority 
households and have served to perpetuate the legacy of racial 
discrimination and socioeconomic stratification in housing. Due 
to their ongoing impact, there is a growing danger that housing 
is going to become even more separate and unequal. This is not 
a viable path forward. While there are, unfortunately, no quick 
fixes to correct the zoning and affordable housing policies 
that have over decades helped to create a separate and unequal 
housing market, the following represent sensible policy 
solutions.
    First, as you are now considering new affordable housing 
proposals providing hundreds of billions of new funding, you 
must be wary of Government programs that promise an easy fix. 
Many poorly designed housing assistance programs have had many 
unintended consequences which have helped to make housing 
separate and unequal.
    Second, a sounder approach for the Federal Government's 
involvement in single-family financing would be to focus on 
wealth building, not debt. Specifically, shorter loan terms 
would sustainably build generational wealth for low-income and 
minority households through home ownership. To make these loans 
attractive, Government assurance could be narrowly targeted to 
lower-income first-generation homebuyers so that they can build 
wealth.
    Third, State and local governments can greatly expand 
supply by unleashing the private sector by restoring property 
owners' rights taken away by Federal policies dating back to 
the 1920s.
    Fourth, identify and prosecute bad actors that propagate 
racial discrimination using sound data analysis by the AEI 
Housing Center while allowing others to defend themselves using 
the same approach. This test requires no new data collection, 
and we stand ready to help HUD or the CFPB to implement it.
    And, finally, fifth, provide and support economically sound 
opportunities for income and wealth growth for lower-income 
people.
    Thank you very much.
    Chairman Brown. Thank you so much, Mr. Peter.
    Let me begin the questions with Ms. Rice. Infrastructure 
investments in the past, Ms. Rice, like FHA and construction of 
the Federal highway system created jobs and helped drive 
economic growth. They only benefited some communities, however. 
They explicitly, as we know, excluded or directly harmed lower-
wealth communities and communities of color.
    Ms. Rice, how do we ensure that new investments in 
infrastructure help promote broad-based economic growth while 
addressing economic and racial inequalities and inequities 
both?
    Ms. Rice. Thank you for the question, Senator Brown. The 
first thing that we have to do is first understand that 
infrastructure is housing. When you think of all of the 
infrastructure bills that the Nation has passed in the past, 
those infrastructure bills had a grave impact on people's 
ability to sustain their housing. It disrupted home ownership 
opportunities for many communities of color, and it created--it 
actually helped create residential segregation. So we have to 
keep that in mind when we are implementing this particular 
infrastructure bill, and one of the things that we are pushing 
for at the National Fair Housing Alliance is to sort of cloak 
the entire infrastructure bill, if you will, in a patina of 
equity. So we're arguing that the Affirmatively Furthering Fair 
Housing mandate should be applied to the entire infrastructure 
bill so that we are implementing all of these programs and 
investments in a very equitable fashion.
    The other thing is the infrastructure bill has to include 
both supply side and demand side provisions. So you cannot just 
buildup housing opportunities without ensuring that people are 
going to be able to adequately access them. And if we negate 
the reality, if we excuse the reality that families of color 
are not in the same position because of historical and current 
discriminatory practices to access affordable housing options, 
then we are going to be exacerbating inequality, much like the 
CARES Act that was implemented at the beginning of the COVID 
pandemic has worked to exacerbate inequality because it was not 
implemented through an understanding of the inequalities that 
currently exist in our Nation.
    So if we do not want to repeat that kind of exacerbation of 
inequality in our Nation, we have to make sure that the 
infrastructure bill is taking into consideration that we have a 
very uneven landscape and not everyone has access to 
opportunity. So we need to pay attention to both the supply 
side and the demand side issues.
    Chairman Brown. Thank you, Ms. Rice.
    Dr. Reece, you have helped communities engage in 
comprehensive planning efforts involving housing and 
transportation. Who needs to be at the table? If you would 
briefly tell us, who needs to be at the table to make sure that 
these plans work for the neighborhoods? Your sound is not on. 
We still cannot hear you.
    Let me come back to you. Apparently that is on our end. It 
is on his end? OK. It is on his end. Sorry about that, Dr. 
Reece.
    Let me move to Mr. Rothstein. You wrote an entire history, 
as we have cited on the Government's role in creating and 
perpetuating segregation in our housing markets and the Federal 
Government's obligation to provide redress. For those who might 
be skeptical, explain why the Government has an obligation to 
remedy the harmful discrimination that it perpetuated. And we 
cannot hear you either. Is there a problem, Mr. Rothstein? Now 
we can hear you, Mr. Rothstein.
    Mr. Rothstein. I forgot to unmute myself. Sorry.
    In the first place, we have a constitutional obligation to 
do it, no matter how difficult it is, because as we have 
discussed, the policies that created segregation were heavily 
dominated by Federal, State, and local government policies, a 
violation of the Constitution, and we have an obligation as 
Americans, difficult though it may be to remedy that, not just 
to let it take care of itself. That is the first reason.
    The second reason is so much is being made of unintended 
consequences. Of course, there are unintended consequences of 
everything we do, and we have to be careful to avoid them. But 
that cannot be a reason to paralyze us from doing anything.
    One of the things we should do is impose a disparate impact 
standard on everything that we do under this infrastructure 
bill so that we make sure that the policies that we enact do 
not have a disparate impact on African-Americans and on other 
minorities in an unintended way.
    For example, just a few years ago, the present Governor of 
Maryland took office and canceled a light-rail project that was 
going to bring African-Americans in a low-income neighborhood 
of Baltimore, give them access to good jobs, to good shopping 
opportunities, residential opportunities, and redirected that 
money to highways that would help speed the travel of commuters 
from suburban areas into the center of the city. That had a 
disparate impact on African-Americans, that policy choice. It 
was not intended as a racially explicit policy, but we need to 
impose a disparate impact standard on it and on all the 
policies that we enact.
    I think that we should legislate the disparate impact 
standard into the Fair Housing Act because leaving it to 
rulemaking, we have seen over the last decade, is subject to 
politicization and to repeal and not be effective.
    So we have to implement policies that we are obligated to 
do under the Constitution. We cannot use the fact that there 
may be occasional unintended consequences as an excuse to do 
nothing. The Federal Government was very powerful in 
implementing segregation. The fact that it was so powerful in 
doing it suggests that if it is intended in the right way, it 
can be equally powerful in desegregating.
    Chairman Brown. Thank you, Mr. Rothstein.
    Professor Reece, we will come back to you later since my 
time has expired, and if we cannot get back to you later, we 
will talk directly about your answer.
    Senator Toomey is recognized.
    Senator Toomey. Thank you, Mr. Chairman.
    Let me start with Mr. Husock. Actually, several people have 
observed that African-American home ownership rates have not 
improved since, I do not know, the late 1960s or thereabouts. 
So we have had 50 years of programs, and you went through some 
of the failings we have had with the public housing system and 
how that has failed and how rent regulations have failed, and 
the CRA has certainly at least become obsolete--oh, and 
literally, truly trillions of taxpayer dollars spent to 
subsidize housing in various ways over recent decades, and yet 
zero progress on a very important metric like home ownership 
rates.
    Is this pretty damning evidence that these programs have 
not worked, in your view, Mr. Husock?
    Mr. Husock. It is really suggestive, certainly, Senator 
Toomey, and I think we have to not look for the big quick fix. 
We have to accept the idea that the best progress is 
sustainable progress, and that can be incremental. Here is what 
I am talking about. The FHA, still today a very powerful force 
in the American Government, requires a 3-percent downpayment. 
Well, low downpayments seem like you are doing a favor to the 
homeowner, but they actually may, as you said in your opening 
remarks, qualify people for homes they cannot afford. 
Foreclosure and delinquency rates in FHA-financed homes remain 
extremely high today compared to those in the private market, 
the straight private market. That is not something that we 
should accept. It is a worry. And that resounds through the CRA 
and other efforts to shoehorn people into home ownership. Let 
us make sure home ownership is sustainable, and that way it 
will improve in the long term.
    Senator Toomey. There is no question we see a correlation 
between home ownership and favorable socioeconomic outcomes. 
But does that mean that there is a causal direction, starts 
with home ownership, and if we put people in homes they cannot 
afford, we are going to still get the favorable socioeconomic 
outcomes that we would like to see?
    Mr. Husock. No, I actually compare it to the discussion 
about moving to a better Zip code. We have to make the right 
life decisions in order to move up in the world. That is a fact 
of American life. And one of the big life decisions we make is 
to save money for a downpayment for a home so that we do not 
have a large overhanging principal, so that when home values go 
down, as they inevitably do, as you pointed out in your opening 
remarks, we are not caught in the down draft. So the good life 
decisions that allow people to accumulate wealth, whether by 
moving to a higher-value neighborhood or just having the 
downpayment to move where they can buy, those are what we need 
to encourage.
    Senator Toomey. I want to develop that, but I just want to 
close out on this. Spending a whole lot more money on the 
programs that have given us zero progress does not sound like a 
great recipe to me.
    Mr. Peter, you made a point that is very related to what 
Mr. Husock just said, which is the idea to focus on wealth 
building instead of debt building. Isn't it true that a lot of 
well-intended programs have really been designed to encourage 
people to take on more debt than they can afford, which has 
ended very badly for those very people that were meant to 
benefit? If we had programs designed to help people encourage 
the accumulation of savings and wealth, wouldn't they be a lot 
better off?
    Mr. Peter. Thank you, Senator, for the question. And, yes, 
basically since 1954, Federal affordable housing policies have 
been to subsidize debt by providing excessive leverage, and my 
colleague Howard Husock just mentioned a couple examples. At 
FHA we have--today the median debt-to-income ratio is 45 
percent. FHA goes as high as 57 percent. At FHA many of the 
loans get risks laid on top of each other with risky features. 
So there certainly--this has been the policy since 1954, and 
the outcomes do not show for it. A much better, a much sounder 
approach would be to add to wealth building, and the way to do 
that is because--the way to achieve that is to focus on shorter 
loan terms, do not get absorbed into--do not end up driving 
home prices higher and higher, but they end up providing 
sustainable wealth building, which is what we want.
    Senator Toomey. And then I have got very little time left, 
but, Mr. Husock, I wonder if you could elaborate a little bit 
on an interesting idea that you alluded to, which is the idea 
of maybe selling off public housing that is on very valuable 
land and using the proceeds from that sale to do a lot more to 
help the folks who would be displaced than keeping them there.
    Mr. Husock. Yeah, in New York City there are housing 
developments on some of the most--I mean billion-dollar lots on 
the Brooklyn waterfront and lower Manhattan. They used to be 
worth billions before the pandemic. We think they will come 
back. And they will, in fact. And rather than giving people a 
housing voucher and saying try to use it somewhere, let us pay 
them for exactly the kind of wealth accumulation they missed 
out on for 40 years--10 percent of New York City public housing 
tenants have lived there for 40 years or more, not accumulating 
wealth. Let us buy them out with the proceeds from these 
extremely valuable real estate sites and let them go use that 
where they would.
    Senator Toomey. Thanks very much.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Toomey.
    Senator Reed from Rhode Island is recognized for 5 minutes.
    Senator Reed. Thank you very much, Mr. Chairman.
    Let me direct a question to Ms. Rice and Professor Reece, 
and it is a very basic one. When it comes to addressing housing 
discrimination, would the private sector on its own produce the 
most efficient and fairest outcome in your estimate?
    Ms. Rice. Sure, I am happy to go first, and thank you, 
Senator Reed, for the question. The answer is no, 
unfortunately, and we have seen this throughout history. There 
is this sort of argument that we have been hearing that 
Government should sort of stay out of the way because the 
private market can handle things on their own. I would like to 
lift up two examples of why that is not the case.
    First, the argument essentially says that it was all right 
for the Federal Government to invest trillions of dollars 
implementing policies that were equitable for and supported 
White communities in a very racialized manner. That was just 
fine. Supporting White families to make it into the middle 
class was just the thing to do, but investing dollars in 
equitable policies to support communities of color is somehow 
wrong.
    I think it is a very racist construct to argue that the 
policies and programs that benefited White residents would not, 
in fact, benefit people of color and should continue to be 
disclosed for them. The argument, I think, Senator Reed, 
ignores that the White community is where it is now on the 
economic ladder because our Government supported--from the 
colonial period to today supported their ability to secure 
land, housing, and businesses. The argument suggests that 
supporting communities of color in this way is somehow wrong, 
and I think that is clearly separate and unequal.
    The second example I would like to lift up is the 
importance of the Government's role in supporting 
antidiscrimination action. The first Fair Housing Act was 
actually passed during Reconstruction in 1866. That law was 
almost never used, Senator Reed, and that law was never used 
because people feared violence and retribution if they were to 
exact this civil rights protection. But when the Fair Housing 
Act was passed in 1968, bringing with it the full weight of the 
Department of Justice and the Department of HUD, we saw 
thousands of victims of discrimination come forward because 
they had the support and backing of the Federal Government. So 
policies implemented in a way to advance justice and fairness 
are necessary.
    Senator Reed. Well, thank you very much.
    Dr. Reece, do you have a comment?
    Mr. Reece. Yes, I wanted to come back to Senator Brown's 
question about moving forward in terms of the benefits of 
comprehensive planning to address these issues. I wanted to 
state that the planning profession still has its place in 
regards to aligning our infrastructure in an efficient way, 
avoiding land use conflict, and building the capacity and the 
consensus needed to guide the development of cities moving 
forward with the macroeconomic changes that we know are coming.
    We have learned from the painful history of the past in 
terms of these past practices that we have talked about, and 
our profession has evolved considerably since then, placing 
great emphasis on engaging marginalized communities and 
centering their voices in the context of how we plan for the 
future. This is why I believe planning still has a very 
profound role in terms of thinking about how we guide our 
infrastructure investments forward, as well as how we address 
these ongoing housing challenges facing many communities of 
color.
    Thank you.
    Senator Reed. Well, thank you very much, and my time is 
dwindling down to a few seconds. So, Chairman, I will yield 
back to you. Thank you.
    Chairman Brown. Thank you, Senator Reed.
    Senator Scott from South Carolina, who may or may not be 
on? If not, Senator Rounds of South Dakota, you are recognized 
for 5 minutes.
    Senator Rounds. Thank you, Mr. Chairman.
    Ms. Rice, I would like to begin with a question for you. 
One of the areas where housing needs are most acute are on 
tribal lands in South Dakota and across the country. Native 
American reservations have a housing stock that has suffered a 
severe underinvestment that stretches over decades.
    Now, one of the reasons for that is because we have what we 
call ``tribal trust land'' in which the Government holds in 
trust the land which belongs to the Native Americans. But when 
it comes time to build a home, showing that you actually have 
ownership or the ability to own the land and, thus, the 
location where the home is becomes rather challenging, and 
there are limited numbers of financial institutions that have 
expertise in working through that particular issue. But this is 
an item that has literally been there for decades.
    Where do you think Congress should start when it comes to 
improving housing conditions for Native Americans? And I am 
going to ask you a follow-up when we are done, but just to 
start things off, can you give me your thoughts about--these 
are rural areas, so they are different from a lot of the rest 
of the country, but to me this is critical for a population 
that really does have a very high level of poverty.
    Ms. Rice. Senator Rounds, thank you for that question, and 
it is a very important one. As you noted, there are a handful 
of lending institutions that have mastered the process for 
providing mortgage credit on tribal lands, and, unfortunately, 
we have not had a regulatory framework in which our financial 
regulators have used the carrots that they have in order to 
incentivize lenders to do more in this space. So there are a 
couple of things that we are actually championing.
    One is the use of a program called ``special purpose credit 
programs.'' This is a program that has been on the books for 
decades. It is a construct of the Equal Credit Opportunity Act, 
but it has really never been used. It is similar to 
Affirmatively Furthering Fair Housing, right? We have never had 
implementation of the Affirmatively Furthering Fair Housing 
provision of the Fair Housing Act, and so we have not realized 
the benefits that the law really holds. It is the same thing 
with the Equal Credit Opportunity Act. Because we have not hand 
really usage of the special purpose credit program provision, 
we have not seen the full scale of its benefits.
    So we are really encouraging the Department of Housing and 
Urban Development to work jointly with the CFPB and the 
prudential regulators to issue more guidance to give lenders a 
higher degree of confidence to create and implement special 
purpose credit programs which can be designed specifically for 
serving Native American populations.
    Senator Rounds. I would like to follow up a little bit on 
that because I would like to know whether or not you think 
there are items specifically with regard to the HUD Section 184 
loan guarantee program that might be improved upon for this in 
particular, because that is really a Native-focused housing 
program. Are you familiar with it? And are there some things 
that we could do specifically with that particular program?
    Ms. Rice. Senator Rounds, unfortunately I am not very 
familiar with that particular program, but I do know that 
special purpose credit programs can be used with any Federal 
mortgage programs, so they can be used with VA, they can be VA 
loans, USDA loans, FHA loans. And I am sure that they can be 
used for this loan product that you just mentioned. Again, 
there is severe underutilization of the special purpose credit 
program, but it is specifically designed--it was put in place 
to meet the special credit needs of marginalized and 
underserved communities, and Native American populations are 
ripe for that opportunity.
    Senator Rounds. Thank you for that, and I noticed that you 
mentioned the VA program. I have to recall that in either 2016 
or 2017 the Minneapolis-based office, which is responsible for 
several States for VA loans on Native American reservations, 
the Minneapolis office was given an award for having the 
highest number of VA-awarded mortgages in the Nation. They had 
five. Now, think about that in terms of the failure of our 
country to provide those types of loans to Native American 
veterans. And so I do think that there are some things that we 
can work on in that, but I thank you very much for your 
thoughts with regard to that.
    Mr. Chairman, I think I have got a little bit of time left.
    Chairman Brown. You really do not, but go ahead anyway.
    [Laughter.]
    Senator Rounds. Well, then let me just say this: Thank you 
for doing this particular item, and I think that this is an 
area that we can find some bipartisan agreement on with regard 
to improving housing programs that were well intended but that 
may very well need just kind of a review to make sure that they 
are actually doing what they were supposed to do in the first 
place.
    Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Rounds. And as a member 
of the Veterans' Affairs Committee, I will be in touch with you 
and your office on the issue you just talked about with Native 
American veterans, so we would love to work with that on 
housing.
    Senator Menendez from New Jersey is recognized for 5 
minutes.
    Senator Menendez. Thank you, Mr. Chairman.
    You know, Black and Latino households are more likely than 
White households to live in poorer and disadvantaged 
neighborhoods. As Congress considers an infrastructure package, 
we have an opportunity, I believe, to help address racial 
disparities in access to affordable housing and economic 
opportunity by targeting aid to low-income communities. And I 
believe the best way to do that is with a package that spurs 
development and investment in underserved communities by 
coordinating housing and transit development so our communities 
can improve economic resiliency.
    Dr. Reece, would an infrastructure package that provides 
specific investments to low-income communities help address 
some of the racial disparities present in affordable housing 
and economic opportunity?
    Mr. Reece. Thank you for the question, Senator. Absolutely. 
We know that the alignment of transportation infrastructure and 
housing is critical primarily in the context of allowing 
greater workforce mobility. But in addition to that, it helps 
us think proactively in terms of understanding that with these 
transportation investments we may see particularly in our urban 
neighborhoods, property value are going to go up, and we can 
potentially stabilize housing to make sure that those 
neighborhoods stay affordable and accessible.
    I am here in central Ohio where our regional planning 
agency right now is trying to think about how to prioritize 
higher-density transportation development along our arterial 
corridors and also preserve affordable housing. A program like 
this would be actually transformational in moving ideas like 
this off of the books in terms of planning and into 
implementation.
    Senator Menendez. Well, thank you. So it would be fair to 
say that you think including coordinating fair housing and 
transit development, that expands housing opportunities and 
transit access to good-paying jobs as part of an infrastructure 
package would help these racial disparities?
    Mr. Reece. Absolutely.
    Senator Menendez. And that is exactly what my Livable 
Communities Act does, which would authorize new programs at HUD 
to promote smart development and regional planning for 
transportation and affordable housing, especially to better 
integrate affordable housing availability and access to transit 
and access to job opportunities. So I look forward to hopefully 
working with the Chairman on that. Thank you.
    Let me ask you, Ms. Rice, home ownership we know is one of 
the most effective ways for low- and middle-income families to 
build intergenerational wealth. The Federal Reserve tells us 
that the median homeowner has about 40 times the household 
wealth of a renter. The Census Bureau data tells us that, as of 
the fourth quarter of 2020, only 44 percent of Black families 
and 49 percent of Hispanic families owned their homes compared 
to 74 percent of White families.
    So, Ms. Rice, Federal data shows that the median White 
family has eight times the wealth of the median Black families. 
Does the home ownership gap contribute to this wealth gap?
    Ms. Rice. Yes, Senator Menendez, absolutely it does. In 
fact, the home ownership gap is the major driver of wealth 
inequality in the United States, and so that is why it is 
imperative that we adopt programs that help expand home 
ownership opportunities for people of color. And I do want to 
make a point here, because in the lead-up to the Great 
Recession and the foreclosure debacle, the kinds of loans that 
we saw that were hyper-targeted for communities of color were 
toxic mortgages that were not designed to be sustainable, and 
that is critically important. In fact, over 50 percent of 
African-Americans and 50 percent of Latino Americans got loans 
in the subprime market. They got these really horribly crafted 
subprime loans in order to purchase their housing.
    The point I want to make is that that has always been the 
case in the United States. There has never been a time in the 
United States when the primary mainstream financial market has 
been the primary provider of credit to communities of color 
because of this legacy of discrimination and these systemic 
inequalities that we have been talking about, the dual credit 
market and so forth and so on. It is important to keep that in 
mind.
    Senator Menendez. Yes, and we certainly want responsible 
borrowing, but we also want the ability to create that 
responsible borrowing to take place at the end of the day. We 
see that the wealth gap is not static. It widens over time.
    One final question to Mr. Rothstein and Ms. Rice. You know, 
if owning your home is part of wealth building, but also if 
homes are properly appraised and valued, a Brookings 
Institution report from 2018 shows that home values in majority 
Black neighborhoods are 55 percent lower than homes in less 
than 1 percent Black neighborhoods. So how does this systemic 
undervaluation happen? And what are the consequences to 
African-American households?
    Mr. Rothstein. Well, thank you, Senator. Let me begin by 
saying that the--shall I go on?
    Senator Menendez. Yes, please.
    Chairman Brown. Yes, please proceed.
    Mr. Rothstein. Thank you. First, let me say that home 
ownership is a critically important thing to maximize. People 
who own their own homes have more pride in their communities. 
They take better care of their neighborhoods. They are more 
invested in their local schools. So nobody should minimize the 
importance of increasing ownership that is presently denied to 
African-American families.
    But we should also be careful not to overexaggerate the 
effect that home ownership has on wealth creation. 
Historically, African-Americans who have owned their homes have 
gained less wealth from them than Whites who have owned their 
own homes because African-American neighborhoods appreciate in 
value less than White neighborhoods do. An important--it is 
certainly true--and I said this in my comments earlier. The 
wealth gap that we have today is largely created by 
discriminatory Federal home ownership policies. But that is not 
the only thing that sustains it. We should not forget that if 
we want to increase wealth of African-American families and 
other minority families, we should enable them to save from 
decent incomes. Income policy is critically a contributor to 
home ownership--to wealth, rather, is as important a 
contributor to wealth creation as housing policies are. And we 
should not silo our attention to the housing and income 
policies when we are talking about wealth creation. We can 
narrow the wealth gap if we give families enough income to save 
from, the way White families do as well.
    So far as the appraisal issue goes, you are absolutely 
right. This is one of the things that a disparate impact well-
enforced rule could address. But many people confuse appraisal 
and assessment, and one of the critical problems that we now 
face--and I am sure you have seen all the attention given to it 
in just the last few weeks as a result of a very important 
report that was issued by a political scientist at the 
University of Chicago, Christopher Berry, showing that 
systematically across this country African-Americans, because 
of discriminatory, in effect, assessment policies pay far more 
in property taxes than Whites with homes of similar value. The 
causes of this are obvious, for one thing, because as I said, 
African-American neighborhoods appreciate less rapidly than 
White neighborhoods in value. If you do not do a regular 
assessment--and many, many communities do not do it; they delay 
their assessments--over time White homes' market values are 
going to be much higher than their assessed values while Black 
home market values are not going to be so much higher. The 
result is that African-Americans pay much, much higher property 
taxes to support schools and fire departments and other public 
services than Whites pay. These are not racially explicit 
policies. They are policies that across the country--the Berry 
report documents 1,800 counties and cities in which African-
American neighborhoods, low-income neighborhoods, pay higher 
property taxes relative to market value than White property 
taxes. Unless we begin to impose a disparate impact standard on 
the assessment practices that are imposed across the country, 
we are not going to solve this problem. And when African-
Americans pay higher property taxes than they should, that 
depletes their wealth as well, because they are dipping into 
their savings to pay property taxes that are unaffordable. It 
causes then sometimes their homes to be foreclosed. Cities and 
counties condemn their homes and resell them to speculators for 
only the defaulted property taxes.
    This is a critical problem nationwide that is depressing 
the wealth of African-Americans, and it should be addressed.
    Senator Menendez. Thank you, Mr. Chairman.
    Chairman Brown. Thank you, Senator Menendez.
    Senator Scott from South Carolina is recognized for 5 
minutes.
    Senator Scott. Thank you, Chairman Brown, for my 10 
minutes. I appreciate that very much, noting that Senator 
Menendez used so much time. I appreciate the new standard, and 
I will take advantage of that. Thank you so much, Chairman, for 
allowing that and Senator Menendez for setting the standard. 
That was tongue-in-cheek, of course.
    One of the things I would say, as I said prematurely 
earlier, is that Republicans and Democrats both agreed that we 
should find a way to make the American dream more attainable 
and more achievable for the average person in this Nation, no 
matter the color of their skin. That is something that we 
should all celebrate, and, frankly, we should all believe. I am 
not completely convinced that others believe that as much as I 
do, but it certainly is the case that we want Americans to 
achieve the American dream, and nothing speaks of the American 
dream, in my opinion, more than home ownership. As a kid who 
grew up really in apartments and in family members' homes, the 
thought of having my mother own her own home and have a garage 
attached to her home that she is able to drive into and to be 
safe as she gets out of the car as opposed to just having an 
apartment complex where she has to be very, very careful when 
she is getting out of the car after a 16-hour shift or an 8-
hour shift that ends at 11 p.m., it is part of the reason why 
this issue is so incredibly important to me personally and why 
I, like so many other Americans, millions of Americans, dreamt 
of home ownership as a way of not really creating equity in 
America but simply having a safer, healthier environment for my 
mother to come home to. And as we have this conversation, I 
hope we do not overlook the fact that we are all striving to 
accomplish something that is sustainable.
    Senator Menendez said it well, that we have to have 
responsible decisions made around home ownership, and I think 
we can actually increase the number of people eligible for home 
ownership in a responsible manner by including within the 
scoring models that we use for creditworthiness those folks who 
are paying rent on time. In so many of the models looked at by 
the GSEs, they do not consider things that are simple. 
Thankfully, we have passed legislation, my legislation, the 
Credit Score Competition Act, that allows for these credit 
agencies to look at whether you are paying your utilities on 
time, whether you are paying your phone bill on time, whether 
or not you are paying your rent on time. Those are three strong 
indicators that we should use to increase the number of people 
in this Nation, and specifically minorities in this Nation, who 
are already creditworthy. But we are not using the information. 
That is wrong. We should change the model so that those who are 
creditworthy have a chance to be a homeowner. It is that 
simple.
    I would ask Mr. Peter and Ms. Rice, am I missing something 
on that specific point? And knowing Chairman Brown will not 
give me 7 more minutes, I would ask you to have short answers 
so I can get to my next question.
    Ms. Rice. You are absolutely right, Senator Scott. That is 
one of the reasons why the National Fair Housing Alliance 
started our Tech Equity Initiative, to de-bias all of the 
technologies that are used in the housing and financial 
services space. Thirty-plus years ago--and I am telling my 
age--when I was a loan underwriter, the two most critical 
pieces of information that I looked at to determine whether or 
not a consumer was creditworthy and could pay their mortgage 
obligation was: What is your current housing payment, how well 
do you pay your rent? And what is your housing payment shock? 
And if those two things were on point, my job was 80 percent 
done. As you know, Senator Scott, we do not consider those two 
key factors today in the underwriting process, as you just 
said. The reason is there is no infrastructure to collect that 
information, and we need to build that, and the GSEs could go a 
long way to doing that.
    Senator Scott. Thank you.
    Mr. Peter, can you give me a quick answer to that question 
so I can get to my last one?
    Mr. Peter. Yes, thank you, Senator. So, fundamentally, the 
problem in the housing market today is that we have a supply 
shortage, and this supply shortage in combination with Federal 
housing policies which tend to stimulate demand only ends up 
with prices higher and higher. Currently we have 10 to 15 
percent home price appreciation. This has been going on for a 
year. If this goes on for another year or 2 more years, it is 
going to be pricing many, many----
    Senator Scott. Mr. Peter, let me ask you a more specific 
question. If we use more variables in understanding someone's 
creditworthiness, would we see an increase in access to the 
American dream called home ownership?
    Mr. Peter. Senator, we can expand the base. However, if we 
do not have more houses available----
    Senator Scott. That is a different conversation. So the 
answer to the question is yes or no?
    Mr. Peter. Sure. Yes.
    Senator Scott. OK. So there is no question, if you live in 
Charleston, South Carolina, there is no doubt about it. We have 
more buyers in the market than we have sellers. We have a real 
problem with capacity, and I understand that. The point of my 
question was whether or not, if we started looking at the 
entire financial picture of a borrower, would more borrowers be 
creditworthy than the ones that do exclude their rent, their 
electric bill? And I believe that answer is pretty clear. And 
knowing that my time is up, I am going to, until Chairman Brown 
cuts me off, make a statement as opposed to asking another 
question, because my thought is that Senator Menendez made a 
really good point, which is that you look at the average net 
worth of the household that owns a home, it is about 255; one 
that rents is about 6,300. We should certainly bridge that gap. 
That should be part of what we do as members of the Senate and 
Congress, is to look at ways for us to close the chasm in the 
most responsible way.
    I oftentimes walk into hearings and asking myself, based on 
the title of the hearing, am I in the same place as my friends 
on the other side? And sometimes the answer is yes, and 
sometimes the answer is no.
    I would suggest that we focus on the problem, and even if 
we come to solutions from different pathways, that we do not 
demonize folks who disagree with your approach to solving a 
problem. I actually think that making the borrower who is 
already creditworthy a focus of my attention actually increase 
home ownership in the minority community faster than other 
ways. I think if we can address the assessment issues, which 
are more a county issue than it is a national issue, on the 
county level, having been a chairman of the county council, 
understanding the 5-year rotations for assessments, certainly 
if your property values increase faster in your more affluent 
communities but you do not have assessments but every 5 years, 
that is like common sense.
    The challenge is that it is not specifically aimed at any 
race of people. That is something that we should pass down to 
the States and to the local level. We should spend our time in 
this area focusing our attention as much as possible on those 
issues that we should control--not that we can control but that 
we should control from the Federal level.
    Thank you so much for the extra 2 minutes and 12 seconds. I 
know that it hurts your heart, but it warmed mine, Senator. 
Thank you, Chairman Brown.
    Chairman Brown. Thank you, Senator Scott.
    Senator Warner from Virginia is recognized for 5 minutes.
    Senator Warner. Well, thank you, Mr. Chairman. I appreciate 
Senator Menendez and Senator Scott on the new 8-minute Brown 
rule. I promise I will not try to take the whole 8 or 9 
minutes.
    Let me actually echo what Senator Scott just said. I agree 
with him and was proud to cosponsor his legislation on trying 
to have a smarter, more reflective credit scoring process. But 
I do think we need to appreciate the fact that home ownership 
is one of the biggest indicators of wealth in this country, and 
we all have cited many times the roughly 10:1 ratio of White 
families over Black families and a lot of that due to the home 
ownership rate differential. And, remember, all those rate 
differentials were based on prepandemic data. So my fear is the 
numbers are even worse right now.
    Echoing what Senator Scott said, looking at this, you know, 
what will help minorities, what will help all first-generation 
homebuyers, I have been working on a proposal, Chairman Brown, 
that I hope to solicit bipartisan support for that would say 
taking advantage of these record-low interest rates with a 
slight one-time Federal subsidy on bringing down the interest 
rate, can we create a 20-year mortgage product that would be 
available to first-generation homeowners, and 
disproportionately that will hit people of color. I am not sure 
anyone--my kids--should take advantage of that if I can help 
co-sign a note, oftentimes first-generation homeowners do not 
have that ability, they do not have someone who has accumulated 
wealth. But a 20-year mortgage note, that would, in the way we 
have been able to do the pricing, end up with a similar pricing 
to what a 30-year mortgage would be, that would accomplish two 
goals. One, it would not drive up the house prices that Mr. 
Peter and others have talked about, if we could deal with that 
affordability issue. It would allow individuals literally, the 
compounding effect, if you got a 20-year mortgage, you are 
accumulating wealth in that mortgage at twice the rate as you 
would with a 30-year mortgage. Five years in, you have got 
twice as much equity in a 20-year note than if you had a 30-
year note.
    Ms. Rice, I will start with you, and then I will go to Mr. 
Peter. If we have this kind of product out there and we 
recognize the wealth differential, a lot due to home ownership, 
wouldn't this be one way in a fair approach offering this to 
only first-generation homebuyers where we might be able to 
tackle this problem?
    Ms. Rice. Thank you, Senator Warner. It is a very great 
question. Yes, in fact, the National Fair Housing Alliance has 
been working in tandem with the Center for Responsible Lending 
and the Urban Institute to conduct research that has landed us 
squarely on the point that you just raised. Our research shows 
that by focusing resources to first-generation homebuyers, we 
will be hitting more of the underserved groups that we are 
trying to help and who have been disproportionately impacted by 
our legacy of unfair and inequitable practices. And, yes, I do 
think that your 20-year mortgage product is a great product to 
add into the ecosystem. We need as many products and programs 
as we can, quite frankly, that are implemented via an equity 
lend, not in a discriminatory fashion but via an equity lend. 
And so I encourage--and I am sure you are already doing this--
to ensure that there is a cloak of the Affirmatively Furthering 
Fair Housing mandate in the implementation of that program to 
make sure that it is being distributed through the right 
channels so that it can reach those underserved consumers, 
recognizing that communities of color disproportionately are 
unbanked or underbanked. This is not an income issue. This has 
nothing to do with income. It is sheerly a virtue--it is a 
construct of the fact that we are a highly segregated society 
based on race and opportunity. The opportunities are equally 
segregated, so we have got to make sure that people can 
actually have access to these programs.
    Senator Warner. And I agree with you, Ms. Rice, and one of 
the reasons why I am working with Chairman Brown and my 
colleagues in our December bill, I was proud to get $12 billion 
to go into community development financial institutions, CDFIs, 
who have a history and a focus on the underbanked community.
    Mr. Peter, I am going to go to you in my last--this will be 
the last comment I will make, and I think after you are done, 
it will go to Senator Van Hollen. But I think one of the things 
we are trying to structure here is focusing on equity 
accumulation, not on simply subsidizing interest rates so that 
we do not end up having the effect of pushing up home prices. 
Let me grant you your premise of your earlier comment. We do 
need more housing stock supply. But, Mr. Peter, could you go 
ahead and comment at least on this notion of increasing our 
investment in trying to accumulate equity rather than pushing 
up home prices in a 20-year mortgage, and how you might deal 
with that.
    Mr. Peter. Thank you, Senator Warner. Yes, I fully support 
your proposal of just a 20-year term, and in general, I support 
any solution that focuses on wealth building. And the beauty of 
the 20-year loan term is that, as you said, it does not get 
subsidized and does not lead to higher home prices. And, also 
the research that we have done, it shows, once we looked at 
foreclosures after the great financial crisis, we found that 
after accounting for risk factors, we found that loans of 15- 
and 20-year loan term had half the default rate of a 30-year 
term. So this would actually help--a 20-year loan term would 
actually help tamp down foreclosure risk, and it would build 
wealth. As you said, after 5 years you have built up twice as 
much equity. After 20 years you own your home outright, so you 
have actually money available to pay for your kids' education, 
you have money to save for retirement, and also you are 
paying--with a 20-year term, you are paying yourself in effect 
instead of paying interest to the bank. So the interest savings 
that you accumulate over the term of the loan also could 
potentially be used for additional wealth building.
    However, I would also add that in the housing market there 
are plenty of other policies out there such as the competition 
between Fannie, Freddie, and FHA that oftentimes ends in a race 
to the bottom of lending standards, in general the risk level 
of FHA, so I think we need to be careful that we kind of 
balance both approaches of wealth building, but not at the same 
time doing too much to promote demand while we have a supply 
shortage.
    Senator Warner [presiding]. I agree with you, and I know we 
will go to Senator Van Hollen. We do need to work on the GSEs 
and others to make sure that if we are able to get this 20-year 
product, we could also get an after-market securitization 
market. And I think Chairman Brown is gone, and I think I was 
supposed to call on Senator Van Hollen on his instruction next.
    Senator Van Hollen. Thank you, Senator Warner, and I thank 
all of you for your testimony.
    Mr. Rothstein, in your book ``The Color of Law'', you point 
out that after decades of explicit segregationist policies, the 
so-called race-neutral policies can still continue the 
discriminatory impacts and effects. You mentioned that 
transportation falls into that category, and you mentioned it 
earlier this morning, but as you know, in Baltimore, Baltimore 
City residents spend significant time and planning to establish 
a Red Line, a Metro east-west line; $900 million was going to 
be made available by the Federal Government. Unfortunately, 
Maryland's Governor pulled the plug on it.
    Can you comment on the Red Line as an example of how we 
could have helped remedy some of this historic segregation?
    Mr. Rothstein. I mentioned earlier this topic that you 
specifically addressed, the Red Line, the cancellation of that 
line that would have enabled African-Americans to access better 
jobs and better retail opportunities and better housing. And it 
was canceled in order to shift money to highways that would 
speed the commute of suburbanites into the city.
    I said earlier that this should be deemed a violation of 
the Fair Housing Act because it has a disparate impact on 
African-Americans, and I would say also, in response to Senator 
Scott's comment before, that the exploitation of African-
Americans by lagged assessment systems is not simply a county 
problem. That is also a violation of the Fair Housing Act and 
should be deemed so.
    So I agree with you that the biggest problem we face is not 
race-explicit policies today. They are policies that are 
superficially race-neutral, but have a disparate impact on 
African-Americans in particular and other minorities. They 
reinforce segregation.
    Let me just mention one other that has been--it seems to me 
everybody on this panel and every Senator who has spoken have 
agreed that the zoning laws that we have in this country 
exclude African-Americans in effect, not explicitly racially 
but in effect for many opportunities for housing, and they 
constrict the housing supply. When Ben Carson was appointed 
Secretary of Housing and Urban Development by President Trump, 
the first thing he said he was going to do was withhold Federal 
funds from communities that maintained exclusionary zoning 
laws. There was a lot of verbal laudatory statements about 
abolishing exclusionary zoning, but the people who support it 
somehow lose faith in it, and we never heard from that again.
    So I think if you are looking for a bipartisan approach to 
housing, one of the first things that you could address is 
zoning laws that have a disparate impact, race-neutral zoning 
laws that have a disparate impact on African-Americans and 
other minorities. Opening up housing supply that that would do 
would not solve the problems of segregation, but it is a 
necessary first step if we are going to address those problems.
    Senator Van Hollen. Well, I appreciate that, and I think, 
you know, in President Biden's American Jobs Plan, he does 
discuss these issues both in terms of zoning but also in terms 
of remedying the transportation policies, which as you say in 
many cases were race-neutral on the surface, but had these 
impacts, and we are feeling them in Baltimore. You know, my 
dear friend, former Congressman Elijah Cummings, the Red Line 
was one of his goals, and it was a real tragedy to see the plug 
pulled on that. We are going to look to see if we can somehow 
remedy that.
    Speaking of the Biden administration, I was pleased to see 
that today the Secretary of HUD announced that they are going 
to reinstate the Obama administration fair housing policy. That 
is an important step.
    On the issue of housing, Dr. Reece, you mentioned in your 
written testimony the Housing Mobility Demonstration Project. I 
am sure you are familiar with the Thompson v. HUD case in 
Baltimore City that demonstrated deliberate policies over years 
in Baltimore for housing segregation. Baltimore City was one of 
the worst in the country. That case resulted in a consent 
decree that includes a mobility program, housing mobility 
program. Senator Young of Indiana and I have introduced a 
proposal to add 500,000 new mobility vouchers, and President 
Biden includes something in his plan, too.
    Can you comment on why these mobility vouchers can be 
important?
    Mr. Reece. Yes, thank you, Senator. And I actually with my 
time at the Kirwan Institute worked on the design of the remedy 
in Thompson v. HUD. And as you have seen in Thompson v. HUD, 
families are prospering and thriving from being in healthier 
environments.
    This builds upon this extensive body of literature, most 
recently the work of Raj Chetty, that shows just the profound 
economic benefits, particularly for kids, if we can get them 
into healthy homes and healthy neighborhoods. I would argue 
that right now mobility programs are underfunded generally in 
comparison to other housing programs, so I think anything to 
provide additional mobility vouchers would be beneficial from 
not only just a fair housing perspective, but also from a child 
development perspective and economic development perspective, 
because we know the long-term benefits of these programs are 
quite profound.
    Senator Van Hollen. Well, thank you. I see that my time is 
up. I had some additional questions for others, but I will now 
turn it over to Senator Cortez Masto.
    Chairman Brown [presiding]. Yes.
    Senator Cortez Masto. Thank you, everyone. This is such an 
important conversation, as you can see, everybody 
participating. I think we can all agree we have concerns about 
the discrimination that we see, particularly in mortgage 
lending as well as interest in housing discrimination.
    So let me just jump right into it because I was listening 
to you, Mr. Rothstein, and you were talking about zoning laws 
that exclude African-Americans and engage in disparate 
treatment. Whether they intend to or not, it is happening. What 
other tools do local and regional governments have to 
proactively prevent housing discrimination? Before we get to 
the Federal laws and enforcement of that, what locally do local 
governments have to really lean into this to also address 
housing discrimination besides addressing the zoning laws, Mr. 
Rothstein, if you have any other ideas?
    Mr. Rothstein. Well, you know, we keep on talking about 
things--the Federal policy, but they are also in the purview of 
local government. There are municipalities across this country 
that do have their own downpayment assistance programs, 
recognizing that they also are responsible for the segregation 
that Government created. So it is not simply the Federal 
Government that can do this.
    Another important issue not of local but of State 
Government is enforcement of the Fair Housing Act's basic 
nondiscrimination proposals--provisions that continue to be 
violated. I am sure you are aware of the explosive survey that 
Newsday did, Long Island Newsday 2 years ago of continued 
steering by real estate agents of African-Americans who can 
afford to buy homes in healthier neighborhoods and who were 
steered away from this. Well, we are ignoring and have been 
ignoring for many years the important role of State Government 
in licensing real estate agents. This is not a problem that 
simply is the responsibility of the real estate agency itself 
to fix. Those real estate agencies that are steering Whites to 
White neighborhoods and African-Americans to Black 
neighborhoods--and it continues to exist as that Newsday expos? 
shows--are violating their States' nondiscrimination policies 
that can be enforced by the State licensing agencies, and that 
would be an important local policy that I think should be 
followed. So those are just two of them.
    Senator Cortez Masto. Well, thank you, and I appreciate 
that. And let me just highlight because I know there was a 
recent report from the National Association of Realtors who 
found that Black households are more than twice as likely as 
White ones to be rejected for mortgage loans. So I know the 
realtors are really trying to address this as well, and I 
appreciate your comments.
    Ms. Rice, anything else to add to that, particularly when 
it comes to looking at identifying and flagging repeat 
offenders of housing discrimination across the country? Is 
there more that can be done at the local and State level?
    Ms. Rice. Yes, thank you for the question, Senator Cortez 
Masto. There is quite a bit that local and regional governments 
can do. One of the first things they can do is fully enforce 
the Affirmatively Furthering mandate, the Affirmatively 
Furthering provision of the Fair Housing Act, which, as you 
know, has to be implemented on a voluntary basis. There is no 
private right of action with that particular provision of the 
law.
    In my home State of Ohio, a great example of this in 
Zanesville, the city of Zanesville for over 50 years denied 
water service to a predominantly African-American neighborhood 
called ``Coal Run'' even though the residents of Coal Run paid 
their taxes and paid additional assessments to get water lines 
extended to their homes. After 50 years, they still were having 
to catch water to take back and to cook and to do other things 
in huge tin cisterns in their backyards.
    Senator Cortez Masto, the city extended water lines up to 
the neighborhood of Coal Run, around Coal Run, and then back 
out Coal Run to purposefully not give these residents water. 
That is a violation of the AFFH provision, and the city could 
have absolutely voluntarily complied and provided these 
consumers water access.
    That same thing is happening in hundreds of communities 
throughout the United States of America today. We still have 
the problem and challenge of local communities not only not 
implementing the AFFH provision, but local communities like the 
city of Cleveland could adopt their own local community 
reinvestment ordinances in order to say, look, we are going to 
invest in banks that invest in all of our communities and serve 
all of our communities.
    And I just wanted to add on to one point that Richard made, 
and that is that State licensing, real estate licensing 
divisions can require their real estate professionals to get 
fair housing training, and they can oversee their housing 
training to make sure that it is of high quality. That is not 
being done in most States in America, and if we did that, that 
would go a long way toward expanding fair housing.
    Senator Cortez Masto. Thank you. And so I have legislation, 
the Housing Fairness Act of 2021, that would reaffirm HUD's 
commitment to fair housing enforcement by increasing funding 
for fair housing programs, making improvements to the Fair 
Housing Initiatives Program, reinstating the Affirmatively 
Furthering Fair Housing rule, and providing additional funds 
for research into housing discrimination. I want to thank my 
colleagues Senators Van Hollen and Menendez for cosponsoring 
it. And I know, Ms. Rice, thank you to the National Fair 
Housing Alliance for endorsing this. I think it is so important 
that we continue to provide and support independent groups of 
folks that are out there that are actually looking to address 
this problem. We need to bring it to the attention of our local 
and State Governments, holding them accountable, but making 
sure we are doing right by homeowners as well. So thank you for 
that.
    I know my time is almost up. I do not know--oh, I do. So I 
am going to pass it off--oh, is Senator Brown back?
    Chairman Brown. I am. Thank you, Senator Cortez Masto.
    Senator Smith is recognized for 5 minutes.
    Senator Smith. Thank you, Chair Brown, and I noticed that 
our colleagues were just skipping right over your formal role 
of handing the ball from one of us to the other of us. But I 
am----
    Chairman Brown. I have been in the Finance Committee for a 
while. Thank you.
    Senator Smith. That is fine. I really appreciate this 
Committee and all of the testifiers today. I want to just start 
by thanking my colleague Senator Rounds for bringing up the 
issues around Native housing. Senator Rounds is the Ranking 
Member of the Housing Subcommittee that I chair, and I am 
looking forward to working on those issues with him there and 
also issues of rural housing and discrimination in rural 
housing, which is such an important issue.
    I really also appreciate the conversation today about the 
Federal legacy of housing discrimination and what we can do to 
turn that legacy around.
    Today, though, what I would like to focus in on is the ways 
in which local governments' policies have had discriminatory 
impacts and what tools we have to address that and to encourage 
zoning reform at the local level.
    So many zoning laws, as we know, at the local level were 
created to racially segregate neighborhoods, even after the 
civil rights laws outlawed overt housing discrimination. In 
fact, these zoning policies restrict high-density housing 
options, were often intended to limit racial and economic 
diversity in certain neighborhoods, and were aimed at 
maintaining or even raising housing values in areas that were 
mostly where White families lived in single-family homes.
    Now, in Minneapolis, this is one of our worst legacies. We 
have some of the worst housing disparities of any place in the 
country, and in an effort to flip that around, in 2019 
Minneapolis adopted the 2040 plan, which is a long-term 
planning document that includes support for local zoning 
reform, and they developed housing priorities specifically with 
the goal of expanding access to affordable housing and quality 
housing everywhere in the city where the city is actually quite 
segregated to this day.
    The plan, for example, would reduce minimum parking 
requirements for new housing production. It would legalize 
triplexes citywide, and it would allow for bigger residential 
buildings to be built along transit corridors. And one of the 
goals was, of course, to increase housing supply, but also 
another specific goal was to reduce racial disparities.
    So I would like to ask, if I could, Ms. Rice and Mr. Reece, 
if you could comment on this, if you could comment on whether 
you think the 2040 plan is going in the right direction, what 
the impact is of local zoning requirements and reforms like 
this, and what the Federal Government can do to encourage 
zoning reforms like this to move us toward a more anti-racist 
policy. Ms. Rice, why don't you go first?
    Ms. Rice. Sure. I was going to let my colleague Jason go 
first.
    Senator Smith. Either one.
    Ms. Rice. Thank you so much, Senator Smith, for that 
question. We absolutely think the 2040 plan is the kind of plan 
that local jurisdictions need to be undertaking in recognizing 
the role that local governments have played in fostering 
segregation. Many of the exclusionary and restrictive zoning 
ordinances that were put in place during the 1940s, 1950s, and 
1960s and 1970s were put in--in fact, even up until today, were 
put in place to restrict the ability of people of color to move 
into those neighborhoods. In fact, the first time that the 
disparate impact doctrine was used under the Fair Housing Act 
by the Nixon administration was to address an exclusionary 
zoning ordinance that the city of Blackjack had put in place in 
order to keep out residents of color.
    So this is a longstanding tool that has been used to create 
segregation, and these zoning ordinances, as I mentioned in my 
statement, are still in place today, and they are still serving 
their purpose of driving racial inequality.
    One of the reasons why we are still seeing the disparities 
that we are seeing when it comes to racial disparities is 
because so many of these systems are still in place and they 
are still serving their function.
    The Federal Government can help create incentives for 
jurisdictions to eliminate exclusionary zoning ordinances by 
essentially applies, as I said before, the Affirmatively 
Furthering Fair Housing mandate to all of the areas to which it 
should be applied. AFFH should be applied not just to housing 
but also to community development, and if we do that, we will 
see much broader voluntary compliance with the AFFH provision.
    Senator Smith. Thank you.
    Mr. Reece, I just have--I am actually a little over time, 
but I would love to hear your comment briefly, please.
    Mr. Reece. Yes, thank you, Senator. What the Twin Cities is 
doing now the whole country is looking at because it does 
potentially set a model going forward about how we can reform 
zoning laws, particularly laws that limit anything other than 
single-family housing. My one word of advice, looking at the 
scholarship around this, is that density alone will not produce 
affordability unless we are attentive to making sure that other 
kind of inclusionary housing tools are in place, things like 
community land trusts, support for home ownership, for first-
gen homeowners, and also then the alignment of other kind of 
subsidized housing within these spaces as we up the density 
within these places.
    I do think there is also a role for, in addition to what 
Ms. Rice referenced in terms of AFFH, incentivizing and 
thinking of ways to get local communities to collaborate 
together to reform these laws. Regions are going to be more 
economically sustainable if these land use regulations are 
aligned across regions, and the problem is, you know, it takes 
resources, it takes time, planning, to build the relationships, 
to get the consensus and the buy-in to do that. I referenced 
the Sustainable Communities Initiative. I think that is a great 
example of how you can run a competitive grant program that 
encourages this kind of multijurisdictional collaboration to 
take down these exclusionary barriers that we know are so 
detrimental and so deeply intertwined with our racial equity 
issues today.
    Thank you, Senator.
    Senator Smith. Thank you so much.
    Thank you, Chairman Brown.
    Chairman Brown. Thank you, Senator Smith.
    Senator Ossoff from Georgia is recognized for 5 minutes.
    Senator Ossoff. Thank you, Mr. Chairman. I appreciate the 
opportunity. Thanks to our panel.
    Last year, in meetings in communities across Georgia, even 
in the midst of the COVID-19 pandemic, in fact, in many cases 
because the COVID-19 pandemic exacerbated the financial 
distress in which so many families found themselves, and 
because the impacts of the pandemic were disproportionate along 
class and race lines, affordable housing is one of the most 
consistently raised issues in community meetings. And I would 
like to just offer you, Ms. Rice, and you, Mr. Reece, each the 
chance to offer for this Committee, as we consider how to build 
legislation that will be a comprehensive infrastructure and 
jobs plan over the next couple of months, what do each of you 
please believe are the one or two most important considerations 
or policy objectives which may currently be neglected in the 
prevailing discourse around this bill as we craft it as it 
relates to affordable housing and equity, race and class 
equity, and access to affordable housing? I would like to begin 
with you, Ms. Rice, please?
    Ms. Rice. Senator Ossoff, thank you so much for the 
question. So I have a litany of things, but I will only mention 
two.
    One is to make sure that we are addressing both supply and 
demand side issues in the infrastructure bill. It is critically 
important, and one of the things I do want to lift up is that 
in every State in America, we already have an existing sort of 
cadre of naturally occurring affordable housing, but much of it 
is not in pristine condition. And so we need laws like the 
Neighborhood Homes Investment Act which we are championing to 
be enfolded into the infrastructure bill to help buildup the 
infrastructure of naturally occurring and already existing 
affordable housing across the country. But we have to address 
those supply side issues, but we also have to address the 
demand side as well, because if we do not, we will just be 
further exacerbating inequality. We have to make sure that 
marginalized communities are able to access these new 
affordable housing opportunities that will be coming online via 
the infrastructure bill.
    The second one is we have to make sure that we are paying 
attention to the already existing inequitable landscape on top 
of which this infrastructure bill will be unfolded. We did not 
pay attention to that with the implementation of the CARES Act, 
and that is why the CARES Act ended up exacerbating inequality 
and the wealth divide. So we have to take that into 
consideration to make sure that we are building equal access to 
these opportunities in the infrastructure bill.
    Senator Ossoff. Thank you so much, Ms. Rice.
    Dr. Reece.
    Mr. Reece. Thank you, Senator. I would completely agree 
with Ms. Rice's comments. Going back to an earlier discussion 
today, I do think the proposals like the Livable Communities 
Initiative could be very profound in assuring that alignment in 
transportation infrastructure and housing infrastructure. In 
addition to that, I think as we think about housing, we have to 
understand and realize the importance of the social side of 
housing. Expanding HUD's self-sufficiency program even further 
I think would be a beneficial step in helping prepare families 
to potentially even step out of the existing affordable units 
into home ownership into the future, as well as to prepare 
financially to economic shocks that could come in the future, 
just like we have dealt with with the COVID pandemic.
    I was evaluating a housing mobility program just recently 
where coaching and social support were critical to help 
families avoid losing their housing, even though most of them 
lost their employment due to the recession following the 
pandemic. So these types of programs, even though they are not 
often seen as important as, say, big transportation projects, 
they are critical to the sustainability of families within 
these housing units and to their development and ability to 
access home ownership later.
    Senator Ossoff. Thank you, Dr. Reece and Ms. Rice. With the 
little time I have left, I think you touched upon the 
importance of the quality of the affordable housing stock. I 
was recently meeting with community leaders in Albany, Georgia, 
and for homeowners without discretionary income, there is 
unrepaired damage from natural disasters that is a decade old. 
How would you propose Congress ensure that communities like 
Albany can invest in retrofitting and upgrading damaged housing 
stocks? Because the quality of a family's housing has a huge 
impact on quality of life, state of mind, opportunity.
    Ms. Rice. Sure. The Neighborhood Home Investment Act, 
Senator Ossoff, is specifically designed to address that issue, 
where we have people who are living in housing that is not in 
pristine condition, but they need a little bit of gap because, 
as we know, sometimes you need more work done into the home 
than what the market value of the housing can bear. And so the 
Neighborhood Home Investment Act is specifically designed to 
provide that gap, to sort of bridge the gap so that consumers 
can get the sufficient funds that they need in order to upgrade 
their housing.
    Senator Ossoff. Thank you, Ms. Rice. Thanks to the panel.
    Mr. Chairman, I yield back.
    Chairman Brown. Thank you, Senator Ossoff.
    Senators Tester, Warren, Sinema, Warnock, Shelby, Crapo, 
Tillis, Kennedy, Hagerty, I guess none of them are here. So, 
Senator Toomey, any closing remarks that you would like to 
make? If not, I can just close.
    OK. Thank you all--oh, Senator Warnock is here. Senator 
Warnock, you are recognized for 5 minutes.
    Senator Warnock. Sorry about that. Thank you so much, and 
thank you--can you hear me?
    Chairman Brown. Yes.
    Senator Warnock. Thank you, Mr. Chairman, for holding such 
an important hearing. And, sadly, there has been a long 
documented history of racial discrimination within our housing 
system, particularly among Black and Brown brothers and 
sisters. And there are also many reports of studies and surveys 
that have documented the fact of these discriminatory 
practices, how they have contributed to the growing racial 
wealth gap in our country. There is a reason why the geography 
of our country literally looks the way it does.
    One often overlooked driver of racial wealth inequality 
with our housing system is how lenders and the appraisal market 
assess the value of Black and Brown homeowners compared to 
White homeowners. We know this to be the case. In fact, a 2018 
Brookings Institution study found that homes in neighborhoods 
where the share of the population is 50 percent Black are 
valued at roughly half the price as homes in neighborhoods with 
no Black residents. The report also stated that homes of 
similar quality in neighborhoods with similar amenities are 
worth 23 percent less in majority Black neighborhoods compared 
to those with very few or no Black residents. And across all 
majority Black neighborhoods, owner-occupied homes are 
undervalued by $48,000 per home on average, amounting to $156 
billion in cumulative losses.
    Ms. Rice, could you expand on how racial disparities within 
the home appraisal market exacerbates the wealth gap in our 
country? And, Dr. Reece and Mr. Rothstein, would you like to 
add on to that response? That is fine.
    Ms. Rice. Sure. Senator Warnock, thank you so much for the 
question. This is a critically important issue, and we are 
seeing many, many anecdotal stories about appraisal bias 
appearing in the newspaper. There is the story of the couple in 
San Francisco who purchased their home for roughly $900,000, 
put $400,000 of investment in it, only to have it appraised at 
$50,000 higher, right? And then they had a White friend come 
and essentially move into the home. They eliminated all of the 
traces of a Black family being the actual owner, and when the 
second appraisal was done, it was appraised at $500,000 higher.
    Well, we are hearing stories like that throughout the 
United States, and, in fact, I mentioned in my statement that 
we are currently investigating a case of appraisal bias in 
Maryland, in Prince George's County, Maryland, in a 
predominantly African-American community where the appraiser is 
refusing to give the appropriate valuation to a multimillion-
dollar development--these are multimillion-dollar homes in this 
development--because the appraiser said there is no way any 
house in Prince George's County in this particular area would 
be valued at this high of a price point.
    I have worked on appraisal cases throughout my entire fair 
housing history. I have seen many, many instances of appraisal 
bias, and it is an unfortunate problem of the systemic issues 
that we have in this Nation, but also these are signs of 
individual discrimination that we are seeing perpetuated as 
well. And so we have to enforce the Fair Housing Act. We have 
to make sure that their housing organizations are sufficiently 
funded so that they can investigate these cases. And we also 
have to make sure that HUD is sufficiently funded that it is 
restaffed, because the Fair Housing Division at HUD has been 
gutted. So we have to make sure that we are building back the 
Office of Fair Housing and Opportunity and also that DOJ has 
the resources that they need to investigate these cases.
    Senator Warnock. Thank you so much, and I read the article 
about the family you mentioned in San Francisco, in California. 
This is a real impact on people's actual lives and the wealth 
gap. It is an important issue for me. I have been there, and I 
know the experiences of millions of Black and Brown families in 
this country, which is why I, along with Senator Klobuchar and 
Representative Cleaver, sent a letter to Federal banking 
regulators and housing agencies as well as the appraisal 
subcommittee urging them to do all they can to address the 
valuation disparities.
    It looks like I am out of time, but thank you so very much 
for your hard work on this issue.
    Chairman Brown. Thank you, Senator Warnock.
    Senator Toomey, any closing remarks? If not, I will close. 
As Mr. Rothstein noted, we heard a lot of agreement today that 
exclusionary zoning and land use policies are part of the 
problem of housing segregation and high housing costs today. We 
heard similar testimony across the panel at our March hearing 
on housing needs. President Biden has also called, as we know, 
for policies to address this issue as part of the American Jobs 
Act. I look forward to working with my colleagues to work on 
this issue as part of the housing investments that we have all 
discussed today.
    Thank you to our witnesses for being here today. Thank you 
for the really incisive testimony from all five of you.
    And for housekeeping, for Senators who wish to submit 
questions for the record, those questions are due 1 week from 
today, Tuesday, April 20th. To this, you have 45 days, if you 
would, to respond to these questions.
    Thank you again. With that, the hearing is adjourned. Thank 
you all so much.
    [Whereupon, at 12:06 p.m., the hearing was adjourned.]
    [Prepared statements and responses to written questions 
supplied for the record follow:]
              PREPARED STATEMENT OF CHAIRMAN SHERROD BROWN
    On Sunday, we marked the 53rd anniversary of the passage of the 
Fair Housing Act.
    53 years ago, jarred by the assassination of the Reverend Dr. 
Martin Luther King, our country finally made it illegal to refuse to 
sell a home or rent an apartment to someone based on the color of their 
skin.
    This was an historic moment and a hard-fought victory for civil 
rights activists. And it was not so long ago when you look at the long 
arc of history.
    Black Americans had endured centuries--that's generation after 
generation after generation--of slavery, only to be locked into second-
class citizenship by the Black Codes and Jim Crow laws that made it 
nearly impossible to get a good-paying job, keep a reliable bank 
account, and--as we all know--even to vote.
    As my friend Joyce Beatty said recently, we cannot change our 
history. But we can learn from it, and we can build a far better 
future--one that brings us closer to making our founding ideals real 
for everyone.
    Fair housing took longer to pass through Congress than voting 
rights, desegregation of public spaces, and even equal opportunities 
for employment.
    As important as these advancements were, they did not come in time 
to help communities of color benefit from the historic investments we 
made in American families and communities in the last century.
    Beginning with the New Deal and continuing through the 1960s, we 
tried a new, grand experiment in this country--we invested in workers 
and in the infrastructure they needed to succeed. And in the process, 
we built the largest, broadest middle class the world has ever seen.
    But that deal remains unfinished--too many were purposefully left 
out.
    We created the Federal Housing Administration to make the dream of 
home ownership, and the wealth that comes with it, available to 
millions more families.
    But FHA limited its loans to neighborhoods that were deemed 
``good'' investments--neighborhoods with White, nonimmigrant residents. 
Neighborhoods with Black and immigrant residents and near industrial 
sites were ``redlined'' and called ``hazardous.''
    From 1934 to 1968, FHA helped finance more than $120 billion worth 
of loans--and 98 percent went to White borrowers.
    We put Americans to work building the interstate highway system, 
the infrastructure that would unleash new levels of American 
prosperity.
    But Federal highways cut through Black and minority neighborhoods, 
severing tight-knit communities and destroying homes and small 
businesses, replacing them with traffic and pollution.
    Following these decades of exclusion and destruction, the Fair 
Housing Act offered enormous promise. It didn't just ban racial 
discrimination--it also required that new Federal funds be used in ways 
that would affirmatively further fair housing.
    In other words, we recognized it wasn't possible to start from 
scratch. Our housing system had our history woven into it, and we would 
need to take active steps to include Black Americans, and all those who 
been left out.
    George Romney, the father of our colleague, became HUD Secretary 
the year after the Fair Housing Act was passed. He set out to fulfill 
that mission--to require communities to use their Federal grants to 
build better housing and take active steps to include everyone, as 
required by the law.
    But he didn't get very far. President Nixon and his Southern 
Strategy blocked Secretary Romney's implementation of the Fair Housing 
Act--and it stayed that way for decades.
    Housing discrimination was illegal beginning in 1968, but 
communities of color lived in the cities we'd already built and then 
abandoned, and lived with the wealth inequality we'd already grown.
    Minority communities continued to lose out on investment.
    FHA no longer used redlining maps, but communities of color still 
saw banks take their deposits, and still refused to make them mortgage 
loans.
    Congress passed the Community Reinvestment Act, requiring banks to 
serve the communities whose money they relied on to make profits. But 
the same neighborhoods--the ones that had red lines drawn around them a 
few decades earlier--never got the same investment that others did.
    And nearly three decades later, lenders seemed to finally discover 
the minority communities they'd been neglecting for decades. But that 
discovery didn't lead to positive investment to help communities build 
wealth and grow new businesses.
    Instead, predatory lenders wiped out the hard-won gains Black and 
Brown families had made in the years since 1968. They targeted people 
in lower-income and minority communities for predatory subprime loans 
and refinances.
    In 2003, President Bush's HUD Secretary, Mel Martinez, told this 
Committee that predatory lending posed, quote, ``a significant danger 
to minority and women homeowners targeted for equity-stripping loans,'' 
and that some loans had ``abusive terms and conditions'' that may 
violate the Fair Housing Act.
    And of course, we all know what happened. We remember the 
foreclosures that swept through neighborhoods in waves. We remember the 
signs that went up on home after home.
    Black and Latino homeowners were 70 percent more likely to face 
foreclosure.
    Today, Black, Latino, and Asian families are far less likely to own 
a home than White families. The Black home ownership rate is as low as 
it was 53 years ago, when housing discrimination was still legal.
    The wounds of redlining remain as fresh as ever.
    We know where you live determines so much about your life--what 
school your kids go to, the kinds of jobs available, how far you have 
to travel to get to work, the air you breathe, the water you drink, 
even how long you live.
    Residents in those neighborhoods that were systematically excluded 
from investment--many of them people of color--have lower life 
expectancies and are more likely to have preexisting conditions.
    Take a walk around Cleveland, where you can still see the scars of 
the foreclosure crisis in the same neighborhoods that were colored in 
red in the maps of the 1930s.
    Come to my zip code, 44105, where we had the most foreclosures in 
the country in the first half of 2007.
    And in these same neighborhoods, you'll find higher rates of lead 
exposure, toxic pollution, and infant mortality. Take a look at maps of 
COVID-19 deaths--they match up with those redlining maps pretty well.
    Our past is still determining people's lives today. That's why this 
hearing, and the work of this Committee, matters.
    We can't change our history--but that cannot mean we throw up our 
hands and tell millions of Americans, ``sorry, this is the best we can 
do.''
    We know it's not.
    Remember all those infrastructure investments we made in the 1930s, 
and in the years after World War II? Remember how we created millions 
of new homeowners and grew the middle class?
    There is no reason we can't do the same thing again--but this time, 
we bring everyone along.
    On this Committee, we have an opportunity to address the legacy of 
housing discrimination. And we have an obligation, under the law that 
this body passed 53 years ago, in the wake of Dr. King's assassination.
    I look forward to hearing from today's witnesses about how we can 
begin to do that.
                                 ______
                                 
            PREPARED STATEMENT OF SENATOR PATRICK J. TOOMEY
    Mr. Chairman, thank you.
    Let me say from the outset that racial discrimination in housing is 
a real and sad part of our Nation's history. We can't ignore that--it's 
a fact. It's also a fact that Government policies contributed to this 
discrimination. Some Federal Government policies were designed to 
increase segregation.
    We all know the Federal Housing Administration--the FHA--engaged in 
redlining practices. For decades, FHA insurance was often limited to 
newer developments outside of inner city neighborhoods, exacerbating 
segregation. We also know Davis-Bacon wage requirements were designed 
to protect White union labor and prevent Blacks from competing for 
federally funded construction jobs. Even today, Davis-Bacon continues 
to impede lower-income and minority workers from opportunities and to 
drive up the construction costs for Government-assisted housing.
    Some State and local government policies have also exacerbated 
segregation. Some zoning practices--such as prohibitions on multifamily 
housing and minimum lots sizes--can have legitimate purposes for many 
communities. However, they sometimes do great harm by pricing low-
income and minority families out of neighborhoods, and reducing the 
support of affordable housing for such families. These zoning practices 
and other regulatory barriers to housing development are particularly 
prevalent in Democrat States and cities. For example, California cities 
have long restricted multifamily construction, driving up housing costs 
and reducing affordability.
    In my view, this history shows us that when it comes to housing in 
America, including housing discrimination, Government has been the 
problem, not the solution. Unfortunately, the Biden administration does 
not seem to have learned this lesson. Its multitrillion dollar welfare 
plan, with a bit of infrastructure sprinkled in, seems designed to 
repeat many of the mistakes of the New Deal and Great Society. After 
Congress has just finished spending more than $80 billion for housing 
in response to COVID--on top of the $50 billion we annually spend on 
HUD programs alone, not to mention the billions we spend on other 
housing programs and then tens of billions more we forgo in tax 
revenues to subsidize--the Biden administration is now calling for $213 
billion in new spending for housing in this so-called 
``infrastructure'' plan.
    Amazingly, the Administration wants Congress to spend $40 billion 
to restore public housing projects--places where people don't want to 
live. Housing projects are notorious concentrations of poverty, crime, 
and other social ills. Research shows that moving families out of 
housing projects and integrating them in communities decreases violent 
crime. But rather than focusing on sensible alternatives, the Biden 
administration wants to keep families in housing projects. More public 
housing will only commit more Americans to a substandard living 
arrangement and increase Government dependency.
    We also shouldn't rush to put families in homes they can't afford. 
Relaxing underwriting requirements or expanding downpayment assistance 
programs for low-income families, especially in an overheated housing 
market is a recipe of disaster. If home values drop, these borrowers 
run the real risk of losing their homes and any wealth they thought 
they had accumulated. We have seen this happen before, most recently 
during the 2008 housing crisis when Government monetary and housing 
policy created a housing bubble, the bursting of which caused the 
financial crisis and great recession.
    The Administration's infrastructure plan also calls for $20 billion 
in tax credits for building and rehabilitating homes and making them 
more energy efficient. These tax credits will predominantly benefit 
developers and investors largely because they are not targeted to low-
income families. In fact, homes built with tax credits can be sold to 
purchasers with incomes up to 140 percent of area median income.
    The Administration's plan also prioritizes using union labor to 
upgrade homes. This unfairly excludes lower-income, nonunionized 
laborers and increases construction costs that will be passed onto 
homeowners.
    Today, we'll hear from two witnesses who'll discuss how Government 
intervention, even when well-meaning, has contributed to inequality. 
Howard Husock is a housing researcher and scholar. As Mr. Husock will 
note, many ``race-conscious'' policies haven't actually increased home 
ownership opportunities or wealth in underserved communities. Public 
housing has deprived many minority communities of the opportunity to 
build wealth. The Community Reinvestment Act is out of date and poorly 
designed to encourage lending in minority neighborhoods without 
tracking whether investments help or hurt families. And overly 
prescriptive Affirmatively Furthering Fair Housing requirements that 
put only a handful of low-income families in subsidized rental homes in 
affluent areas does little to support minority families or help them 
build wealth through home ownership.
    We'll also hear from Tobias Peter, an expert in housing finance. He 
notes that policies aggressively encouraging minorities to buy homes--
especially during a boom when houses are more expensive--expose 
borrowers to greater default risk during dips in the market. He argues 
that risky lending harms low-income and minority borrowers who purchase 
homes when home prices are inflated. And he believes that local 
governments need to remove zoning restrictions and other regulatory 
barriers to housing that artificially constrain the supply of housing 
and drive costs up.
    It's important to remember that the legacy of discrimination is a 
direct result of Government supported policies. As we consider how to 
address the housing challenges we face, we must not repeat the mistakes 
of the past. Now is not the time to double down on failed efforts. That 
means we should not keep American families in dilapidated and 
segregated housing projects; we should not let bureaucrats in 
Washington make local housing decisions that undermine communities; and 
we should not inappropriately push families to purchase homes they 
can't afford in the long run.
    The lesson we need to learn and apply is: When it comes to housing 
in America, Government is the problem, not the solution.
                                 ______
                                 
                PREPARED STATEMENT OF RICHARD ROTHSTEIN
Senior Fellow, Emeritus, NAACP Legal Defense and Educational Fund, Inc.
                             April 13, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                    PREPARED STATEMENT OF LISA RICE
 President and Chief Executive Officer, National Fair Housing Alliance
                             April 13, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                   PREPARED STATEMENT OF JASON REECE
   Assistant Professor, City and Regional Planning Section, Knowlton 
           School of Architecture, The Ohio State University
                             April 13, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                  PREPARED STATEMENT OF HOWARD HUSOCK
 Executive Senior Fellow, Philanthropy Roundtable, and Adjunct Fellow, 
                     American Enterprise Institute
                             April 13, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                 PREPARED STATEMENT OF TOBIAS J. PETER
  Director of Research, Housing Center, and Research Fellow, American 
                          Enterprise Institute
                             April 13, 2021
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        RESPONSES TO WRITTEN QUESTIONS OF SENATOR SINEMA
                     FROM RICHARD ROTHSTEIN

Q.1. Your testimony shares the story of Levittown, where Black 
veterans were systematically denied the ability to purchase 
affordable homes despite having benefits from the G.I. bill. 
What specific tactics were used to discriminate against Black 
veterans and deny them housing in Levittown?

A.1. Banks would not lend William Levitt the funds to buy the 
land and build 17,000 Levittown homes unless the loans were 
federally guaranteed/insured. The Federal Housing 
Administration and Veterans Administration would only 
guarantee/insure Levitt's loans if he made a commitment only to 
sell to Caucasians. These Federal agencies required Levitt to 
place a clause in the deed of every home prohibiting resale or 
rental to non-Caucasians. This requirement was spelled out in 
the FHA's Underwriting Manual, distributed to appraisers 
nationwide to guide them in their recommendations regarding 
whether a developer's application for Federal bank guarantees/
insurance should be approved. Realtors who handled the sale of 
homes in Levittown and other subdivisions nationwide were 
required to follow this Federal policy and they refused to show 
homes to African-Americans who attempted to purchase one. I 
described all this in greater detail in my book, The Color of 
Law. If Senator Sinema would like a copy of the Underwriting 
Manual, I would be please to provide one to her.

Q.2. In spite of passage of the Fair Housing Act, which 
discriminatory tactics in homebuying that occurred in Levittown 
still persist today? Which tactics have changed, and what new 
forms (if applicable) do they take?

A.2. The Fair Housing Act is very weakly enforced, and many, 
though not all realtors still engage in extensive 
discriminatory behavior. Newsday, a Long Island newspaper whose 
circulation area includes Levittown, published an investigative 
report documenting the unlawful behavior of realtors to 
preserve segregation in Long Island. The citation for this 
investigative report is here, including videos of real estate 
agents who discriminated against black homebuyers (New York 
State does not require two-way consent for recording 
conversations, so Newsday reporters wore hidden buttonhole 
cameras to assemble their evidence): Ann Choi, Keith Herbert, 
Olivia Winslow, and Arthur Browne. 2019. ``Long Island 
Divided''. Newsday, November 17; https://projects.newsday.com/
long-island/real-estate-agents-investigation/. The Federal 
Government (HUD) conducts ``audit'' studies of real estate 
agents' compliance with the Fair Housing Act once a decade, but 
the studies only make statistical reports and are not used for 
enforcement activities. HUD has no proactive program of 
enforcement and relies on complaints made (usually) to local 
fair housing centers. But since a consumer of real estate 
agency services has no way to know whether he or she has been 
receiving treatment that is different from that received by 
consumers of another race, complaint data are not an indication 
of the extent of ongoing discrimination.

                             [all]