extent of FHA activity." [1] Given this substantial bias in the data it is hard to formulate any conclusions about the proportio of FHA sales or the actual incidence of red lining, at least unless one can correct for the systematic bias. Lyons then looked at the credit worthiness of buyers. Using 1970 census data, he found that the median home value was 2.6 times the median family income in the northwest quadrant, but only 1.7 times the income in the southeast quadrant. He concluded from this that lenders should have regarded buyers in the southeast quadrant as good risks for conventional mortgages. This is fallacious on a number of grounds. First, most of the families in these quadrants are not home owners; second, most of the home owners bought their house before 1968; and third current annual income does not accurately measure assets and permanent income. Lyons should have compared income and home value for just the homes that were purchased between 1968 and 1970, a breakdown available in the census. A fair measure of assets is provided by down payments reported in the SREA data. Lyons selected 26 high down payment FHA sales and 26 low down payment conventional sales and concluded that FHA down payments in the southeast were higher than conventional down payments in the northwest. This finding is so contrary to average measures of FHA and conventional down payments in Chicago that a skewed sample is strongly suggested. Lyons does not supply us the mean and median down payments for the years 1968-72, but we know what these were in 1975. [26] Average payments for the same Northwest Side area are reported as follows for the year 1975: 3rd quartile down payment We note from these figures that conventional down payments were about eight times higher than FHA down payments in 1975. Moreover, throughout the range of payments, conventional down payments are consistently and substantially higher than FHA payments. Another item of note is that only 45 (or 11 percent) of the 402 sales in the Northwest Side were FHA sales in 1975. In the period 1968 to 1975, annual FHA sales in this area remained steady in the 45 to 55 range whereas conventional sales have climbed from about 100 to 357 a year. If this is indeed a typical redlined area, it does not seem to support the hypothesis that S&L's arbitrarily cut off the flow of mortgage money to older communities and thus doom them to decay. The basic problem for the anti-redliners is that it is much easier to prove the ecological and market models of neighborhood decline than it is to prove the disinvestment model. There is abounding evidence of declining and collapsing housing markets in the redlined areas. Low down payments made by FHA buyers seem to be the overwhelming explanation of the predominance of FHA sales in these areas. The anti-redliners have yet to prove that there is a pool of credit-worthy buyers in these areas that conventional lenders will not accommodate. They also have yet to explain why these buyers spurn FHA-insured loans. They also have not proven that the act of withholding mortgage money precedes the weakening of the market for credit-worthy buyers, and that the latter is not caused by a third variable. Scapegoat and Devil Theories to the Rescue of Embattled Cities Housing decline and abandonment are the most visible signs of the urban decay which threatens to engulf Chicago and many of the nation's older cities. Community activists proclaim that financial institutions are to blame for this process, and prescribe mortgage disclosure laws as a way to stop financial institutions from "redlining," hence arresting the process of urban decay itself. Proponents of the market and ecological models of urban declir contend, on the other hand, that urban decay is caused by a complex chain of factors associated with the city's growing attraction to poor and minority Americans and growing repulsion to middle class majority Americans. Residential discrimination, urban unemployment, suburbanization, and an unregulated housing industry reinforce these processes. Yet the states and the nation have no policies to directly slow down these processes by attempting to regulate or mitigate the exacerbating effects of residential discrimination, urban unemployment, suburban balkanization, and excessive housing construction. Anti-redliners have contributed to the search for political solutions to urban decay by blaming financial institutions for deserting minority neighborhoods while attacking the FHA for insuring mortgage money in these same neighborhoods. By the designation of these scapegoats and devils, the anti-redliners have relieved local and national officials of the need to face up realistically to the problems of urban decay. The campaign against redlining and the FHA has distracted public attention from the real causes of urban decay and the discussion of programs and strategies to deal with these problems. It has also provided a forum for self-designated community leaders to build up political influence based chiefly on nuisance value and on the selection of issues and targets that are not embarrassing to city officials. It has brought about an alliance between white ethnics and the blacks who displace them through a joint attack on redlining lenders and the anti-redlining FHA. It has fostered a folklore of urban decay caused by institutional villains and devils rather than by larger social and economic forces, which prevents view References 1. 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I, Crisis in Urban Hous- De Vise, Pierre, "Social Change," Ch. 8 in Dick Simpson (editor) Chicago's De Vise, Pierre, "Housing Construction in the Suburbs and Housing Demand De Vise, Pierre "The Thin Red Line: Geographic Patterns of Conventional and FHA Mortgage Loans in Chicago, 1975," Chicago Regional Hospital Study Working Paper II.24, September 1976. 10. Eisinger, Peter. "The Conditions of Protest Behavior in American Cities," American Political Science Review, March 1973. 11. Gershen, Martin. "S&L's Warned of Activist Coup," Chicago Sun-Times, May 10, 1975, p. 3 12. Harvey, David and Chatterjee, Lata. "Absolute Rent and the Structure of Space By Governmental and Financial Institutions," Antipode A Radical Journal of Geography, Vo. 6, No. 1, April 1974, 22-36. 13. 14. Hoyt, Homer. The Structure and Growth of Residential Neigbborhoods in American Cities, Washington, D.C: Federal Housing Administration 1939. Orren, Karen. Corporate Power and Social Change: The Politics of Life Insurance Companies, Baltimore: Johns Hopkins University Press, 1974. 15. Merridew, Alan. "Fight Against Red'ining Turns to Drive For Tough Federal Laws," Chicago Tribune, September 4, 1975, Section 7, p. 1. 16. Merridew, Alan. "Protest Leader Calls For U.S. Help in Anti-Redline Battle," Chicago Tribune, August 12, 1976, Section 7, p. 3. 17. 18. Park, Robert, Burgess, Ernest and McKenzie, Robert. The City. Chicago: Rose, Stephen. "Saul Alinsky, The Industrial Areas Foundation and the 19. Scheff, Henry. "Issues and Communites: The CAP Model of Organizing," FOCUS Midwest, Vol. 11, No. 69 (1976), 14-17 20. Wilson, James Q. Political Organizations. New York: Basic Books, 1973. 21. Hearings Before the Committee on Banking, Housing and Urban Affairs of the U.S. Senate on S-1291 (Home Mortgage Disclosure Act of 1975), May 5-8, 1975. Washington D.C: USPGO, 1975. 22. The Dynamics of Neighborhood Change, Real Estate Research Corporation, Washington D.C., U.S. Department of Housing and Urban Development, December 1975. 23. "Redlining: Discrimination in Residential Mortgage Loans," Illinois Legislation Investigating Commission, May 1975. 24. "The Role of Mortgage Lending Practices in Older Urban Neighborhoods: Institutional Lenders, Regulatory Agencies and Their Community Impacts," The Urban-Suburban Investment Study Group, Center For Urban Affairs, Northwestern Unviersity, Fall 1975. 25. "House-Buying 'Swindles' Hit by the Poor: Chicagoans Jolt Quiz on Housing," Washington Bureau, Chicago Daily News, May 2, 1972, p.2 26. "Residential Sales Data, Chicagoland January, Through December 1975," Chicago: SREA Market Data Center, 1976. 27. Disclosure, Newsletter of the National Training and Information Center, |