Cleveland, OH, March 2008. Activists with the East Side Organizing Project took part in a direct action at the suburban home of a regional vice president of Countrywide Financial. ESOP demands that the company take responsibility for predatory loans made

The challenge facing our nation is not a lack of wealth but a destructive distribution of wealth. Over the last 40 years, the US economy has shifted from one that was producing a strong middle class, to an economy that serves the richest among us almost exclusively and concentrates wealth among the wealthiest in society. This has created a growing wealth divide. This wealth divide has hurt historically marginalized communities like African-Americans and current low-income immigrant populations that are overwhelmingly Latino.

In 1966, A. Phillip Randolph and Bayard Rustin, stewards of the Civil Rights movement, advocated a comprehensive federal budget proposal. They called this proposal the Freedom Budget. The Freedom Budget proposed a new federal investment in the poor of the nation, an investment that for the first time would not be blocked from reaching Black Americans due to segregation. The Freedom Budget was endorsed by most mainstream civil rights organizations and even some Black power advocates such as Stokely Carmichael -- yet not by our nation's legislature.

The Freedom Budget would never be implemented. The war in Vietnam would end up consuming billions of dollars and distracting the nation from healing the wounds of racial discrimination. Fiscal conservatives would oppose increases in federal social spending, and the election of Richard Nixon would seal the door to the possibilities of the Freedom Budget. Over the last forty years we have seen a regressive economic climate where the rich are getting richer, the middle class and poor are struggling to make ends meet, and the racial wealth divide continues to keep race a mark of division in the United States.

Forty years after the assassination of Dr. Martin Luther King, we believe it is not too late to implement the economic reforms Dr. King knew were needed to make his dream a reality.

Ending the Homeownership Divide

Between the 1930s, the time of the Great Depression, and the early 1950s, marking the beginning of the Civil Rights movement, billions were invested in American homeownership. The post-WWII housing boom was fueled by subsidized assistance to over 35 million Americans between 1948 and 1972. During these years, 11 million families bought homes and another 22 million improved their properties. The biggest beneficiary was primarily White suburbia, where half of allhousing could claim Federal Housing Administration or Veterans Administration (VA) financing in the 1950s and 1960s. Interstate highway construction served as an indirect subsidy, as it opened up inexpensive land for suburban commuters. At the end of World War II, the percentage of US citizens who owned their own homes was about 44 percent. In 2004, 76 % of Whites owned their own homes, compared to 49.1 % of Blacks and 48.1 % of Latinos.

The progressive economic measures prevailing at that time had a positive impact in strengthening the economic situations of most middle-class and lower-income Americans, but due to the openly racist policies also prevalent during this time, it reinforced the economic supremacy of Whites in relation to people of color as well. Since the end of legal segregation in the late 1960s, there has not been any comparable federal investment in homeownership that would benefit disenfranchised people of color. The following policy solutions can change this situation.

1. Lower the Ceiling for Mortgage Deductions

One of the first steps that needs to be taken to promote equal opportunity homeownership is removing the subsidies that promote a growing economic divide in this country and redirecting these subsidies to broadening our middleclass economy. In 2005 President Bush's advisory commission on tax reform recommended lowering the mortgage interest deduction that overwhelmingly and disproportionately benefits the richest of Americans. Currently, homeowners can deduct all interest paid on mortgages as high as $1.1 million. President Bush's advisory commission recommended that the mortgage ceiling for such tax deductions be placed on a sliding scale that is related to the real estate market of an area. In 2005, the recommended ceiling was $415,000 in the most expensive areas.

Implementing this recommendation would not stop people from taking out larger mortgages. It would just prevent the American public from subsidizing the interest on mortgages greater than $415,000.

2. Increase the Development of Affordable Homes

In the private market, the sole motivating force is profit -- not just the drive to make a profit, but to make the greatest possible profit. This often has limited private market opportunities for the non-wealthy, particularly as it relates to housing. The higher profit margins that come with building expensive homes have made the affordable housing market less attractive for private home development companies. Government subsidy of housing development through tax credits would make affordable housing more attractive to private developers.

Affordable Housing Tax Credits -- The federal government could fund and have distributed by state agencies tax credits to home developers who build affordable housing. This would increase the profit margins for private companies to build affordable housing. In some cases, the cost of building affordable homes is greater than the market value of these homes. It would require a tax credit to close this "appraisal gap" and create a margin of profit.

Government-mandated Affordable Housing -- The federal government should consider a mandate that federal housing aid to states be tied to a requirement that all new construction and renovations in the state provide a set percentage of affordable and low-income housing.

3. Simplify Homeownership Loans

Currently, much of the regulation for buying a home is at the state level, consisting of various compliance costs and practices. Housing policy varies considerably from state to state. A national standard could greatly simplify the home-buying process, and because of this the costs of compliance would lessen. For years, consumer groups have advocated strengthening the Homeownership Equity Protection Act (HOEPA), but this effort has been successfully opposed by the mortgage lending industry, which was concerned that a strengthening of HOEPA would limit the securitization of subprime loans.

Since the end of legal segregation in the late 1960s, there has not been any federal mass investment in homeownership that would benefit disenfranchised people of color.

As the nation now faces the possibility of a recession -- primarily fueled by the subprime loan crisis and the mass securitization of bad subprime loans -- we can see how greater regulation of the mortgage lending industry would have been beneficial to the nation as a whole. All Americans deserve a more transparent home loan process.

For too many would-be homebuyers, the closing costs and down payment necessary to get a mortgage are large up-front costs that make buying a home prohibitively expensive. In order to reach the people-of-color populations that were excluded from full participation in the homeownership aspects of previous programs like the GI Bill, such as low interest loans with zero down payment, a new federal program must be offered to first-time home buyers.

A federal subsidy covering 50% of closing costs and the down payment should be offered on a once-in-a-lifetime basis for a first-time home buyer purchasing a moderately-priced home in an affordable community. Though not as generous as the home buying benefits that made White Americans majority homeowners, this type of policy would be a step forward in giving would-be homeowners a greater opportunity to acquire the number-one wealth-building asset for most Americans.