Black homeowners pushed out of one Baltimore block show how Wall Street banks failed to lend money they had promised, a Bloomberg investigation shows

• Banks promised to invest in Black communities after they were hit by the 2008-2009 financial crisis.
• Bloomberg found those promises go unmet as large lenders stop serving mostly Black neighborhoods.
• The lenders' retreat is just one reason the massive racial wealth gap in America isn't improving.

Just 14 minutes from the bustling streets of downtown Baltimore lies the 2900 block of Walbrook Avenue.

The block stands as a glaring reminder of the broken promises made by some of Wall Street's biggest banks to support America's Black homeowners, a recent Bloomberg investigation shows.

Several major lenders stopped offering mortgages to residents of the area, a community of mostly working-class Black families, in the years following the 2008-2009 financial crisis, Bloomberg's Shawn Donnan, Ann Choi and Christopher Cannon found.

Before, large institutions including Bank of America, JPMorgan, and Wells Fargo held mortgages on 12 of the 38 lots on the block. Today, only two belong to Wells Fargo and JPMorgan — and they're both held by landlords, not homeowners who use the properties as their primary residences.

Bloomberg's reporting on Walbrook Avenue reinforces how the economic disaster brought on by the subprime mortgage crash that stretched from 2007 to 2010 disproportionately hurt minority households — and how the effects are being felt to this day.

Black Americans have historically owned their own homes at much lower rates than white Americans, and the disappearance of these large lenders from Walbrook Avenue and elsewhere have contributed to what is known as the homeownership gap. As of October 2021, according to the US Census Bureau, 45% of Black Americans owned homes, which is nearly 30 points below the rate of white Americans: 74.6%.

On Walbrook Avenue, the absence of large lenders has left many locals without a lifeline. Several residents like Terrence Jones Jr. — who was just a teenager when he and his family were forced out of their home in 2013 — have lost their homes to foreclosure only to see their mortgages sold to investors who flipped their properties for a tidy profit.

According to Bloomberg's investigation, Wells Fargo, which purchased the mortgage on the Joneses' family home from an undisclosed lender in 2012, has sold at least 3,000 of its Baltimore properties to real estate attorneys between that year and 2021. While it's unclear how many homeowners have lost their properties as a result, Bloomberg suggested that the bank's actions have contributed to lower rates of Black homeownership in the area.

Rudy Miales, a retired resident of Walbrook Avenue who paid off his mortgage in 1980, told Bloomberg he's seen many of his neighbors leave the area, replaced by renters who often do not have ties to the community.

"All these people over here, they might not be here tomorrow," Miales told Bloomberg, pointing to several rental units near his home.

The racial wealth gap grows as Black Americans lose access to capital

Because homeownership is a key driver of wealth, the banks' pullback from Walbrook Avenue ends up limiting the prospects of financial gain for many locals who remain. It's a problem impacting many predominantly Black communities throughout the US.

America's biggest banks and lenders recognized the problem was dire. After the 2008-2009 financial crisis, several financial institutions made pledges to invest billions of dollars to support Black homeownership.

However, in the years since, many of their actions have fallen short of their promises due to a mixture of lending discrimination and the banks' tendency to avoid Federal Housing Administration-backed home loans — a particularly popular mortgage program for first-time buyers that offers low-down-payment options.

Wells Fargo made the largest vow in 2017: a pledge to lend $60 billion for the creation of 250,000 Black homeowners within a decade. But, according to Bloomberg, it underwrote 42% fewer mortgages to Black buyers in 2021 than in the year it announced its goal.

"That's clearly going in the wrong direction," Brad Blackwell, a retired senior executive behind Wells Fargo's 2017 goal, told Bloomberg.

A 2021 study from Brookings Institution, a nonprofit public policy organization, shows that since 2010, the number of banks in majority-black neighborhoods has decreased by 14.6%. Their withdrawal has helped to widen the nation's racial wealth gap.

"Achieving the American dream — the opportunity to succeed, to provide food and shelter for family members, education for children, hope for a better life, and freedom of opportunity — requires capital," Brookings researchers Kristen Broady, Mac McComas, and Amine Ouazad wrote in the study. "But, in the United States, access to capital for individuals and business owners is uneven based on race. The racial wealth gap remains significant."

Indeed, data from an October study from the Federal Reserve Bank of Minneapolis shows that white Americans currently hold 84% of total US wealth but make up only 60% of the population, whereas Black Americans make up 13% of the population and hold 45% of the wealth — simply put, the wealth of the richest 400 Americans is equivalent to that of 43 million Black Americans.