Collateral Damage: Racial Logics of Property in the Adjudication of the U.S. Foreclosure Crisis

Abstract

This paper assesses the relationship between law, race, and property through the legal regimes shaping post-crisis claims of racial harm linked to the U.S. subprime mortgage market. Drawing on theories of legal form linking capitalism, property, and race, I detail how racially exploitative practices through the subprime mortgage depended on transformation of a specific legal instrument – collateral - that tied the pledge of real property as security for a loan to financial market abstractions of liquidity and yield. Then, through close analysis of a recent set of mass lawsuits filed by the cities of Cleveland, Baltimore, and Miami against large subprime lenders seeking restitution for discriminatory lending practices, I examine how collateral’s legal form has patterned a “politics of redress” within court adjudication. This illuminates two novel aspects of the racial logic of property linked to mass foreclosures in Black and Brown neighborhoods. On the one hand, focusing on collateral has enabled municipalities to link disparate properties/neighborhoods into cognizable legal actions against lenders, effectively territorializing claims for restitution across significant areas of the city. On the other hand, the disposition of these cases demonstrates how plural doctrines of property, contract, and discrimination have produced a recoding of property within which the flow of value to lenders and investors from racially exploitative lending is rendered legally unproblematic.