loans, written as second mortgages, may be in the form of
down-payment or monthly mortgage assistance; they have a deferred
pay-back and a fixed interest rate of 6 percent.
LOOKING
TO STATE GOVERNMENT
In 1982 Ohio
voters approved a referendum establishing the Ohio Housing Finance
Agency (OHFA). OHFA floated tax-exempt bonds to create a pool of
funds to lend, through participating banks, at below-market rates
to qualified first-time buyers. Nothing in the agency's charter
spelled out a fair housing mission. Nevertheless, DeMarco and other
fair housing advocates, primarily from Shaker Heights and Cleveland
Heights, launched an effort to get OHFA's board to set aside 10
percent of its anticipated $100 million in bond proceeds for
pro-integration housing. Other fair housing groups in the region,
notably the Metropolitan Strategies Group, coordinated the
effort.
At first,
OHFA's nine-member board rejected, as outside its mandate, the
integration incentive set-aside. But in 1985 the death of a
67-year-old black grandmother in a firebombing in a west side
Cleveland neighborhood was cited by fair housing advocates and
black elected officials of Cleveland and suburban cities as proof
of the need for increased government action. The following month
the board, reportedly under pressure from Governor Richard Celeste,
voted to allocate $7 million on a trial basis for integration
mortgage incentives assistance. The board directed that the
earmarked money be distributed to potential buyers moving into
areas where they were "racially underrepresented."
Regulations
proposed by the Metropolitan Strategies Group at the request of
OHFA took the unprecedented step of defining racial
underrepresentation. Under the 10/40 plan, a neighborhood would
have to be at least 90 percent white for blacks to qualify for
pro-integration loans and at least 40 percent black for whites to
qualify for such loans; the thresholds were set by taking the
percentage of the county population that was then black, 25
percent, and adding or subtracting 15 percent.
The set-aside
program was in force for two months in 1985, during which time 30
black and 19 white borrowers qualified for $3 million in mortgages.
After September 1985, the program's 9.8 percent interest rate could
not compete with falling conventional lending rates, and consumer
demand for the loans temporarily dried up. Nevertheless, the funds
were credited with helping open two communities in the eastern
suburbs.