par Horacio Ortiz
Book review of Noelle Stout, Dispossessed. How Predatory Bureaucracy Foreclosed on the American Middle Class (Oakland, University of California Press, 2019, 280 pages), published in European Journal of Sociology, 61(3): 542-548 , with the title “The “American middle class” after 2008: financial, fictitious, foreclosed”.
In Dispossessed, Noelle Stout takes us on a journey into the experience of foreclosure in the US after 2008, inviting us to witness the “death of an imagined social tie, a severed bond that homeowners, since World War II, had relied upon to define their moral standing and social status” (p. 132).
The book focuses on the experience of people whom private institutions prevented from refinancing their mortgage. In 2009, the Obama administration created a Home Affordable Modification Program (HAMP). This program gave incentives to financial institutions to refinance the loans of people who had taken a mortgage before 2009 and whose house was now worth less than the nominal amount. The program was administered by 140 private mortgage servicers. They were asked to choose the most profitable option (for them) between refinancing the loan and seizing the house. Approximately 13.7 million people faced foreclosure in the US between 2006 and 2013. By 2016, 9 million people had requested a loan modification through HAMP. Between 2009 and 2015, 70% of the requests were rejected [8-9].
The book is based on 26 months of fieldwork in Sacramento, California, between 2012 and 2016. Stout closely followed 12 families, undertook participant observation and interviews with 32 other homeowners, 25 interviews with employees managing the rejections of loan modification requests, and a few interviews with financial executives, government officials and activists. She carried out observations in three neighborhoods, chosen for their differentiation in terms of race and class: a “low income black and Latino neighborhood with a concentration of high-risk lending; a predominantly white upper-income residential area suffering from overbuilding and inflated home prices; and the racially integrated middle-income suburb where [the author] was living” . The book is organized in five chapters that follow a clear narrative line: the first chapter provides a historical background to land seizure in the area; the second chapter looks at the experience of foreclosures in the poorer neighborhood, Oak Park; the third chapter looks at foreclosures in the other neighborhoods; the fourth chapter presents the views of employees of financial institutions rejecting loan modification requests; and the fifth chapter presents forms of resistance to foreclosures.
In Chapter 2, Stout explains that racial minorities and people living in poor neighborhoods were overrepresented in HAMP rejections. The poor residents Stout met in Oak Park, many of them migrants or belonging to racial minorities, had never expected to be treated respectfully by financial institutions or to be entitled to fair treatment by government programs. They tended to compare widespread foreclosures to the expansion of crack in the 1970s. In this neighborhood, people tried to fend off foreclosures by using street smarts and looking for help within networks of neighbors and relatives. They also mobilized to create collective organizations and engage in political action.
Chapter three describes how, in the other neighborhoods, on the contrary, the residents observed by Stout tended to self-identify as white and to consider that financial institutions were bound to them by links of equality and reciprocity. They blamed themselves for their wrong investment decisions before 2008, and attempted to use their social and cultural capital to navigate the bureaucracy of HAMP. Yet, even they met with rejection and foreclosure. This led to the break-up of their identification with the middle class whose foreclosure is the object of the book. Stout considers that they reached “‘post-middle-class’ subject formation. Post-middle-classness is a psychic and material state of being in which the expectations for postwar middle-class life no longer function in the face of social and financial decline” .
Chapter four provides insight into the system of rejections. Stout interviewed employees who managed loan modification requests. They described a system geared towards rejecting applications. This involved multiplying bureaucratic hurdles, losing paperwork, fast employee turnaround and computer terminals that were not interconnected, preventing the continuity of treatment of applicants’ dossiers. More systematic illegal strategies, applied massively by Bank of America, for instance, included “double tracking”, where people paid the refinanced loan to one department of the bank, but the mortgage was still considered due by another department, ending in foreclosure anyway. Banks received government help for providing HAMP assistance. They could later cancel the assistance without having to pay the government back. Stout remarks that the massive rate of rejections indicates that these “inefficiencies” were not random, but actually aimed at facilitating foreclosures by a “predatory bureaucracy” . The employees met by Stout tended to feel sad, frustrated or torn by their own practices. Some experienced depression and others attempted to illegally help applicants. Stout remarks that, in general, they held the same views about reciprocity as those who identified as middle class.
In Chapter 5, Stout explores the forms of resistance to foreclosures. In poorer neighborhoods some people organized to put pressure on local authorities. Elsewhere resistance could take the form of staying in the house until physical eviction, anonymous participation in online forums, suicide or sharing in religious gatherings. Trashing the home before leaving it, an extreme case, was often shunned as “low class”. Occasional calls to mass defaults as an act of resistance, in online forums, tended to meet with generalized moral rejection. The moral tie between debt repayment and homeownership remained strong, even as the possibility of pursuing it was being denied by the financial industry.
The book contains many detailed stories of how people took mortgages and equity loans, either without clearly understanding the future shift from fixed to floating rates, or without expecting to experience a combination of a sharp drop in house prices, rising unemployment and economic hardship. We experience their long waits for mail returns and phone calls, the uncertainty after sending paperwork that was often lost by banks, the feeling of being lied to, and a growing hopelessness that overwhelms them as they slowly come to terms with the fact that they will not be able to refinance their loans and will lose the home where they live. The qualitative description is systematically linked to quantitative data demonstrating that this is not simply a personal experience of downward mobility and despair, but a process that is commonplace throughout the entire country.
Through her poignant descriptions of individual stories across differences of class, race and location, Stout addresses a single issue. She is interested in the effects of foreclosure on the American middle class. The book does not define this “middle class” clearly. This is problematic. But the author presents it as a result of her involvement with the people she observed. Stout explains that she grew up in Northern California, where her family experienced upward mobility during the 20th century. At the time of her observations, some of its members faced foreclosure in the same area she was studying. Quoting Lila Abu-Lughod, she presents herself as a “halfie anthropologist […] who navigates an uneasy split between “speaking for” and “speaking from”” . Her explorations of the “death” of an imagined social tie explore multiple meanings of the concept of middle class she grew up with. The book illustrates, in part, how these multiple meanings work together.
Stout presents “class subjectivities” as “heuristic devices that combine people’s own views of their social position with markers of traditional status such as homeownership and employment”. They are co-constituted with differentiations in terms of gender, race, religion and urban or rural location. For people identifying as “middle-class” or “lower-middle and middle class”, homeownership and debt repayment were central. This imagined character of middle-class status is relational. Stout shows how it is partly produced in relations between homeowners and employees of banks, who tend to think of themselves as middle class. The notion is also defined in opposition to the “poor”. Foreclosure and downward mobility mean confronting financial difficulties, government assistance, and rejection by banks, problems once attributed to those explicitly excluded from the middle class. Stout shows how poor residents of Oak Park did not share the expectations of respondents identifying as middle class.
Stout also refers to the formation of an American middle class, more objectively, as a historical process. This started in the 1920s, when mortgages and other forms of debt became an entitlement for middle class Americans, and good debtors were considered good citizens. It solidified after World War II, with a renewed focus on homeownership and continued racial exclusion. Until the 1970s, access to good education, government programs, credit and homeownership, with participation in the military, came to define the middle class American, especially if one were a white male [38-44]. This is the “American dream” that, according to Stout, middle-class homeowners held on to in the run-up to 2008.
Yet, since the 1980s, the middle classes increasingly used debt to pay for the loss of social benefits and stagnant incomes. In 2008, “these were not solidly middle-class families who faced a sudden crisis of unemployment, but post-middle-class Americans who had been living on the precipice of financial instability for decades” . In that sense, “the narrative of mortgaging is shot through with fiction: home “ownership” is, in most cases, a misnomer. Lender and borrower enter into a tacit falsehood that a home owned by the bank and leased to the borrower for thirty years belongs to the homeowner rather than to the bank” . Foreclosure awaits defaults, as it becomes increasingly difficult to repay mortgages and at the same time maintain consumption levels, access to education and other markers of the “postwar middle class”. For Stout, the middle class has been a fiction since the 1980s, a dream about how to be a morally respectable American. Before the 1980s, for white males and their families, this dream was based on repayable debt. After the 1980s, the financial industry became increasingly disinterested in guaranteeing its continuity.
All these definitions of the American middle class, subjective, objective, financial and fictitious, were foreclosed in the experience of the “lower-middle class and middle-class” people observed by Stout in Sacramento: “Collectively, these experiences, what I refer to as post-middle-class-life projects, show how post-World War II middle class formations—a collection of aspirations, performative styles, forms of work and leisure, ideas about privacy and decorum, gendered and racialized assumptions, and uses of money and investments—were unraveling. Being or becoming middle class, as a subject position, was foreclosed, in part, by the predatory mortgage modifications bureaucracies of corporate banks” . Since the house is symbolically charged with ideas of kinship, belonging, morality and citizenship, people facing foreclosure projected these ideas onto their relations with mortgage servicers. Massive foreclosures constitute, then, a shift in the moral economy [194-196].
This presentation of the “middle class” eschews some fundamental processes that are nevertheless visible in Stout’s descriptions. She is extremely clear that identification as “middle-class”, both after World War II and today, is founded on systemic discrimination, especially concerning gender, race, nationality and religion. She distances herself from critical accounts of financialization since the 1980s that may appear as “almost nostalgic for the corporate bureaucracies that preceded this change” . But exclusive focus on identification by people who lost their self-assigned status as middle class leaves other forms of identification unexamined. This is surprising given that immigrants and racial minorities are a prominent part of Oak Park’s population. The concern with the middle class overshadows other forms of identity that may or may not have been foreclosed after 2008. This risks implying that middle class identity was the only one available to respondents, including those who were systemically excluded from it.
Stout’s story is also limited to “America”. In the introduction, she remarks in passing that the 2008 collapse of house prices and credit derivatives was felt not just by Americans, but also “from Singapore to Mexico” . But many of her respondents are immigrants, some of them from Mexico. The book does not explore the meaning of homeownership for them, for instance by relating it to their experience of migration and their ties and projects outside US borders. A case can be made that the “American middle class”, in the early 2000s and before the 1980s, was premised on abundant cheap labor, supplied by migrants to the US and by low-cost workers in global manufacturing chains. This issue is not totally absent from the book’s detailed descriptions, but it is left out of the analysis: they are not given the same voice as the “American middle class”.
Something similar happens with the role of war and global politics in the formation of the concept of an “American middle class”. Stout asserts that the G.I. Bill and participation in the military were constitutive elements of the ideals of a white male middle class after World War II. But this only makes one minor appearance in the cases she presents in the book. A veteran of the Vietnam war, commenting on the despair he felt when his application for loan modification was rejected, said: “This is not the country I grew up in, not the country I went to Nam for”. This could have led to an interrogation of the definition of “America” and of “middle-class” for this person, who connected it with massive wars that asserted US global dominance at least since World War II. Yet, the book does not analyze this statement, and the history of the person uttering it, to explore the connection between “middle-class” status and geopolitics. This is problematic because the rise of credit derivatives in the US since the late 1990s was part of US financial expansion worldwide. It was made possible by the US dollar’s role as the world currency, a position of strength partly based on military power and amplified by the end of the Cold War. The imaginaries of US global dominance since the 1990s are different from those of World War II and the Vietnam war. But the book leaves them out of the analysis of middle class subject formation. This risks implying that, instead of being the product of global power relation, the idea of an “American middle class”, and its unraveling, occur in a world contained within US borders.
These limitations are not due to the method. Stout’s detailed descriptions are in dialogue with a wide range of quantitative data. This strengthens the representative character of the deeply personal dramas presented in the book, without losing any of their poignancy. The “American middle class” designates an unstable object, established in a circulation through subjectivities, objective markers and financial relations within national borders. Stout considers that this identity is now foreclosed and cannot be recovered. The society of Keynesian economic policies, with its systemic discrimination, is over. Instead, “seizing on these preexisting assumptions of fairness and reciprocity and making visible how these ideals have been undermined could fortify from below these impulses regarding idealized American moral economies” that were foreclosed . For Stout, this would allow “reimagining a renewed American moral economy” .
Dispossessed offers an in-depth exploration of the experience of foreclosure in the US after 2008. It shows how, as loan modifications were rejected and people lost the places they lived in, their assumptions about their own moral and social status are transformed. These changes vary depending on the person’s social status before 2008, within a history of systemic discrimination in terms of gender, race, nationality and religion. The book isolates the dismantling of one particular form of identification, one that the author grew up with. The author’s reflexivity sheds light on the limitations of the book, which disregards other identities and the global relations in which the “American middle class” was formed. Thereby, it contributes to a timely reflection on the current quandaries of this class’s global political project.