Urban renewal on "to do" list of next U.S. leader

By Nick Carey

CHICAGO (Reuters) - No matter who wins the U.S. presidential election in November, their "to do" list will probably include urban renewal.

For while the subprime crisis may force the U.S. economy into recession, it has already brought boarded-up homes and broken dreams to thousands of minority families inner cities.

"Whoever wins the race to the White House will preside over the crumbling of the American dream," said Dennis Talbert, president of Detroit-based non-profit Michigan Neighborhood Partnership, a credit and mortgage counseling service.

During the U.S. property boom, Latino and African American borrowers were nearly four times more likely than their white counterparts to receive a high-cost subprime loan. As a result, many foreclosures are concentrated in minority neighborhoods, pushing property values down and creating a magnet for crime.

"In some of these neighborhoods it's going to look like a bomb went off," said Geoff Smith, vice president of community development group The Woodstock Institute in Chicago on expectations for 2008, adding: "It will be worse than 2007."

In Chicago Lawn, not far from where Democratic presidential candidate Barack Obama once worked as a community organizer, it looks like the bomb has already hit.

From the corner of West 64th Street and South Maplewood Ave in this mostly African American and Hispanic neighborhood on Chicago's blue-collar South Side, you can see 10 small red-brick homes boarded up -- about one in five homes on the two blocks -- after owners couldn't pay their mortgages.

"The people who bought here thought they were living the American dream, but they could never afford the loans they were given," said Livia Villareal, counseling services director at the Greater Southwest Development Corp., a local non-profit.