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WASHINGTON (Reuters) - U.S. housing is still racially segregated 40 years after civil rights laws to end unfair practices, which also contributed to the subprime mortgage crisis, according to a report published on Tuesday.
The National Commission on Fair Housing and Equal Opportunity, which hopes to get a good hearing from President-elect Barack Obama, the first black U.S. president, also said a new agency was required to enforce laws passed by Congress in 1968 that too often have been ignored.
"When the rules break down in something as fundamental as where you can live ... our system doesn't work," said Henry Cisneros, a former secretary for housing and urban development under President Bill Clinton.
"I know the president-elect will see that as well," he said as he presented the report. Obama takes office on January 20.
The seven-member commission based its findings on hearings held in five U.S. cities between July and October.
"Past and ongoing discriminatory practices in the nation's housing and lending markets continue to produce levels of residential segregation that result in significant disparities between minority and nonminority households, (and) in access to good jobs," the report warned.
By denying minorities access to traditional home loans, discrimination also drove them into costlier subprime mortgages. When defaults on these loans began to climb in 2007, they hit the entire housing market, inflicting the United States with a recession and the highest unemployment level in 15 years.
"The subprime market discovered the African-American and Latino communities and targeted them," said commission member Okianer Dark, a law professor at historically black Howard University in Washington.
The report found that whites got better loans than blacks, Latinos and Asians, who make up roughly a third of the population and who were sometimes steered away from buying homes in predominately white communities.
The main recommendation was for a new enforcement agency to replace the fair housing structure within the Department of Housing and Urban Development.
Cisneros said the fair housing structure had become marginalized as a "source of annoyance" for bringing complaints against entities that other parts of HUD were working with in the drive to build more houses.
Illustrating this point, the report noted there were some 4 million fair housing violations per year but HUD took action in only a tiny fraction of these cases.
"We've got a government of checks and balances and this is a critically important check and balance," said Cisneros, who co-chaired the commission with Jack Kemp, HUD secretary under President George H.W. Bush.
A statement issued later on Tuesday by HUD assistant secretary for fair housing and equal opportunities, Kim Kendrick, disputed that the agency was not fighting hard against discrimination.
"By every measure, HUD and our partners are aggressively enforcing the Fair Housing Act as never before. We join the Commission to reinforce the need for continued vigilance in fighting housing discrimination," she said.
Editing by Doina Chiacu