1976: Mike Wallace on Detroit corruption

Back in 1976, Mike Wallace charged into houses in Detroit's neighborhoods to expose the federal government's role in the city's housing blight

How did Detroit's neighborhoods get so destroyed? Take a look at this 1976 report from the archives of 60 Minutes, and you'll see that the problems in Detroit's blighted housing stock are decades in the making.

Back in '76, Mike Wallace charged into homes all over Detroit for his story about the federal government's role in the city's deteriorating neighborhoods. "Hell Upon Detroit," Wallace's 60 Minutes report, aired on April 18, 1976, and it opens with an interview with a young Carl Levin, then president of the Detroit City Council (and now a U.S. senator).


The following is a transcript of "Hell Upon Detroit":

MIKE WALLACE: Our lead story tonight tells of good intentions gone wrong. Since Depression days, the FHA --the Federal Housing Administration-- has guaranteed mortgages for millions of American home-owners. Then in 1968, Congress broadened that program to include the very poor, so that a poor person could buy a home for as little as $200 down. That was fine with the mortgage bankers. They couldn't lose, so long as the FHA guaranteed the loan on a house.

What no one foresaw was a wave of corruption and mismanagement, and that thousands of homeowners would default on their monthly payments and stick Uncle Sam with the bill. Many of their houses, repossessed by the Government, are now dilapidated wrecks. The FHA is a division of HUD - the Department of Housing and Urban Development. But in one city, the city hardest hit by these homes, it stands for this: "Hell Upon Detroit." That title is not ours.

It was coined by the president of the City Council of Detroit. What you're looking at is the result of ten years of decay here in the center of Detroit. Looks as though maybe a bomb hit or a riot took place. There was no bomb; there was no riot. That's vandalism over there. In many neighborhoods, empty, boarded-up HUD homes have sat for months, sometimes for years, prey to fire, crime and vandalism. They spread like a cancer along Detroit's streets, forcing property values further down.

MIKE WALLACE: One of the top officials of Detroit, president of the City Council and one of HUD's chief critics, is Carl Levin. Mr. Levin, you say that H-U-D stands for:

CARL LEVIN: Hell Upon Detroit.

WALLACE: Why?

LEVIN: HUD permitted the speculators, the illegal and bad guys to take advantage of them because their own people took money to overlook defects in houses.

WALLACE: Case in point: this house on Phillips Street on Detroit's East Side. The owner bought it back in 1970 from a real estate speculator. The speculator had paid only $7,000 for it a few weeks earlier. But in return for a $100 cash bribe, an FHA appraiser agreed to insure a mortgage on that home for $14,650.

LEVIN: And when those defects became obvious a year later, six months later, the people who were placed in these houses, poor people, abandoned the houses because they had no equity in them. They just simply walked away when the big cracks showed up.

WALLACE: Once such a house is abandoned, the mortgage company takes over. But since the FHA insured the mortgage, the company has nothing to lose. HUD just pays off the mortgage company, and winds up with still another ramshackle house.

FEMALE HOME OWNER: Everything is crumbling. It's rotten. We weren't in the house six months and there was a leak here. My son went to-- to fix the porch with a neighbor, and he literally fell through, it's so rotten. And this-- even the wall is rotted. Just terrible - and you can Just take and shake the whole thing.

WALLACE: That's the back wall of the house?

HOME OWNER: Back wall of the house.

WALLACE: But you're a smart lady. So, how-- how did they con you into buying it?

HOME OWNER: Well, I'd been brought up to believe that the FHA approved a home, that they are very particular, and if the FHA approved a home, then that home was sound.

WALLACE: No man in Detroit knows more about what's gone on with HUD the past half-dozen years than Don Ball of The Detroit News. Don, how much-- how much Just plain corruption has been involved in this story?

DON BALL: Literally tens of millions. Thousands and thousands of homes were involved in the fraud and corruption. This house here was-- was one of one thousand homes that just one real estate broker paid bribes on.

WALLACE: And that one real estate speculator got how much?

BALL: Well, he said that he made a million dollars. It was his testimony in court. We figure he made more like two million dollars.

WALLACE: Where is he now?

BALL: And he's in New Mexico operating a dude ranch now.

WALLACE: Did he go to jail?

BALL: No, he got probation.

WALLACE: Don Ball says the worst days of HUD corruption have passed, and lately HUD has also been trying not to saddle poor people with homes they can't afford to keep up. HUD's biggest problem now is that it has billions of dollars pledged to real estate in the nation's failing cities, and no city is having a tougher time of it than Detroit. One plant after another has abandoned Detroit. Thousands of small businesses have shut down and moved out. Entire commercial blocks are almost completely boarded up. There are bright spots, like the huge new Renaissance Center. This is supposed to bring new life to the center city, but so far rental agents are way behind schedule in trying to find tenants to fill these huge new towers. Unemployment in Detroit runs at Depression levels - about 20 percent; a staggering 45 percent in some areas. The city faces a huge budget deficit, and one of the highest crime rates in the country. A recent newspaper survey found that 50 percent of Detroit families want out of Detroit. Often they leave just by packing up and walking away from homes which aren't worth the trouble to sell. Today in Detroit alone HUD holds almost 2,000 vacant lots, more than 17,000 apartment units and 8,000 homes - and is having to pick up new homes at the rate of 500 a month! Most of them aren't in the ghetto areas, but in the once pleasant neighborhoods of northwest Detroit. These are not homes of the poor, but of Detroit's lower middle class - solid blue collar workers.

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