Blacks, Latinos have disproportionate share of foreclosures

[Aug 26, 2010.]

 

Minorities have a disproportionate share of foreclosures, according to a recent study by the Center for Responsible Lending (CRL). There were 2.5 million foreclosures between 2007 and 2009, but blacks and Latinos were about 70 percent more likely to be foreclosed upon than whites. Almost 8 percent of African-Americans and Latinos lost homes to foreclosure, compared with 4.5 percent of whites. Also, 21.6 percent of African-Americans and 21.4 percent of Latinos are at imminent risk of foreclosure.

Predatory mortgage loans

The high rate of foreclosures in minority communities is related to some of the predatory lending practices that are alleged to have occurred. For instance, mortgage loans made to minorities tend to have higher interest rates than loans made to whites. Also, some minority home buyers were reportedly steered into sub-prime adjustable-rate mortgages or other risky loan products. Lastly, minorities have higher unemployment rates, making them more likely to fall behind on mortgage payments.

Minorities with higher incomes are also disproportionately affected by foreclosure, according to the report. Blacks with high incomes were 80 percent more likely to lose homes to foreclosure than whites, and Latinos were 90 percent more likely.

Losing home equity

People living near foreclosed homes in communities of color are expected to have home values drop more than $350 billion between 2009 and 2012. CRL, a nonprofit research group, said that figure might be higher than the damage in the Gulf States due to Hurricane Katrina.

"Whether we're talking about oil spills or housing catastrophes, it's clear America needs to invest in prevention, clean-up and recovery. As Congress finishes financial reform legislation, the rules on home lending need to get stronger, not weaker. We need to make sure a foreclosure crisis of this type never happens again, and though many homes have been lost, it's not too late to prevent damage," CRL President Mike Calhoun said in a statement.

More troubled mortgages

Families of all races and income levels are being hurt by foreclosure. Another 5.7 million foreclosures are imminent, and by 2013 it's estimated that up to 13 million homes may be lost to foreclosure. Some housing experts are hoping the government's new Consumer Financial Protection Bureau can put steps in place to prevent predatory and abusive practices not only in mortgage lending, but across the financial industry.

In the meantime, if you believe you are the victim of predatory lending, you can file a complaint with the Department of Housing and Urban Development. Federal law prohibits discrimination related to race, color, national origin, religion, sex, family status or disability.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.