A new
report by the Center for Responsible Lending (CRL) shows
foreclosure rates in 2011 have more bad news for communities of
color.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>As of February 2011, low and moderate-income African Americans who received mortgages between the years 2004 and 2008 are now experiencing foreclosures at a rate about 80 percent higher than those of low- and moderate-income whites. For higher-income Latinos, the foreclosure rate for loans secured during these same years is more than three times that of higher-income whites.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>The report, Lost Ground, also finds that communities of color still suffer from foreclosure disparities by race and ethnicity that cannot be explained by objective risk factors alone.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>Although white families have experienced the majority of foreclosures, the share of home losses is much higher for families of color, even within the same income categories. Moreover, African-Americans and Latinos were much more likely to get the most dangerous types of mortgages even if they had good credit – indicating they could have qualified for a sustainable mortgage.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>CRL estimates that the nation is not even half-way through this continuing crisis. Among homes purchased between 2004 and 2008, 3.6 million are at serious and immediate risk of foreclosure. Additionally, another 2.7 million mortgages made during this same years have already foreclosed.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>The awful irony of this still-unfolding saga is that many people are trying to blame affordable housing lending as the culprit for today’s weak housing market. But the “exploding” loans that were marketed so aggressively during the subprime boom were not part of any governmental initiative.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>Minority homebuyers were steered to mortgage products prone to foreclosure: brokered loans, non-traditional adjustable rate mortgages and loans with pre-payment penalties. Loosely regulated lenders and Wall Street firms marketed these loans aggressively and approved them without regard to the huge exposure to financial risk, whether the loans were sustainable, or if borrowers could have qualified for a less costly loan.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>Had borrowers of color been offered mortgage loans that were sustainable, far different results would have occurred. Family wealth could have increased; investors could have benefited; and local governments – highly-dependent upon property tax revenues – would not be facing severe budget deficits. Most importantly, the nation might not have suffered the worst recessionary economy of this generation.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>Homebuyers, especially those of color, could have gotten better loans. Far more borrowers would have been more successful. And those who offered these risky loans should have known better.
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>Our nation just didn’t need this saga of “coulda’, woulda’, shoulda’.”
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>The report includes information on foreclosures and delinquencies by state and by metro areas. It is available at:
“blocked::http://www.responsiblelending.org/” href= “http://www.responsiblelending.org/”>www.responsiblelending.org
“font-size: 9.0pt; font-family: Verdana; mso-fareast-font-family:”>Charlene Crowell is a communications manager with the Center for Responsible Lending. She can be reached at:
“blocked::mailto:Charlene.crowell@responsiblelending.org” href= “mailto:Charlene.crowell@responsiblelending.org”>
“text-decoration: none; text-underline: none;”>Charlene.crowell@responsiblelending.org