Revealing the racial makeup of California's foreclosures 21 2 KALWNews.org
By Hana Baba
The Center for Responsible Lending-a non-profit research and public policy group-released a study, this week, focused on the racial makeup of foreclosures in California. It found that Latinos have experienced notably higher foreclosure rates than non-Hispanic borrowers in the state.
In what's being called a "first of its kind," the report, entitled Dreams Deferred: Impact and Characteristics of the California Foreclosure Crisis, analyzed more than half a million statewide cases of foreclosures and found that the vast majority-48%-has been on Latinos. Whites totaled 35%, African Americans 8% and Asians 6%.
The study also looked at the types of homes foreclosed upon. While it was commonly believed that these homes were the kind of cookie-cutter, so-called "McMansions" built within expensive subdivisions, the study revealed that 75% of foreclosed homes were actually modest properties. This indicates that not all homebuyers bought beyond their means, as has been frequently noted throughout the housing crisis.
Of course, a discussion of the housing crisis is never complete without some analysis of the reasons behind the numbers.
According to the Center's report, Latino and African American borrowers were more likely to acquire higher-cost subprime mortgages with loan terms that generally increased the risk of default, compared with safer loans made to similarly situated non-Hispanic white borrowers.
An in-depth 2009 report on Latino home ownership by the Wall Street Journal found another reason why so many Latinos sought home ownership in the first place. According to the US Census Bureau, between 2000 and 2007, Hispanic homeownership grew 47%. Over that same period, homeownership nationally grew by only 8%. And, according to the Federal Financial Institutions Examination Council, in 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%.
The Journal's investigation found "a push by low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, mortgage lenders and brokers, who all were pushing to increase homeownership among Latinos." It looks like this push to seek the American dream may have backfired.
Some solutions to the problem offered by the Center for Responsible Lending in its latest report include lifting the ban on bankruptcy judges to modify principal residence mortgages, and increasing funding for agencies that offer housing counseling and legal help to borrowers.
Read more: http://www.sfgate.com/cgi-bin/blogs/kalw/detail?entry_id=70480#ixzz0xLD9vp00
