Foreclosure Crisis Hits Minorities Harder

Tami Luhby, CNN Money, June 21, 2010

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Of borrowers who took out mortgages between 2005 and 2008, some 8% of both African-American and Latino borrowers have lost their homes to foreclosure, compared to 4.5% of non-Hispanic whites, according to a study by the Center for Responsible Lending, released Friday.

The racial and ethnic disparities continued even after controlling for income differences. The center’s research shows that African-American and Latino borrowers were about 30% more likely to get higher rate subprime loans than white borrowers with similar risk characteristics.

Of the total pool of homeowners, 17% of Latinos have lost their homes to foreclosure or are at imminent risk of losing their homes, while 11% of African-Americans are in that position. By comparison, 7% of non-Hispanic whites have lost their homes or are about to.

The reason for the disparity is that African-Americans and Latinos were marketed riskier, higher cost loans that became unaffordable during the mortgage and economic crisis, said Keith Ernst, the center’s director of research.

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African-American and Latino communities are likely to lose $373 billion in declining property values between 2009 and 2012.

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