Foreclosures in State Hit Latino Homes Hardest

Robert Selna, San Francisco Chronicle, August 18, 2010

A review of the damage wreaked on California communities by the housing bust shows that Latino households suffered nearly 50 percent of the foreclosures and that loan defaults are concentrated in the state’s Central Valley.

That area, which includes the Sacramento and San Joaquin valleys, features six of the top 10 California metro areas for foreclosure concentrations, according to the Center for Responsible Lending, which released a comprehensive report Tuesday.

No California communities have experienced a higher percentage of defaults than Modesto, Merced and Stockton–each of which had a foreclosure percentage of around 16 percent between late 2006 and 2009, the study found.

“The signature finding of this report, that there is a disproportionate rate of foreclosures for Latinos, is really stunning,” said Paul Leonard, director of the California office for the Center for Responsible Lending. “The data shows that high-cost loans correlate with foreclosures and that there was a big presence of subprime lending to the (Latino) demographic and in areas where there are concentrations of Latinos.”

The center, a national nonprofit organization dedicated to fair lending practices, reported that minorities and remote suburbs–where incomes did not keep pace with escalating housing prices and unemployment has been high–were disproportionately represented in loan defaults.

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Tuesday’s report also says that Latinos, who represent 36.6 percent of California’s population, received 29.9 percent of all mortgage loans originated between 2004 and 2008, but were subject to 48.7 percent of foreclosures.

Latinos’ share of higher-rate loans in California was 47.1 percent between 2004 and 2008, which correlates with general discriminatory lending practices at the time, the report said.

According to the study, it is well-documented that Latino and African American families disproportionately received the most expensive and risky types of loans during the subprime lending boom. In 2006, for instance, federal figures show that among consumers who received conventional mortgages for single-family homes, roughly half of African Americans and Hispanic borrowers received a higher-rate mortgage compared with about 18 percent of white borrowers.

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