AndreaGail
21st June 2010, 08:59 AM
By Tami Luhby, senior writerJune 18, 2010: 2:27 PM ET
NEW YORK (CNNMoney.com) -- The mortgage meltdown is hitting the African-American and Latino communities harder than whites, a new study has found.
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 similiar 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.
"These are more expensive mortgages," he said. "They are more likely to fail."
African-American and Latino communities are likely to lose $373 billion in declining property values between 2009 and 2012.
The report also found that an estimated 2.5 million foreclosures were completed between 2007 and the end of 2009. This is roughly one in every 20 mortgages outstanding at the time of the crisis.
More than eight in 10 of these foreclosures were on owner-occupied homes with mortgage originated between 2005 and 2008.
An estimated 5.7 additional foreclosures are imminent.
"This crisis still has a long way to go," Ernst said.
http://money.cnn.com/2010/06/18/news/economy/african-americans_latinos_foreclosure/index.htm
NEW YORK (CNNMoney.com) -- The mortgage meltdown is hitting the African-American and Latino communities harder than whites, a new study has found.
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 similiar 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.
"These are more expensive mortgages," he said. "They are more likely to fail."
African-American and Latino communities are likely to lose $373 billion in declining property values between 2009 and 2012.
The report also found that an estimated 2.5 million foreclosures were completed between 2007 and the end of 2009. This is roughly one in every 20 mortgages outstanding at the time of the crisis.
More than eight in 10 of these foreclosures were on owner-occupied homes with mortgage originated between 2005 and 2008.
An estimated 5.7 additional foreclosures are imminent.
"This crisis still has a long way to go," Ernst said.
http://money.cnn.com/2010/06/18/news/economy/african-americans_latinos_foreclosure/index.htm