Latinos, blacks being hurt harder in U.S. foreclosure crisis
LOS ANGELES, Nov. 23 (Xinhua) -- Two new reports show mortgage foreclosure is still a serious problem in the United States, with the latino and black communities being hurt harder than the whites.
A report by the Mortgage Bankers Association shows that, overall, 14.41 percent of all U.S. home loans were in foreclosure or at least 30 days past due at the end of the third quarter, which means one in seven was past due. This is up from 13.16 percent in the second quarter of this year.
The ratio is the highest level since the organization began releasing the report in 1972. The foreclosure situation has been deteriorating since the beginning of this year, when the ratio was one in 10 loans past due.
Home foreclosures are likely to keep climbing through all of next year, despite stabilizing housing prices in some areas, according to the report.
California, Florida, Nevada and Arizona are the four Sun Belt states where the housing bubble inflated the most and exotic lending was most prevalent, and these accounted for 43 percent of the foreclosures started in the third quarter.
Minorities, including latinos and blacks, have been especially hurt by the ongoing mortgage foreclosure wave that began in 2005, according to a study released by William C. Velasquez Institute (WCVI).
The study, entitled The Continuing Home Foreclosure Tsunami: Disproportionate Impacts on Black and Latino Communities, examines the economic impact the foreclosure crisis has had on communities of color.
"The study finds that banks were two to nine more times likely to offer high cost mortgages to blacks and latinos than whites," said WCVI President Antonio Gonzalez.
"These predatory banking practices have directly led to the loss of homes, wealth, and prosperity in disproportionately more latino and black neighborhoods and could set back those communities for generations," Gonzalez added.
According to the study, at the peak of the recent housing expansion, a greater percentage of black and latino homeowners held high-cost mortgage instruments than whites in selected foreclosure regions and were at a proportionally greater risk of defaulting or vacating their homes.
Nationally, blacks and latinos had higher rates of unemployment than whites. The two groups lost thousands of jobs in home building and construction sectors in regions strongly affected by the foreclosure crisis. This aggravated an already acute risk of mortgage default and foreclosure among black and latino homeowners, the study said.
Blacks and latinos suffer in comparison to whites both in unemployment rates and having loans with higher interest rates.
Statistics show that the nationwide unemployment rate is 10.2 percent. For blacks, it's 15.7 percent and for latinos, 13.1 percent.
Some observers initially suggested the foreclosure crisis was primarily a regional phenomenon, but the recent study suggests that a new wave of foreclosures has reached other metropolitan areas as well.
Between 2007 and 2008, the metropolitan areas with the highest growth in foreclosure rates included Seattle, Minneapolis, Chicago and San Francisco; whereas the suburban growth of foreclosures has been traditionally in places such as Phoenix, Las Vegas, California's Inland Empire or southern Florida, according to the study.
Between 2005 and 2008, a total of approximately 7.6 million homes in the U.S. have been foreclosed, or an average of 7,030 home foreclosures each day over this period. This represents a combined loss of 308.7 billion dollars in domestic GDP, and this trend is expected to continue through 2012, says the study.
The Center for Responsible Lending (CRL) estimates approximately 2.4 million homes will fall under foreclosure by the end of the year 2009. By 2012, they project a total of 9 million foreclosures, or roughly 12 percent of the country's current owner-occupied housing stock.
The WCVI study said current housing relief interventions had limited reach, especially to black and latino homeowners saddled with expensive mortgages that were becoming worth more than their home.
Foreclosure rates are increasing in a different set of regional markets, suggesting that the housing crisis is not over and is entering a different phase.
The study called for the Obama Administration to allay the mortgage crisis and encourage housing consumption among blacks and latinos with targeted interventions.