Foreclosures by Race and Ethnicity: The Demographics of a Crisis

The ongoing foreclosure crisis has been a disaster for many American communities – especially communities of color. According to the June 18, report by the Center for Responsible Lending (CRL), approximately 17% of Latino homeowners and 11% of African-American homeowners have lost their homes due to foreclosure or who are at “imminent risk” of foreclosure. According to the report, imminent risk is defined as two or more payments behind or in foreclosure process.

There is no single set of numbers that depict the story. CRL used several datasets to calculate the impact of foreclosures on people of color. Regardless of which database, compilation, or tabulation system used by CRL, the numbers add up the same and the results are disturbing. Of importance, is that these disparities hold across all income lines.

Among the report's findings:

• An estimated 2.5 million foreclosures were completed from 2007-2009 and an estimated 5.7 are imminent. (Independent estimates have suggested that up to 13 million homes will be lost through 2014.)
• Among completed foreclosures, most on mortgages made between 2005 and 2008, CRL estimates that 56 percent involved a white family. But, black and Hispanic families have received a disproportionate share, even when accounting for income: Nearly 8 percent of both groups have already lost a home, compared with 4.5 percent of white borrowers.
• The great majority of homes lost were owner occupied, as are those at imminent risk of being lost.
“As Congress finishes financial reform legislation, the rules on home lending need to get stronger, not weaker,” said Mike Calhoun, CRL president. “We need to make sure a foreclosure crisis of this type never happens again, and, though so many homes have been lost, it's not too late to prevent more damage."

To reverse the foreclosure trend, the CRL recommends policymakers strengthen efforts to prevent needless foreclosures. While the CRL praises the government’s volunteer Home Affordable Modification Program, it feels it doesn't go far enough in holding lenders' feet to the fire. CRL suggests a multipronged approach to mortgage modification that includes requiring all servicers to engage in loss mitigation and providing authority to bankruptcy judges to modify mortgages on principal residences.

To read the full report, go to….

http://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-and-ethnicity.html