EthnicMajority

(San Francisco Chronicle) 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.

Full story…

(CNN Money) 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.

Full story…

In a recent New York Times article, the headline screams: “home ownership losses are greatest among minorities”. Given that African and Hispanic Americans were more likely to get subprime loans during the housing heyday up to 2006, you would think they would be the most negatively impacted by more recent foreclosures and more stringent mortgage approval standards.

In reviewing the research conducted by the Pew Research Center that the Times used to reach this conclusion, it does not appear that the news is as bad as the headline purports. Overall home ownership reached a peak of 69% in 2004 and declined to 67.8% in 2008. During the same time period, whites fell from 76.1% to 74.9%, Asians 60.8% to 59.1%, Blacks 49.4% to 47.5%, and Hispanics 49.8% to 48.9%. While home ownership rates declined more than the average for Asian and African Americans, the differences were marginal. And Hispanic declines were less than average, especially for more recent immigrants.

That said, the future does not look bright. African and Hispanic Americans are still two or three times more likely to get a subprime loan, pay 3 percentage points more for it, and borrow more for the same income levels when compared to whites.

This could lead to another foreclosure crisis, and we are still feeling the effects of the last one. But lets not jump the gun by making things sound worse than they really are today.

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