Study Shows Race Affects Likelihood Of Foreclosure

A study released last week by the Center for Responsible Lending has revealed a startling trend in foreclosures, although experts say that the results are far from surprising.

The study titled “Lost Ground, 2011: Disparities in Mortgage Lending and foreclosures” supports claims that African Americans and Latinos are “more than twice as likely to lose their home as white households.”

The latest report from the Center for Responsible Lending builds on previous studies in the field of ethnicity and foreclosure. In 2006, they published a study which predicted the sub-prime housing crisis well before it came into being.

They detailed the potential impact it would have on homeowners from African American and Latino communities based on the above average subprime loans given to these ethnic groups. It was estimated that 17% of Latino homeowners, 11% of African American homeowners and 7% of non Hispanic white homeowners have already lost, or are at risk of losing, their homes.

The latest report follows on from this previous research and looks at three issues,

First, we consider who has lost their home to foreclosure, and who is still at risk. We look at both the race/ethnicity and income of borrowers, and explore how the impact of foreclosures on different socioeconomic and demographic groups varies depending on where they live. Second, we look at what kind of mortgages different borrowers received to better understand the relationship between loan characteristics and defaults. Finally, we examine where the crisis has had the greatest impact, assessing which areas and types of neighbor- hoods have been most affected,

said the report.

One of the most noted findings of the report is the suggestion that the current foreclosure crisis is far from over. The study states,

among homeowners who received loans between 2004 and 2008, 2.7 million households, or 6.4 percent, had already lost their homes to foreclosure as of February 2011. Strikingly, an additional 8.3 percent – 3.6 million households – were still at immediate, serious risk of losing their homes.

The study also found that around 25 percent of all Latino or African American borrowers have either had their homes foreclosed on or else they are in serious delinquency. This is compared with below 12 percent of white borrowers who are in the same position. This shows that Latinos are more likely to be affected by foreclosures than white people are.

Similar Personal Finance News

• Verizon Study Shows Insufficient Protection For Credit Card Data – October 11, 2011
• Report Shows Patience Improves Credit Worthiness – December 9, 2011
• New Study Involving Minimum Payments – November 23, 2011
• Bankruptcy Filing Decreases In The First Quarter – April 16, 2012
• Credit Unions Next Major Lenders To Be – February 17, 2012
• Supreme Court Brings Arbitration To Card Agreements Again – February 24, 2012
• Fed Survey Shows Drop In Student Credit Cards – August 4, 2011