[credit provider=”Renzo Salazar / Getty”]
A sobering new report reveals homeowners facing foreclosures in the U.S. aren’t out of the woods just yet — especially low-income minority borrowers.The centre for Responsible Lending‘s study, “Lost Ground, 2011“, found more than 2.7 million homeowners given loans between 2004 and 2008 have already lost their homes to foreclosure, which accounts for 6.4 per cent of all borrowers at the time.
Another 3.6 million of the borrowers were 60 days or more behind on mortgage payments or on the brink of foreclosure.
“This suggests that, five years into this crisis, we are not even halfway through it,” the centre said.
The report showed a staggering chasm in foreclosure rates for minorities versus white homeowners, presenting evidence of just how prevalently minorities were targeted by brokers for high-risk loans.
African Americans with a credit score over 660 who went through a broker were nearly 8 per cent more likely to get a risky loan than those who did not use a broker, according to the study. Latinos were 13 per cent more likely to get a high-risk loan through a broker than without one.
[credit provider=”centre for Responsible Lending”]
“Minority borrowers were disproportionately targeted for mortgage products that were inherently more difficult to sustain, which has resulted in higher foreclosure and serious delinquency rates in communities of colour,” the report says.
Ethnicity aside, low-income homeowners across the board felt the brunt of the foreclosure crisis, with 7.3 per cent already having lost their homes to foreclosure. However, middle- and high-income households showed rates just 1 or 2 per cent lower for foreclosures, showing that the entire crisis can’t be blamed on policies that pushed homeownership in poor communities.
Region played a major role in rates of foreclosure as well. Atlanta, Las Vegas and Minneapolis-St. Paul saw rates higher than 20 per cent, putting a massive burden on low-income neighborhoods.
The centre is calling for major lending reform to eradicate the uneven playing field among homeowners in different income brackets and of varying ethnicity.
Click here to see the centre for Responsible Lending’s map with state-by-state foreclosure rates.