With close to 6 million homes at risk of being seized by banks, the foreclosure crisis continues to deepen, with the greatest risk to homeowners of color, according to a new study by the Center for Responsible Lending.
So far 2.5 million homes have been lost. While the majority of these belonged to white working-class families, black and Latino families have experienced far higher rates of foreclosures and also a higher rate of evictions.
“While about 4.5 percent of white borrowers lost their homes to foreclosure during that period, black and Latino borrowers had 7.9 and 7.7 percent foreclosure rates, respectively. That means that blacks and Latinos were more than 70 percent more likely to lose their homes,” writes the Washington Post.
Significantly the study demonstrates that even high-income Blacks and Latinos experience higher levels of foreclosure.
Other minorities are affected as well.
“American Indian (16.5%), Native Hawaiian or other Pacific Islanders (18.6%), and Asian borrowers (15.7%) all also show an increased likelihood of being at-risk,” write the authors of the report.
Latinos have faced the most severe losses.
Federal efforts to abate the crisis, led by the Treasury Department, so far have made modest but insufficient headway. The Making Homes Affordable program is assisting about one million homeowners in preventing foreclosures, according to the Congressional Oversight Panel. “About 230,000 U.S. homeowners had secured permanent loan modification under the program through last month,” but many homeowners are in limbo, cautions the Washington Post.
The mortgage crisis has precipitated the greatest wealth loss in Black and Latino history in the U.S. In coming years it is expected that these losses will continue to grow. The Center for Responsible Lending says, “Furthermore, the indirect losses in wealth that result from foreclosures as a result of depreciation to nearby properties will disproportionately impact communities of color. We estimate that, between 2009 and 2012, $193 billion and $180 billion, respectively, will have been drained from African American and Latino communities in these indirect spillover losses alone.”
Earlier on, inability to pay back expensive subprime loans were the chief source of the crisis. Because of high unemployment, traditional mortgages now comprise the majority of foreclosures. The NAACP, along with labor unions and community organizations, is calling for national march for jobs and justice in Washington on Oct. 2.
The Republican Party has scuttled Obama administration efforts to pass jobs legislation and extend unemployment insurance.
Federal officials are now pursing criminal investigations of banking institutions involved in the crisis, like Goldman Sachs, for fraud.