Latino and African American borrowers have experienced significantly higher foreclosure rates than non-Hispanic borrowers in California, according to a study released today by the Center for Responsible Lending.
In fact, 48 percent of foreclosures in the state are tied to Latino borrowers, while another eight percent have been on African Americans.
These borrowers have experienced foreclosure rates 2.3 and 1.9 times higher that of non-Hispanic white borrowers, probably because they were much more likely to receive high-cost subprime loans.
“NCLR has sounded the alarm for the last two years about the devastating impact foreclosures have had on communities of color, but this report reveals a shocking level of concentration among Latino homeowners in California,” said Janet Murguía, President and CEO of the National Council of La Raza, in the press release.
“Dishonest brokers peddled their high-cost loans, steered our families into risky products designed to fail and now Latinos and all of California are paying the price.”
The report found that over three-quarters of the more than 600,000 foreclosures analyzed were not “McMansions,” but rather modest properties priced below the median value in their area at time of loan origination.
The CRL has recommended that loan servicers be required to complete a review of a loan modification application before initiating the foreclosure process, the central feature of California bill SB 1275, which is nearing a vote.
They also want the ban lifted on judicial modifications of principal residence mortgages by bankruptcy judges, referred to as “mortgage cram downs.”