The Leadership Conference on Civil and Human Rights

A new William C. Velasquez Institute (WCVI) study finds that the foreclosure crisis has had a disproportionate impact on Black and Latino communities – and that the recession has made it worse.

Black and Latino homeowners were more likely to be the victims of predatory lending during the peak of the housing boom.  Fifty-five percent of Blacks and 46 percent of Latinos were issued subprime loans, even when most of them qualified for regular loans, according the WCVI's analysis of RealtyTrac data.

As a result, Blacks and Latinos were two-to-nine times more likely than White homeowners in high foreclosure regions like California, Nevada, and Florida to hold high-cost mortgage loans, putting them at greater risk of default and foreclosure.  Higher rates of unemployment among Blacks and Latinos in the wake of a devastating recession only further aggravate such risk.

Home foreclosure often turns into a perpetual cycle because the foreclosure of one home lowers the value of other nearby homes. In order to stop this cycle, the WCVI study includes several policy recommendations:

• Expand eligibility requirements for the Making Home Affordable program to target borrowers who are at a high risk of foreclosure;
• Reform bankruptcy laws to enable restructuring of mortgage terms;
• Underwrite Fannie Mae and Freddie Mac mortgages to allow private sector refinancing at a 4.5 percent interest rate;
• Expand the Federal Tax Credit for first-time homebuyers to have a greater impact in more expensive markets.