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The ""Center for Responsible Lending (CRL),"":http://www.responsiblelending.org/ a nonprofit research and policy group, rests the bulk of the blame for the recent foreclosure crisis in the realm of ""predatory lending."" The group finds disparities in the types of loans that were issued to minorities prior to the foreclosure crisis and finds disproportionate affects of the staggering market on those minorities.
[IMAGE]""The predatory lending practices in the mortgage market caused the worst foreclosure epidemic in U.S. history,"" CRL stated in its December report, _The State of Lending in America & Its Impact on U.S. Households._
According to CRL's estimate, about 3.3 million homes with loans originated from 2004 to 2008 have been foreclosed as of February of this year. Another 3.2 million loans originated over the same period were 60 or more days delinquent or in foreclosure as of February.
CRL admited, ""[f]oreclosures have touched almost every U.S. community, affecting borrowers across racial, ethnic, and income lines."" However, the group asserted, ""The disparate impact of the foreclosure crisis on borrowers of color reflects that African-American and Latino borrowers were far more likely to receive higher-rate and other risky loan terms than white borrowers.""
While a greater number of white and middle- or higher-income Americans lost their homes to foreclosure than minority or low-income Americans, the proportion of minorities who underwent foreclosure in recent years is significantly higher.
About 11 percent of African-American homeowners and 14 percent of Latino homeowners have had their homes foreclosed as of February. In contrast, 6 percent of non-Hispanic white borrowers have undergone foreclosure.
From 2004 through 2008, African-American borrowers were 2.8 times more likely to be placed into higher-rate loans than their white counterparts, according to CRL.
[COLUMN_BREAK]While foreclosures continue to work their way through the pipelines in many areas across the country, CRL continues to observe differences in the way minorities and non-minorities are treated in the mortgage industry.
Banks and lenders have significantly tightened credit over the past few years, but CRL says the impact is greater among minorities. Conventional, non-government lending to white borrowers declined 67 percent between 2000 and 2010.
Among African-American borrowers, the decline is 83 percent, and among Latino borrowers the decline is 75 percent.
CRL understands, ""[t]hese current trends in mortgage credit may be temporary responses to the crisis and could abate once the market fully adjusts to the new regulations and protections of Dodd-Frank.""
However, the CRL report stated, ""It is critical, however, that this dynamic not result in a new, permanent ‘dual mortgage market,' where only the highest-wealth borrowers with near-perfect credit can gain access the conventional market, while lower-income and minority borrowers who can be successful home owners are relegated to more expensive FHA loans, or find credit largely unavailable.""
*A glance at numbers from the report*
*12 million homes have entered the foreclosure process between January 2007 and June 2012
*2.1 million homes were in foreclosure inventory, on their way to foreclosure but not yet there by the middle of 2012
*Over 1.9 million white borrowers and 2.3 million middle- or higher-income borrowers who received their loans between 2004 and 2008 had lost their homes to foreclosure as of February 2012
*11% of Among African-American borrowers and 14% of Latino borrowers have lost their home to foreclosure compared to 8% of Asian borrowers and 6% of non-Hispanic whites
*African-American borrowers were 2.8 times as likely to receive a higher-rate loan as a white borrower, and Latino borrowers were 2.3 times as likely to receive a loan with a prepayment penalty
*$1.95 trillion in home equity has been lost to property owners who happen to live in proximity to foreclosed homes, according to CRL’s estimate
*400 banks have failed since 2007, compared with the 2000â€"2007 period in which only 26 banks failed
*Overall housing prices are down 17.4% from five years ago
