Afro-Netizen: Blacks suffer most in U.S. foreclosure surge

Tuesday, March 20, 2007

Blacks suffer most in U.S. foreclosure surge

Blacks 3.8 times more likely than whites to receive a higher-cost home loan

BOSTON - (Reuters) Barbara Anderson and her husband know racism. Among the first blacks to move into an Ohio neighborhood 25 years ago, she watched in horror as white neighbors burned her garage nearly to the ground.

Fast-forward to 2007 and Anderson talks of a different sort of discrimination: brokers of subprime mortgages who prey on borrowers with weak credit histories like the Andersons, who raised eight children in Cleveland’s Slavic Village district.

“These subprime lenders target you to take you through disaster,” said Anderson, 59, who filed for bankruptcy after a legal tussle with a subprime lender, a “nightmare” that she said ended four years ago when her home was nearly foreclosed.

“I was fortunate. I went to another bank that decided to give me a chance with a new loan. The day that happened my headache stopped, my blood pressure lowered, my sick stomach went away, and it was because now I could see some daylight.”

Across the United States, blacks and Hispanics are more likely to get a high-cost, subprime mortgage when buying a home than whites, a major factor in a wave of foreclosures in poor, often black neighborhoods nationwide as a housing slowdown puts millions of “subprime” borrowers at risk of default.

Even more troubling, real-estate industry analysts say, is an alarming proportion of blacks and Hispanics who received subprime loans by predatory lenders even when their credit picture was good enough to deserve a cheaper loan.

In six major U.S. cities, black borrowers were 3.8 times more likely than whites to receive a higher-cost home loan, and Hispanic borrowers were 3.6 times more likely, according to a study released this month by a group of fair housing agencies.

“Blacks and Latinos have lower incomes and less wealth, less steady employment and lower credit ratings, so a completely neutral and fair credit-rating system would still give a higher percentage of subprime loans to minorities,” said Jim Campen, a University of Massachusetts economist who contributed to the study.

“But the problem is exacerbated by a financial system which isn’t fair,” he said.

In greater Boston, 71 percent of blacks earning above $153,000 in 2005 took out mortgages with high interest rates, compared to just 9.4 percent of whites, while about 70 percent of black and Hispanic borrowers with incomes between $92,000 and $152,000 received high-interest rate home loans, compared to 17 percent for whites, according to his research.

“It’s a huge disparity,” he said. High-cost mortgages usually have interest rates at least 3 percentage points above conventional mortgages.

Afro-Netizen on Tuesday, March 20, 2007 at 04:19 PM in Community & Consumer Activism | Permalink

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Tuesday, March 20, 2007

Blacks suffer most in U.S. foreclosure surge

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