Foreclosed Homes Devastates Black and Latino Communities

For the past two years, foreclosed homes spread across the New York region at a rapid pace. According to the “New York Times” study of foreclosure filings and federal mortgage data since 2005, the foreclosure crisis caused devastation on the housing market in the New York region.

It spread so fast that in Long Island alone, 6 percent of mortgage loans are 90 days delinquent. However, the report noted that the most devastating effect of Foreclosure is felt on black and Latino communities. Loan defaults occur as often as three times in minority households than in whites,

The report also showed that 85 percent of neighborhoods hardest hit by foreclosures have a big concentration of black and Latino homeowners. Most of their neighborhoods have default rate not less than twice the regional average.

In the city of New York, a black middle class household makes over $68,000 annually and are five times more likely to have subprime mortgages with high interest similar to whites who have lower incomes.

It used to be that black homeownership was rare because of zoning practices and discriminatory lending that discouraged blacks from purchasing properties. Today, black homeownership is rising and so is the sector’s foreclosure problem. Most black families lose their savings and damage their credit, their neighbors seeing a decline in their home values and renters being evicted.

Meanwhile, a study released by the Pew Research Center showed that foreclosure rate is highest in cities and towns with predominantly black and Latino residents. And the study cited the New York region as one of the areas badly affected by the foreclosure crisis.

Black and other minorities used to have difficulty in obtaining bank loans. However, for the past several years, minorities have become primary targets of banks marketing subprime loans.

According to the study, subprime mortgage loans accounted for 50 percent of all loans issued to black middle income homeowners in the New York region between 2005 and 2006. In fact, the National Association for the Advancement of Colored People filed a class action lawsuit against several banks for alleged unfair lending practices.

In his speech at the New York University, U.S. Housing and Urban Development Secretary Shaun Donovan said that about 33 percent of subprime mortgages issued in New York in 2007 went to homeowners who have credit scores that qualified them for conventional loans with prevailing rate. New York’s foreclose activity increased by 32 percent in the first quarter of 2009, according to data release by RealtyTrac.

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