The effects of the housing market’s collapse can be felt far and wide, though perhaps no more so than by Latinos and other communities of color.
While the overall number of foreclosure filings has recently decreased, foreclosure remains a disproportionately significant problem for these communities. The continued instability that Latinos and other communities of color face in the housing market is particularly troubling because housing and homeownership is the best way for these communities to build their wealth and assets.
Prior to the housing market’s collapse in the final years of the Bush administration, Latinos were disproportionately targeted for risky subprime loans and were victims of predatory lending practices from major banks. In some cases, people of color were pushed into subprime loans by these lenders, even when their income and credit scores qualified them for a less-expensive mortgage. One study of 14 major banks found that this kind of discrimination was systematic: 30.9 percent of Hispanics and 41.5 percent of African Americans were offered these risky, expensive loans, while only 17.8 percent of whites were offered a similar mortgage.
Considering that subprime mortgages can add over $100,000 in interest payments over the course of the loan repayment, these figures are especially troubling.
In the wake of the housing and financial crises and the Great Recession of 2007-2009, Latinos and other communities of color continue to bear the brunt of the struggling housing market. A Latino Decisions poll revealed just how painful the housing market collapse has been for these communities. Over half of Latinos interviewed admitted to having used up all or most of their savings in order to make pricey mortgage or rent payments, and 34 percent have been forced to forego basic necessities such as food, utilities, and other bills in an attempt to make ends meet and not default on these obligations. Falling home prices only compound these problems, and approximately 31 percent of homeowners of color now find themselves “underwater,” or owing more in mortgage payments than the market value of their home, which is about eight percentage points higher than the national average.
Latinos are also disproportionately plagued by foreclosure. The current foreclosure rate among Latinos is staggering. They face a foreclosure rate of 11.9 percent, significantly higher than the foreclosure rate among African Americans (9.8 percent), and appallingly higher than among whites (5 percent), according to the State of Communities of Color report. Latinos are also twice as likely as whites to be at risk of foreclosure today. Approximately 25 percent of Latinos and African Americans have been foreclosed upon or are struggling with serious delinquency, in comparison to just 12 percent of whites.
Disconcertingly, these discrepancies remain when differences in income and credit rating are accounted for.