Report on Pattern of California Foreclosures

A unique report was released by the Centre for Responsible Lending, which is a non profit research and public policy group. It concentrates on the racial make up of foreclosures in California. The most important finding is that loans taken by Hispanics are more likely to end in foreclosure than those taken by other racial groups.

The Report which is being described as “First of its kind’ and titled as ‘Dreams Deferred: Impact and Characteristics of the California Foreclosure Crisis” studied over half a million case of foreclosure in California and found the following facts.

Latinos accounted for 48% of foreclosed loans, followed by 33% by Non Hispanic Whites, 8% by African Americans and 6% by Asians. The centre in its analysis of data from government agencies and mortgage servicers found that almost half of the state’s foreclosures between 2006 October and 2009 November was accounted by Hispanics.

The study also reported that African Americans experienced high rates of foreclosures with them accounting for less than 6% loan originations but 8% of foreclosures. Asians accounted for 12% of loans but only 6% of foreclosures.

The study also reported on the kind of homes that were subjected to foreclosure. It was widely believed that most of these homes were like McMansions built with expensive loans, but the study revealed that 75% of loans were made for modest homes. This ascertained the fact that most home owners had not bought beyond their means as was widely believed during the crisis of foreclosures.

The report focused on the racial makeup of the foreclosure crisis. According to the report, African Americans and Latinos are more likely to take high cost sub prime mortgages with terms of loans that were most likely to result in defaults. In comparison, Non Hispanic Whites were handed more safe loans.

Another 2009 detailed report on home ownership by Latinos by the Wall Street Journal tried to examine why Latinos demanded so many home loans in the first place. The US census bureau reported that Hispanic home ownership grew by 47% between 2000 and 2007.The national figure for the same period was only a paltry 8%. According to another report, mortgages to Hispanics surged by 29% in 2005 itself with costly non prime mortgages soaring by 169%.

The Wall street Journal study found that Latino home demand was pushed by low income housing groups, Hispanic lawmakers, Congressional Hispanic housing initiatives, mortgage lenders and servicers. This push to seek the American Dream seems to have badly backfired.

Solutions offered by the CRL, comprises of lifting the ban on bankruptcy judges to modify mortgages and increase funding to agencies offering counseling and loan modification to home owners.