More African-American and Hispanic Families Receive Foreclosures
With 17% of Latino and 11% of African-American homeowners having essentially already lost their homes and estimates that many more foreclosures are on the way, Shana Smith, president and CEO of the National Fair Housing Alliance, is encouraging Congress to hurry and pass an independent Consumer Financial Protection Agency.
“We also need servicers to do whatever is necessary to stop this hemorrhaging now. Enough is enough,” Smith said in response to a troubling new report from the Center for Responsible Lending.
The ongoing foreclosure crisis has slashed hundreds of billions of dollars in wealth from communities of color, according to a CRL, which says the wealth drain is the result of direct losses from foreclosures and also the decline in neighboring property values each foreclosure brings.
From 2009 to 2012, CRL said those living near a foreclosed property in African-American and Latino communities will have seen their home values drop by more than $350 billion—possibly exceeding the damage the Gulf states suffered from Hurricane Katrina. An estimated 2.5 million foreclosures were completed from 2007 to 2009 and an estimated 5.7 additional ones are imminent. (Independent estimates have suggested that up to 13 million homes will be lost through 2014.)
On completed foreclosures, most on mortgages made between 2005 and 2008, CRL estimates that 56% involved a white family. But African-American and Hispanic families have received a disproportionate share, even when accounting for income, nearly 8% of both groups have already lost a home, compared to 4.5% of white borrowers.
The great majority of homes lost were owner-occupied, as are those at imminent risk of being lost. “Whether we're talking about oil spills or housing catastrophes, it's clear that America needs to invest in prevention, clean-up and recovery," said CRL president Mike Calhoun.
"As Congress finishes financial reform legislation, the rules on home lending need to get stronger, not weaker. We need to make sure a foreclosure crisis of this type never happens again and, though so many homes have been lost, it's not too late to prevent more damage."
According to the biannual BAI & Finacle Index of Bank Consumer Sentiment, there is a growing divide between the way bankers and consumers view the banking industry. Consumer sentiment as a whole has declined.
“While consumers across geography, gender and generations are discouraged right now with the banking industry as a whole, when asked about their primary bank, there are significant consumer segments that respond positively to what their banks are doing for them,” said Ajay Nagarkatte, managing director, BAI Research.
“And we found that the people most likely to use financial services providers that are exclusively online or Internet based had the most positive views about their bank experience.”
Nagarkatte said there’s a sense among bankers that consumers may be slowly returning to spending, but the company’s research shows it’s likely slower than the bankers anticipate. In February 2010, 36% of bankers surveyed felt the economy was better vs. six months prior, a rise of 8%. Only 44% of consumers now feel strongly that their financial situation will improve as opposed to 47% who felt this way six months earlier.