Tuesday, December 15, 2009

Think-tank study finds foreclosure crisis hits blacks, Latinos hardest

By Deepti Hajela

The Associated Press

NEW YORK — African Americans and Latinos are at a disproportionate risk in the ongoing foreclosure crisis because they are more likely than whites to have higher-cost mortgage loans and face higher unemployment rates, a report says.

The new report from the San Antonio-based William C. Velasquez Institute called on the federal government to take steps, including reforming bankruptcy laws and expanding eligibility for mortgage modification, to help combat the crisis.

"If nothing is done, then the foreclosures will continue disproportionately hitting blacks and Latinos," said UCLA professor Raul Hinojosa, the study's author.

Hinojosa said continued foreclosures could wipe out billions of dollars in home equity amassed in those communities, and that even owners who kept their homes would be affected by lower property values in foreclosure-riddled neighborhoods.

"Not only are you wiping out this generation of black and Latino families," he said, "but those neighborhoods go into serious decline."

Jose Calderon, vice president of programs and policy for the Hispanic Federation, said the foreclosures carried a far-reaching impact.

"The social cohesion of our communities is being destroyed," he said.

Unemployment is now the primary force behind foreclosures. Borrowers are struggling with no income and lenders are having a harder time reworking troubled loans.

Blacks and Latinos suffer in comparison to whites both in unemployment rates and having loans with higher interest rates.

The nationwide unemployment rate is 10.2 percent. For blacks, it's 15.7 percent and for Latinos, 13.1 percent.

The report said that in regions across the country, blacks and Latinos were anywhere from two to nine times as likely as whites to have high-cost mortgages.

The William C. Velasquez Institute is a nonpartisan think tank that studies Hispanic issues.

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