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Report Says Black and Latino Borrowers Have Disproportionate Risk of Foreclosure

November 25, 2009

Our Rancho Cucamonga loan modification lawyers were disappointed, but not especially surprised, by a recent report showing disproportionate risk of foreclosure among some minority homeowners. The Associated Press reported Nov. 17 that the William C. Velasquez Institute, a nonpartisan think tank studying issues affecting Hispanics, issued a report the previous week saying black and Latino borrowers were at greater risk of foreclosure because of greater rates of subprime loans and higher unemployment than average. Author Raul Hinijosa, a professor at UCLA, said the ripple effects of foreclosures affected black and Latino homeowners not in foreclosure as well, thanks to lower property values and their effect on the greater community.

The study traced the foreclosure crisis from its start, as far back as 2005. Using data from selected metropolitan areas, it found that Latino and black homeowners were twice to nine times more likely than white homeowners to have high-cost mortgages. Those high-cost mortgages include subprime and "exotic" mortgages as well as conventional loans with high interest rates. The study also found greater rates of unemployment -- currently considered the major driver of foreclosures -- in the two subgroups. The national rate of unemployment is now 10.2%, the AP reported, but it's 13.1% among Latino workers and 15.7% among black workers. The report called on the federal government to stop the crisis by expanding eligibility for the Home Affordable Modification Plan, allowing bankruptcy cramdowns and expanding the federal homeownership tax credit to cover the greater cost of real estate in coastal areas.

As Placentia loan modification attorneys, we have known for some time that minority borrowers are more likely than whites to run into trouble with their mortgages. Studies and individual court cases have shown that racial prejudice drove some lenders to explicitly or implicitly target minorities for subprime loans. Given that subprime loans drove the first waves of foreclosures, it's not surprising that minorities are now seeing disproportionately high rates of foreclosures. Studies have also shown that minorities, particularly those without strong English language skills, are also more likely to be targets of predatory lending, another driver of foreclosures. And the disproportionate effect of unemployment on minority communities suggests that foreclosures in those communities will remain high into the future.

If you're facing foreclosure after a bad home loan or unfair treatment by your loan servicer, you should call Howard Law LLP right away. Our Fountain Valley loan modification lawyers represent people throughout California who need an attorney's help to negotiate a fair, sustainable loan modification. Our past efforts have helped homeowners secure changes to their loans that include lowered interest rates, changes to the repayment period and sometimes even restructuring of the loan itself. When a loan was unfair from the start because it was made through predatory lending, we can file a lawsuit right away to not only stop foreclosure, but cancel the loan and refund all of the payments you have made. In every loan modification case, our goal is to get our clients sustainable loan modifications that keep them in their homes for the long term.

Howard Law offers free, confidential consultations to all potential clients, so there's no risk and no further obligation from speaking to us. To set up a meeting, you can call us toll-free at 1-800-872-5925 or contact us through the Internet.