Big report out today on the housing crisis by the Center for Responsible Lending.
A lot of stunning numbers and some you would expect. CRL studied 27 million mortgages to get their stats.
1. We are not even halfway through the foreclosure crisis. Among homeowners who received loans between 2004 and 2008, 2.7 million households, or 6.4 percent, had already lost their homes to foreclosure as of February 2011.3 Strikingly, an additional 8.3 percent–3.6 million households–were still at immediate, serious risk of losing their homes. Affected families span all races, ethnicities, and income levels. It is notable that these serious delinquencies represent only a sub-set of likely foreclosures ahead, since they do not include foreclosures on loans originated outside our origination time frame or those that are not yet at imminent risk.
2. Loan characteristics and foreclosures are strongly linked. The study examines outcomes on different loan types and finds a pattern of higher foreclosures and delinquencies associated with specific mortgage characteristics. Loans originated by brokers, hybrid adjustable-rate mortgages (“ARMs,” such as 2/28s), option ARMs, loans with prepayment penalties, and loans with high interest rates (a proxy for subprime mortgages) all have much higher rates of completed foreclosures and are more likely to be seriously delinquent.
3. Although the majority of affected borrowers have been white, African-American and Latino borrowers are almost twice as likely to have been impacted by the crisis. Approximately one quarter of all Latino and African-American borrowers have lost their home to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers. Asian borrowers have fared better as a whole than Latino and African-American borrowers, but they, too, have been disproportionately affected, especially in some metropolitan areas.
4. Racial and ethnic differences in foreclosure rates persist even after accounting for differences in borrower incomes. Racial and ethnic disparities in foreclosure rates cannot be explained by income, since disparities persist even among higher-income groups. For example, approximately 10 percent of higher-income African-American borrowers and 15 percent of higher-income Latino borrowers have lost their home to foreclosure, compared with 4.6 percent of higherincome non-Hispanic white borrowers. Overall, low- and moderate-income African Americans and middle- and higher-income Latinos have experienced the highest foreclosure rates.
5. Loan type and race and ethnicity are strongly linked. African Americans and Latinos were much more likely to receive high interest rate (subprime) loans and loans
with features that are associated with higher foreclosures, specifically prepayment penalties and hybrid or option ARMs. These disparities were evident even comparing
borrowers within the same credit score ranges. In fact, the disparities were especially pronounced for borrowers with higher credit scores. For example, among borrowers with a FICO score of over 660 (indicating good credit), African Americans and Latinos received a high interest rate loan more than three times as often as white borrowers.
6. Foreclosure rates by income groupings vary by housing markets. In areas of the country that had weak or moderate housing price appreciation during the period leading up to the crisis, foreclosure rates are highest for low-income borrowers and lowest for higher-income borrowers. For example, low- and moderate-income borrowers have been most affected in cities such as Detroit, Cleveland, and St. Louis. However, in areas that had strong housing appreciation before the collapse, the opposite is true. In boom-market metropolitan areas located in California,Nevada and Arizona, foreclosure rates are highest among middle and higher-income borrowers. These patterns are consistent with the incidence of high-risk mortgages received by different groups of borrowers across the different housing markets.
7. Impacts vary by neighborhood. Low- and moderate-income neighborhoods and neighborhoods with high concentrations of minority residents have been hit especially hard by the foreclosure crisis. Nearly 25 percent of loans in low-income neighborhoods
and 20 percent of loans in high-minority neighborhoods have been foreclosed upon or are seriously delinquent, with significant implications for the long-term economic viability of these communities.