2Center for American Progress | How “Occupy Our Homes” Speaks to Communities of Color
oreclosure han heir whie counerpars. A he same ime, ighened credi sandardsin he wake o he nancial crisis have made i harder or borrowers o color o accessaordable morgages, possibly creaing new barriers o homeownership.o be sure, whie households, which ook ou he majoriy o high-cos, risky, and sub-prime loans, have been shaken by recen shocks in he housing marke. Bu no mater how you measure i, communiies o color were a he epicener o he quake, and hey’re silleeling he aershocks. Tis issue brie explores wha happened and he consequences o predaory lending among communiies o color, and hen makes a series o recommenda-ions abou how o resolve he crisis so aply highlighed by he Occupy movemen.
Communities o color were a primary target o predatory lendingduring the housing bubble
A major conribuor o he oreclosure crisis was he inroducion and rampan spreado predaory morgage producs such as adjusable-rae morgages wih pricing gim-micks designed o encourage poenial homeowners o borrow ar more han hey couldmanage. Much o his lending was done in he so-called privae-label securiies markecreaed by Wall Sree, wih many lenders ully aware ha borrowers would no likely beable o pay back he loan in ull.Communiies o color were disproporionaely argeed or hese predaory loans. Fordecades, hese areas had sruggled o ge access o good, radiional orms o credi. Ashe housing bubble grew beween 2004 and 2008, Arican-American or Laino borrow-ers wih “good credi” were almos hree imes as likely o receive risky subprime loanscompared o heir whie counerpars, according o heCener or Responsible Lending. Asian borrowers wih good credi were almos wice as likely o receive a risky adjus-able-rae morgage. All old, borrowers o color were more han30 percen more likely o receive more cosly morgages, despie oen boasing credi raings and oher crediqualicaions ha would have enabled hem o ge a beter morgage.
The ongoing oreclosure crisis disproportionately hit communities o color
Arican-American and Laino borrowers are almos wice as likely o have been harmed by he oreclosure crisis, according o heCener or Responsible Lending. For loans origi-naed beween 2004 and 2008, roughly 25 percen o Arican Americans and Lainos haveeiher los heir homes o oreclosure or are a leas 60 days behind on heir morgage pay-mens, compared o jus 12 percen o heir whie counerpars. Te gap is even larger inneighborhoods o color, where oreclosure raes are almos hree imes hose in predomi-nanly whie areas, according oHarvard’s Join Cener or Housing Sudies.