According to a new report by the Center for Responsible Lending, the U.S.
foreclosure crisis is not even halfway over. The consumer advocacy group found
that 2.7 million U.S. households that took out mortgages between 2004 and 2008
have succumbed to foreclosure. Additionally, the report estimated that another
3.6 million borrowers are at least 60 days behind on their mortgage payments or
in the process of a foreclosure. CRL's findings underscore the belief that
riskier loan products caused the housing bubble to burst. "The foreclosure rates
are consistently worse for borrowers who received high-risk loan products that
were aggressively marketed before the housing crash," read the report. Loans
with higher interest rates and those with pre-payment penalties were more than
three times as likely to end in foreclosures than less expensive loans.
Additionally, adjustable-rate mortgages with increased interest rates at five
years or less were about four times more likely to end with a borrower losing
the home. The report found that white, middle-class, and high-income households
make up the majority of those who have lost their homes in the mortgage crash.
However, minority and lower-income borrowers have been disproportionately
affected by the crisis, likely because they had less in savings when the bubble
burst. Foreclosures occurred at a pace of 11.9 percent for Latinos, 9.8 percent
for African Americans, and 6.6 percent for Asian Americans but at a rate of just
5.1 percent for whites.