Foreclosures in State Hit Latino Homes Hardest

San Francisco Chronicle
August 18, 2010
Selna, Robert

A review of data collected on foreclosures in California reveals that Latino households suffered nearly 50 percent of home repossessions and that loan defaults are highly concentrated in the state's Central Valley, which features six of the top 10 California metro areas for foreclosure concentrations. According to the Center for Responsible Lending (CRL), Modesto, Merced, and Stockton have experienced the highest percentage of defaults, with the foreclosure percentage hovering around 16 percent in all three locations. Paul Leonard -- director of the California office for the Center for Responsible Lending -- calls the disproportionate numbers for Latinos "stunning" and says, "The data shows that high-cost loans correlate with foreclosures and that there was a big presence of subprime lending to the (Latino) demographic and in areas where there are concentrations of Latinos." The state's numbers also debunk some conventional beliefs about the foreclosure crisis, revealing that most defaulting borrowers were living in relatively modest homes rather than big homes and indicating that just over half of foreclosures related to refinanced loans. CRL hopes the reports will encourage lenders to aggressively pursue loan modifications and principal reductions as well as to invest in the regions most affected by the foreclosure crisis. Federal and state governments are working to try and help defaulting residents; and SB1275, a piece of state legislation that would require more of lenders before they initiate the foreclosure process, could come up for final approval any day now.
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