Race and the Foreclosure Crisis

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[The costs of foreclosure] are extensive, multifaceted and long-term, extending far beyond individual families to their neighbors, communities, cities and states. As the foreclosure crisis threatens the financial stability and mobility of families across the country, it will be particularly devastating to African-American and Latino families, who already lag their white counterparts in terms of income, wealth and educational attainment. Furthermore, the indirect losses in wealth that result from foreclosures as a result of depreciation to nearby properties will disproportionately impact communities of color. We estimate that, between 2009 and 2012, $193 and $180 billion, respectively, will have been drained from African-American and Latino communities in these indirect “spillover” losses alone.

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Even before the foreclosure crisis, our nation evidenced wide socioeconomic disparities. Home-ownership rates are much lower for African Americans and Latinos and, while homeownership rates have dropped for all populations since the beginning of the foreclosure crisis (down to 45.6 percent for African Americans, 48.5 percent for Latinos and 74.5 percent for non-Hispanic whites), these declines represent greater percentage changes for communities of color. In 2007, the median non-Hispanic white family reported $171,200 in net worth versus only $28,300 for non-white and Hispanic families and there are large gaps in educational attainment, with 46.8 percent and 33.1 percent of African-American and Latino adults having at least some college, compared to 59.3 percent for non-Hispanic whites. Communities of color also commonly experience higher crime and lower tax bases than predominately white neighborhoods. If foreclosures disproportionately impact communities of color, these economic and social disparities stand to grow worse.