Foreclosure1 Blog

Statistics never lie. As per facts and figures it is clear that the minorities bear the major share of the foreclosure crisis.

Minnesota came 12th in the national foreclosure race exposing the fact that it is minorities who were duped. In 2006, in Minnesota of the total number of mortgages 42% of the sub-prime loans were saddled on minorities while the Whites accounted for 17% only as per facts released by The Annual Minority Lending Report. The disparity in figures in Minnesota is wider than that of the nation. Nationally of all the mortgages 39% were sub-prime mortgage taken by minorities as compared to 18% of the Whites. Thus foreclosures are more likely to affect the Afro-Americans.

Last year there was a sharp lull in the house buying market in Minnesota notably amongst the Afro-Americans. But across the country among the minorities it had picked up by 1% during the previous year. Housing experts were not surprised either by the disparity or the decline. The records speak for it that the minority borrowers have been palmed of sub-prime loans. This point is agreed upon by all but there is difference of opinion as to why it is so.

The lenders, be they banks or financial houses, charge higher rates of interest for sub-prime loans because of the risk they have to undertake. These loans are primarily given out to those who have poor credit history and weak income figures. Housing activists are highly critical of lenders taking advantage of the vulnerability of the minorities and exposing them to the horrors of foreclosures.

The Executive Director of a Minnesota based non-profit group is of the opinion that such disparities show up difference in levels of financial education. The majority of them fall for gullible talk by the lenders without being aware of the foreclosure implications. His organization is supported by the mortgage industry and the government and is trying to educate real estate agents, lenders and minority borrowers trying to own a house about the nitty-gritty of mortgage products.

Another expert opines that the report is like a weather forecaster of foreclosures pointing to the route the dark clouds will follow. The cluster of foreclosures hone in on minority localities. Minnesota reports are so stark and clear because of the clear segregation of the town based on colour. In a mixed neighborhood the disparity is not so sharp.

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