Non-Whites Favoured Targets Of Foreclosure In Kansas City

September 10th, 2007

Non-white and low-income groups seem to have been the favoured targets of the sub-prime loans with high interest rates. As such they are now the most susceptible group to feel the sting of foreclosures. This is according to a detailed study report about racial and income disparities in mortgage lending practices in 172 cities undertaken by ACORN. The survey is based on the data detailed under the Home Mortgage Disclosure Act.

The survey showed that in Kansas City there has been a high rate of sub-prime loans. Out of every 5 loans one belonged to the sub-prime category. Borrowers belonging to all races had availed of it. Nevertheless the trend showed that Afro-Americans were 2.9 times and Latinos 1.5 times more likely to opt for high-cost loans in comparison to their white peers. About one out of three amongst this non-white group were prone to go for refinancing. In other cities the picture was more or less the same with the non-whites being more exposed to high-cost borrowing. Kansas City seemed to be leading in this matter of disparities. 31.2% of the total number of loans made in Kansas City was in the sub-prime group and thus veritable sitting ducks when the countdown begins.

ACORN’s findings point to a 16% rise in sub-prime loans from 2005 – the time from which they started detailing their study. Its president Maude Hurd said these disadvantaged groups are the ones that most need the protection of ownership houses. Yet because of their weakness they have not been allowed to enter prime mortgage zone where the rates are relatively low and steady. As such they had no alternative but to opt for sub-prime to realize their ownership dreams. But the whole scheme has gone awry.

Economist Eaton from University of Missouri (Director of the Center for Economic Information) Kansas City said that he could not confirm these findings until he thoroughly scrutinized the matter. Nevertheless he admitted that Kansas City seems to be one of the worst hit pockets attacked by the sub-prime crisis and apprehended that worse days seemed to be ahead. Kansas City is one of the top ranking cities as regards foreclosure games.

The situation is so grave that Bush and his administration are sitting up and trying to find remedies anticipating further dark days ahead for consumers. Interest rates are all set to jump again.

Via