Foreclosed homeowners returning to the rental market due to the subprime lending crisis are more likely to be members of a minority group.
Roughly four in 10 mortgages to minority homeowners in 2006 were of the subprime variety. flat is more than double the rate (18 percent) for white homeowners, according to the 2007 Annual Report on Minority Lending. The report was compiled and released in late 2007 by Washington, D.C.-based lending market consulting firm Compliance Technologies and Richmond, Va.-based Genworth Financial, a financial services company.
Home buying was down in 2006 across all ethnic groups except blacks, whose purchasing rate increased at a minimal 0.6 percent, the report noted. But blacks also had the highest share of subprime mortgages—a startlingly high 48 percent. And all this after home buying among all minority groups was on the rise.
“The momentum we've been seeing in minority home buying unfortunately came to a halt in 2006,” Compliance Technologies managing director Maurice Jourdain-Earl said in a statement accompanying the release of the report. “The level of subprime lending to minorities that the report shows is troubling.” According to the report, which analyzed 2004 to 2006 mortgage data that was made available under the Home Mortgage Disclosure Act, the states with the highest proportion of subprime lending made to minorities in 2006 included Michigan (60.2 percent), Missouri (48 percent), and Delaware (47.4 percent).
Compliance Technologies and Genworth Financial say that they believe the report's findings merit further investigation.
