Report: Minorities Hit by Foreclosures [USA]

Author: Juliana Barbassa, Associated Press, Published on: 6 March 2008

Subprime lenders that went out of business with the industry's collapse targeted minority neighborhoods, leaving them to struggle disproportionately with foreclosures and crumbling home values, according to a new report...[by] the Neighborhood Economic Development Advocacy Project [NEDAP]... The study analyzed the geographic operating patterns of 35 high-risk lenders that were very active in 2006 but that went bankrupt, were closed or sold in 2007 as the industry imploded. Chief among them were New Century Mortgage Corp., WMC Mortgage Corp. [part of General Electric], Fremont Investment & Loan [part of Fremont General], and Argent Mortgage [formerly part of Ameriquest/ACC Capital, now part of Citigroup]... Advocacy groups have said poor and minority borrowers who qualified for traditional loans were nevertheless steered into risky adjustable mortgages. The concentration of subprime loans happened in low-income areas, but also in middle-class minority communities...[Saara Nifici of NEDAP] said. In these cases, "race and ethnicity played a bigger part" in lending decisions than income, she said. This concentration means these minority communities will shoulder most of the negative impacts of the subprime crisis — foreclosures, sinking property values, lower tax bases, abandoned homes and higher crime. [also refers to Wells Fargo]

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Related companies: ACC Capital Holdings Citigroup General Electric Wells Fargo