By: John Cutts, www.realestateproarticles.com
Hispanic Americans and African Americans are experiencing the brunt of the economic recession as indicated by the growing unemployment rate and foreclosed homes in states that are densely populated by minorities.
On the case of higher mortgage defaults and foreclosed homes, experts blamed banking requirements under the Community Redevelopment Act (CRA) which resulted to poor lending practices and underwriting standards.
With unemployment in this country on the rise, compounded with mortgage defaults and a restrictive foreclosure time table, minority borrowers have become the poster children of the current foreclosure crisis.
This growing number of foreclosed homes is especially evident in minority communities of Arizona, California and Nevada.
These states have experienced the most severe slump in home prices, and they carry the most number of Hispanic American families compared to other states in the country.
It has been the usual practice of banks to target first-time homebuyer minorities who were eager to invest in properties in the hope of joining the middle class. Hispanic Americans and African Americans were the favorites of banks such as Bank of America to convince to deposit in a category where only about 2 percent of the community used traditional banking institutions for saving and checking accounts.
The minorities were enticed by banks by offering preferred CRA programs. The law allowed banking institutions to lower entry requirements. This was followed by the issuance of a slew of subprime loans to minorities who had a limited understanding of risks involved in adjustable loan, in part because of the language barrier.
A series of well-documented events led, of course, to the crash of subprime loans resulting in more and more foreclosed homes in ethnic communities.
Another factor being blamed for the rising number of foreclosed homes is the foreclosure laws’ timing requirement. The traditional foreclosure process requires not less than 90 days from the issuance of notice of mortgage default to the listing and sale of distressed properties.
Distressed homeowners are given a grace period from 60 to 90 days to allow them to restore their loans before proceedings for foreclosure can commence.
Meanwhile, experts seem to agree that foreclosure rates will continue to soar in the coming months as more and more jobs are being lost. The result will be an increasing number of distressed homeowners who have lost the ability to refinance their home loans or even meet their monthly mortgage payments, for that matter.
And sadly, a great number of Hispanic Americans and African Americans are still expected to be added to the growing list of foreclosure victims.
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