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Recession Continues to Curb Blacks' Dream of Home Ownership

Washington Afro, News Report, Dorothy Rowley Posted: May 18, 2009

May 16, 2009 -- In the past two decades, the U.S. saw rapid gains in Black home ownership, hailed as a tool for narrowing the racial gap and for passing on ones family legacy.

But those gains took a severe hit in the last two years amid the ongoing recession and foreclosure crisis, according to a report released this week by the Washington, D.C.based Pew Hispanic Center
.
That report found Blacks and Latinos experienced the sharpest reversal in home ownership in recent years among ethnic groups. Although Black households raised their ownership rate from 41.9 percent in 1995 to 49.4 percent in 2004, by 2008 Black home ownership had decreased to 47.5 percent.

Its definitely the economic circumstances, Rakesh Kochhar, the centers associate director told CNN. Officially, the recession began the fourth quarter of 2007, but Hispanic [and African-American] unemployment started rising sharply a year before that.

The weakened economy has resulted in more minorities facing foreclosure, and the ability of first-time buyers to secure a mortgage loan has decline.

In addition to the faltering economy, Blacks and Hispanics have traditionally been more likely to be rejected for mortgages. Since 2007, Hispanics have faired slightly better with lenders than Blacks, with mortgages usually approved for $197,000 and $168,000, respectively.

Pew generated its home ownership data from the Current Population Survey produced by the U.S. Census Bureau.

In 2007, Blacks and Hispanics borrowed higher amounts that did Whites with similar incomes, exposing themselves to greater debt relative to their incomes, the report said. On both counts the likelihood of higher-priced borrowing and higher debt relative to income the gap between minorities and Whites is greater among high-income households than among low-income households.

Pew also found that home ownership among people of color from 1995 to 2004 was disproportionately associated with subprime loans.

Compliance Tech, a firm that assists mortgage lenders, estimated that minorities accounted for 44 percent of all subprime loans from 2004 to 2006 with Hispanics slightly outnumbering Blacks.

U.S. Housing and Urban Development Secretary Shaun Donovan said this week the Obama administration is warning against homeowners who are threatened with foreclosure.

We want to make sure that while we rescue people from the edge and from foreclosure that we ensure that credit remains available and give African Americans access to the American dream, Donovan said.

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