Latinos and African Americans were more likely to take out high-cost subprime mortgages during the boom, and have been foreclosed on at a higher rate than white borrowers, according to an analysis of more than 600,000 California foreclosures by the Center for Responsible Lending.

The study found Latinos are foreclosed on in California at a rate that’s 2.3 times the rate for whites, and that the foreclosure rate for African Americans is 1.9 times that of white borrowers. As a result, Latino borrowers account for almost half of all California foreclosures.

While the study found that major cities like Los Angeles and Sacramento have seen the greatest number of foreclosures, communities in the Central Valley and Inland Empire have the highest foreclosure concentrations.

The study, which looked at foreclosures that occurred between September 2006 and November 2009, found that most were on loans originated in 2005, (28.1 percent), 2006 (41.5 percent) and 2007 (19.7 percent).

Nationwide In 2006, roughly half of African-American borrowers (53.7 percent) and Hispanic borrowers (46.5 percent) took out higher-rate mortgages, compared to 17.7 percent of white borrowers, the study said, citing data collected by federal regulators.

The Center for Responsible Lending urged that loan servicers be required to complete reviews of loan-modification applications before beginning the foreclosure process, as stipulated by SB 1275, a bill being considered by California lawmakers.

The Center for Responsible Lending also advocates:

  • Incorporating principal reduction into loan-modification programs, especially in areas where housing prices have contributed to a lack of affordability.
  • Allowing bankruptcy judges to reduce principal on residential mortgages.
  • Expanding funding for housing counseling agencies and legal aid providers.
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