You Don't Say: Minorities Hit Hardest By Foreclosures In NYC Metro Area

This is astoundingly obvious to anyone who's paid attention over the past decade. All the efforts to increase home ownership have been to increase the numbers of minorities who are able to buy homes.

Is it any wonder that minorities are among the hardest hit by the foreclosure mess and the downturn in the real estate market?

But the storm has fallen with a special ferocity on black and Latino homeowners, the analysis shows. Defaults occur three times as often in mostly minority census tracts as in mostly white ones. Eighty-five percent of the worst-hit neighborhoods — where the default rate is at least double the regional average — have a majority of black and Latino homeowners.

And the hardest blows rain down on the backbone of minority neighborhoods: the black middle class. In New York City, for example, black households making more than $68,000 a year are almost five times as likely to hold high-interest subprime mortgages as are whites of similar — or even lower — incomes.

This holds a special poignancy. Just four or five years ago, black homeownership was rising sharply, after decades in which discriminatory lending and zoning practices discouraged many blacks from buying. Now, as damage ripples outward, black families in foreclosure lose savings and credit, neighbors see the value of their homes decline, and renters are evicted.

That pattern plays out across the nation. A study released this week by the Pew Research Center also shows foreclosure taking the heaviest toll on counties that have black and Latino majorities, with the New York region among the badly hit.

Homeownership was seen as a positive for politicians across the political spectrum and affordable housing was the holy grail. Programs to get minorities into homes was thus a way to curry favor with the minorities, and to achieve political goals. The economics was ignored.

It is instructive to note that one of the New York Times own economics and business reporters found himself foreclosed because he got in way over his head and didn't think twice about the damage he was about to do to his personal finances.

The banking industry was told to lend - even to those who were not on solid financial footing. The money was coming fast and furious and it created a real estate bubble because many of those borrowers should never have been extended credit in the first place. They accelerated the demand for homes, pushing the prices ever higher. To compensate, the lenders were forced to extend even more credit - particularly to minorities who had been denied credit in the past (because they were high credit risks and lacked the ability to repay on the mortgage obligations that they were now suddenly deemed worthy to accept).

The merry-go-round had to stop, and when it did, all those who bought homes suddenly found themselves overextended and they couldn't turn around and sell their homes to someone else as the demand dried up.

Prices dropped. Fast.

And those foreclosures will hit minorities harder - because they are more likely to be subprime borrowers who lacked the ability to repay on the mortgage obligations they had no business getting in the first place.