California’s foreclosure crisis & racism

California is in a state of economic emergency on many fronts. Not only does official unemployment hover around 12 percent, but approximately 702,000 homes — nearly 1 in 8 — are currently in foreclosure.

Foreclosure victims in Sacramento Feb. 10 tell Gov. Schwarzenegger: ‘Terminate foreclosures!’ WW photo: John Parker

Who is hurt the most from this crisis? Latino/a and African-American homeowners make up more than half of all foreclosures in California, according to a new report that looked at 600,000 foreclosures around the state.

“Dreams Deferred: Impacts and Characteristics of the California Foreclosure Crisis,” by the Center for Responsible Lending, paints a stark picture of the devastation wreaked in the state by the banks’ racist subprime mortgage schemes and resultant mass foreclosures. “Conventional” mortgages at higher interest rates were also targeted for sale to African-American and Latino/a home buyers.

The report notes: “It is well-documented that African-American and Latino families disproportionately received the most expensive and dangerous types of loans during the heyday of the subprime market. According to analyses of the Home Mortgage Disclosure Act data, higher-rate conventional mortgages were disproportionately distributed to borrowers of color between 2004 and 2008. For example, in 2006, among consumers who received conventional mortgages for single-family homes, roughly half of African-American (53.7 percent) and Hispanic borrowers (46.5 percent) received a higher-rate mortgage compared to about one-fifth of non-Hispanic white borrowers (17.7 percent).” (responsiblelending.org/california, Aug. 17)

The report cites three key findings:

“Latino and African-American borrowers in California have experienced foreclosure rates 2.3 and 1.9 times that of non-Hispanic white borrowers. Given the high foreclosure rates for loans made in recent years and the large number of loans to Latinos in those years, almost half of all California foreclosures have been of Latino borrowers.

“The concentration and volume of California foreclosures differ dramatically by region. The Central Valley and Inland Empire have the highest concentrations of foreclosures, while the volume of foreclosures is highest in major cities, such as Los Angeles.

“Contrary to some claims, most foreclosures have not been on sprawling ‘McMansions’ but rather on modest properties that were typically valued significantly below area median values at origination.”

From coast to coast, record foreclosures and evictions show no end in sight. In the meantime, unemployment, furloughs, lowered wages, anti-immigrant attacks and every form of racism, repression and hardship are on the rise.

Gov. Arnold Schwarzenegger, like every governor around the country, has the executive authority to declare an economic state of emergency and impose an immediate moratorium to stop all foreclosures. This measure would cost nothing but is opposed by the banks. The one item never touched in any state budget is the interest payments and/or debt service paid to the banks.

In California the demand for an economic state of emergency and a moratorium on foreclosures and evictions is a pivotal component in the fight against racism and for jobs at living wages for all.