Lenders foreclosed on the subprime loans that targeted minorities, but now that the white majority is defaulting, they are being given a pass.
Irvine Home Address … 30 HONEY LOCUST Irvine, CA 92606
Resale Home Price …… $875,000
We are the world
There comes a time
when we need a certain call.
When the world must come together as one.
There are people dying.
Oh it's time to lend a hand to life.
The greatest gift of all.
We can't go on,
pretending day by day,
that someone somwhere will soon make a change.
Michael Jackson — We Are The World
Foreclosures by Race and Ethnicity: The Demographics of a Man-Made Disaster
Center for Responsible Lending
June 18, 2010
The ongoing foreclosure crisis has slashed hundreds of billions of dollars in wealth from communities of color, a new CRL research report shows, as an estimated 17% of Latino homeowners and 11% of African-American homeowners have already lost their home to foreclosure or are now at imminent risk. The wealth drain is the result of direct losses from foreclosures and also the decline in neighboring property values each foreclosure brings.
The report—"Foreclosures by Race and Ethnicity: The Demographics of a Crisis," http://www.responsiblelending.org/mortgage-lending/research-analysis/foreclosures-by-race-and-ethnicity.html—shows that foreclosures will continue to climb and losses will continue to mount. From 2009 to 2012, those living near a foreclosed property in African American and Latino communities will have seen their home values drop by more than $350 billion—possibly exceeding the damage the Gulf States suffered from Hurricane Katrina. And high levels of unemployment that were caused by reckless lending and the collapse of the housing and financial markets continue to exacerbate the foreclosure crisis.
"Whether we're talking about oil spills or housing catastrophes, it's clear that America needs to invest in prevention, clean-up and recovery," said CRL President, Mike Calhoun. "As Congress finishes financial reform legislation, the rules on home lending need to get stronger, not weaker. We need to make sure a foreclosure crisis of this type never happens again, and, though so many homes have been lost, it's not too late to prevent more damage."
The percentage of homes in some stage of foreclosure in the United States is the highest on record and five times the norm, but little study has been done to quantify this trend. This report provides the most detailed estimate yet of how many foreclosures have been completed since the crisis started in 2007, how many more homes are on the brink of being lost, and how this man-made disaster has disproportionately damaged African-American and Latino communities.
No single set of numbers exists to tell this story. Instead, CRL used several databases to compute reasonable, even conservative, estimates that together add up to a grim picture: The United States has tolerated a dysfunctional lending system that has disproportionately eroded the wealth of communities of color and set them even further behind other groups on the economic ladder.
Among the report's findings:
- An estimated 2.5 million foreclosures were completed from 2007 – 2009 and an estimated 5.7 additional ones are imminent. (Independent estimates have suggested that up to 13 million homes will be lost through 2014.)
- On completed foreclosures, most on mortgages made between 2005 and 2008, we estimate that 56% involved a white family. But African American and Hispanic families have received a disproportionate share, even when accounting for income: Nearly 8% of both groups have already lost a home, compared to 4.5% of white borrowers.
- The great majority of homes lost were owner occupied, as are those at imminent risk of being lost.
Here are several civil rights leaders' comments on the report:
"The findings in this report describe the devastating impact that the casino culture of Wall Street and the mortgage industry is having on communities of color. Instead of owning a piece of the American dream, these hardworking families have borne the brunt of an anything-goes regulatory system that has turned a blind eye toward predatory lending and the needs of vulnerable consumers, who may never recover the wealth they have lost. The report demonstrates why we need a strong, independent Consumer Financial Protection Bureau, and why mortgage servicers must act swiftly to help more families keep their homes." – Wade Henderson, President and CEO of The Leadership Conference on Civil and Human Rights.
"We know that with the right tools, every family in America can share in the American Dream. Knowing this makes these recent findings very disturbing. Latino homeownership will retract by 17% by the time we feel the full effects of the fallout from the credit crisis. That's more than one million Hispanic households, an outstanding figure and higher than other groups. This crisis is moving our community in the wrong direction and it's unacceptable," – Janet Murguía, President and CEO of NCLR (National Council of La Raza.)
"With 17 percent of Latino and 11 percent of African-American homeowners having essentially already lost their homes and estimates that many more foreclosures are on the way, we need Congress to hurry up and pass an independent Consumer Financial Protection Agency. We also need servicers to do whatever is necessary to stop this hemorrhaging now. Enough is enough." – Shana Smith, President and CEO of the National Fair Housing Alliance
For more information: Kathleen Day at (202) 349-1871 or kathleen.day@responsiblelending.org; Ginna Green at (510) 379-5513 or ginna.green@responsiblelending.org; or Charlene Crowell at (919) 313-8523 or charlene.crowell@responsiblelending.org.
Peak buyer with $0 down still got some HELOC booty
Some of the more prudent peak buyers put money down and lost their down payment in addition to the trashing of their credit. The totally irresponsible buyer who put no money down and managed to extract some HELOC money really benefited from gaming the system.
- Today's featured property was purchased on 8/31/2006 for $1,000,000. The owners used a $800,000 first mortgage, a $200,000 second mortgage, and a $0 down payment.
- On 5/14/2007 they refinanced the second mortgage for $291,000… they made $91,000 for owning about 9 months.
- Total property debt is $1,091,000.
- Total mortgage equity withdrawal is $91,000.
- Total squatting is at least 7 months.
Foreclosure Record
Recording Date: 03/15/2010
Document Type: Notice of Default
Irvine Home Address … 30 HONEY LOCUST Irvine, CA 92606 
Resale Home Price … $875,000
Home Purchase Price … $1,000,000
Home Purchase Date …. 8/31/2006
Net Gain (Loss) ………. $(177,500)
Percent Change ………. -17.8%
Annual Appreciation … -3.3%
Cost of Ownership
————————————————-
$875,000 ………. Asking Price
$175,000 ………. 20% Down Conventional
4.80% …………… Mortgage Interest Rate
$700,000 ………. 30-Year Mortgage
$177,075 ………. Income Requirement
$3,673 ………. Monthly Mortgage Payment
$758 ………. Property Tax
$517 ………. Special Taxes and Levies (Mello Roos)
$73 ………. Homeowners Insurance
$183 ………. Homeowners Association Fees
============================================
$5,204 ………. Monthly Cash Outlays
-$890 ………. Tax Savings (% of Interest and Property Tax)
-$873 ………. Equity Hidden in Payment
$321 ………. Lost Income to Down Payment (net of taxes)
$109 ………. Maintenance and Replacement Reserves
============================================
$3,872 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$8,750 ………. Furnishing and Move In @1%
$8,750 ………. Closing Costs @1%
$7,000 ………… Interest Points @1% of Loan
$175,000 ………. Down Payment
============================================
$199,500 ………. Total Cash Costs
$59,300 ………… Emergency Cash Reserves
============================================
$258,800 ………. Total Savings Needed
Property Details for 30 HONEY LOCUST Irvine, CA 92606
——————————————————————————
Beds: 4
Baths: 3 baths
Home size: 2,862 sq ft
($306 / sq ft)
Lot Size: 4,892 sq ft
Year Built: 2006
Days on Market: 122
Listing Updated: 40253
MLS Number: U10000842
Property Type: Single Family, Residential
Community: Columbus Grove
Tract: Alex
——————————————————————————
According to the listing agent, this listing may be a pre-foreclosure or short sale.
This property is in backup or contingent offer status.
SHORT SALE SUBJECT TO LENDER APPROVAL.Lovely Desirable Plan 2 Alexandria home,Located in Prestigous Columbus Grove. Dramatic Entry with Distressed Hardwood Floors, Vaulted Ceiling. Formal Livingroom, Formal Diningroom,French Doors Open to Paved Atrium. Over 100k in Custom upgrades! An Entertainers Delight, Spacious Gourmet Kitchen w/Eat at Island, Granite Slab Counters,Full slate backsplash, Undercounter Lighting, GE Monogram stainless steel appliances,6 burner cooktop,large Pantry. Inviting Familyroom with Crackling Fireplc. plus elegant Diningroom. Sliders lead you to rear yard with Full Blt.in Gas Barbque, sink (Outdoor Kitchen),Paved Patio.Four Bedrooms Plus LOFT(possible 5th bdrm), 3 Full Tiled Baths, 1 Bedroom & Bath Downstairs. Huge Mastersuite w/boxed coffered Ceiling, Retreat,Cozy Fireplace.Master Bath 6 jet Jacuzzi tub,wardrobe area,dbl.vanities,huge walkin closet w/blt.in. Blt.in Music sys.Prewired Too many amenties to list.3 Car Tandem Garage. Model Perfect Home! MUST SEE!
Why Is This Written In Title Case? Prestigous? amenties?
A good listing for an early morning laugh.Just a couple items
– “Too Many Amenities to List” – by my quick count they listed over 30 amenities in the listing
– What is the difference between a “Crackling” fireplace and a “Cozy” Fireplace. If it is Crackling, is it crackling so loud that it it isn’t cozy, it is irksome. If it is Cozy is it doing anything – if it isn’t crackling then it may be a pretty lame fire.
I call BS on the notion that whitey gets a pass. 2000 Census data might suggest Irvine is a majority white community, but demographics have shifted significantly over time. We may still be a majority white County, but do a surname search for SS/REO homes in So Cal, and it’s not all non-European names getting hit. For every Martinez, Patel, or Liao being nailed hard in this economy, I’m sure there are a near equal number of Smiths as well.
My guess is that most of the Florida condo’s that were foreclosed on weren’t bought by Venezuelan ex-patriats, but by speculators from Europe or Uncle Mort from Yonkers looking to retire in Boca.
A few reasons why higher priced areas – OC in general – don’t have higher foreclosure rates than others:
1) Cost. Why go after one $900,000 Irvine albatross when you can close out 10 $200,0000 homes in Rialto that will flip quicker?
2) Litigation. Why fight one attorney homedebtor in Coto for months on end when you can steamroll 25 people in Modesto into foreclosure in half the time?
3) Resale time on the market. A $2.25m home on the Newport Coast is not going to sell as fast as 10 Santa Ana SFD’s at $250k per.
Less affluent Counties are not always minority majority environments. You have many, many short sales in Corona, but I put forward that the SS’s are concentrated in the newer home communities rather than the established lower priced ones – peakage buyers.
Skin color based studies are often filled with all sorts of bias. The only color banks intentionally discriminate against is the color green. If you are “viridian-challenged”, expect there to be a NOD in your mailbox, no matter where you migh hail from.
My .02c
Soylent Green Is People.
I agree 100% with SGIP. This idea of racial discrimination in the foreclosure process is pure non-sense. Racism has all but been eliminated in this country as evidenced by the fact that we elected a black president. The fact that foreclosures are hitting minorities hardest is purely an economic phenomenon as these communities simply don’t have enough liquid assets to fight the foreclosure process. Therefore, they are far easier to “steamroll” over. That is hardly racism. It is simply a practical business process. The fact that these minority communities have such little assets also has little to do with racism and much more to do with the culture of laziness that seems to be prevalent in minority communities. It bothers me to no end when the race card is played on common sense economic issues like this. If we are to dig ourselves out of the malaise we are currently in, we will have to get past the blame game and move on to real solutions.
Racism has all but been eliminated? “And much more to do with the culture of laziness that seems to be prevalent in minority communities” Racism is alive and well, YOUR A RACIST SIR
That is an outlandish statement! My point was the exact opposite of racism. As I stated quite clearly, the problem is with culture. Culture is a choice and has nothing to do with race. Just as homosexuals choose to be gay, minority communities tend to choose laziness over industriousness. Culture is a choice, not something you are born with. That is vastly different than holding someone accountable for their race; something of which they have no control over.
Of course you call BS. Without a fact your only left with your hood.
Oh, wow, this is great news guys. What we are seeing here is the start of the next great housing bubble. The whole point of the relaxed lending standards for subprime and Alt-A mortgages was to allow people who hadn’t previously been credit worthy – who had been supposedly ‘red-lined’ to purchase homes. Like it or not, many of these people are black or latino. Those evil banks wouldn’t lend to them, you see. So everyone cheered when the ‘American dream’ became available to people with shakey credit and poor job prospects. Now, of course, the Sub-prime and Alt-A borrowers have mostly defaulted, so it isn’t surprising that a disproportionate number of the borrowers are black or latino. I’m not defending the banks here, but it is pretty hilarious how they can’t win no matter what — tighten lending standards and get sued by the government, loosen lending standards and lose your shirt (while tanking the economy). The banks are always gonna be somebody’s bad guy.
Now, while we are still in the middle of the crisis, the call is going on to loosen lending standards once again. That has to be good news, since it means the RE bubble will start inflating again, right? Right?
So, yes, I call BS on this cheap article too.
Hmmm…you are spot on about the funky “damned if they do/damned if they don’t” scenario that banks find themselves in as it relates to lending.Still…BLACKS & LATINOS DID NOT CAUSE THIS FINANCIAL MELTDOWN.There simply are’nt enough of us (me included) to have triggered the mess we’re in.It’s not that I think the lending standards need to be loosened again-such that (mostly)Whites can HELOC a coupla’ nice cars …and a trip to Aspen…and some new boobs.I think that some SANITY would be in order about the pricing of residential property.Is there any reason for a person to have to rent a home from the bank for 30 freaking years before they actually “own” it? Lot of dead weight the avg. homeowner has to carry on his back when he/she takes out a mortgage.Why? Actual land costs aside-
most homes cost 10-15grand to build.Custom “luxury” homes only a little more.Home pricing & purchasing has much built-in socio-racial content about it.It’s a big part of the reason why we’re HERE at this point.
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I might add that I am no fan of this presidents’ bailout (welfare for those who should know better) policies.It gives all these alleged “free marketeers” (crony capitalists) a fig leaf to continue living their lie.
Hey Dr. Vegas,
Please don’t get me wrong, I certainly wasn’t saying that that the minority groups caused the meltdown. In fact, to continue your theme, although the Alt-A and subprime products were INTENDED to help the so-called working poor (and by implication, the somewhat higher percentage of black and latino borrowers who had difficulty getting mortgages under the old requirements), once these products were out in the market, they became a tool for middle-class losers to buy ever bigger McMansions, to speculate, and to drive the price of RE above all reasonable level. So, the loans were misused – and much of the defaulting these days is being done by people who could easily pay their mortgages — they just don’t want to anymore.
What you describe is exactly what I saw.(2004-2007)
People-(mostly middle/working class)-playing “Trump Junior” with borrowed money.This personal trainer/d’bag in my gym…A PERSONAL FREAKIN’ TRAINER-was constantly in my face about his “portfolio” of properties.Some car show/swimsuit model I used to date developed “perma-smirk” because she was so sure a “greater fool” would always be available to confirm her “investment prowess”.Any schadenfruede I may feel about their current plight is muted by the fact that people far smarter & wealthier than them (investment banks/REIT hedge funders) have friends in Washington who will soften the blow of their stupidity.
The CRA was to get loans to borrowers with study incomes and little to no history of borrowing, but very likely able to pay-off the loan. Instead it was issued to no income verification schemes in which their was little chance of paying back — $40,000 income to borrow $500,000 and for flipping, Ponzi schemes. It’s one thing to make a loan to someone with $30,000 income with no credit history for $40,000 for a house in a “bad neighorhood” than loans for $400,000 in a “good neighborhood” or $250,000 in a “bad neighorhood.” For the banksters perspective with govt backing, the loan for $400,000 is better because of the fees collected will be higher for them.
The bankster are saying “Let them eat recession.”
Sorry, but IrvineRenter has this one wrong. I happen to know the family living there and they are mostly not white. I’ll spare the details for their privacy. Last names can be misleading when it comes to ethnicity.
Oops, make that “not mostly white”. Forgive me I’ve been drinking.
A million dollar house “purchased” with no money down. Wow… I should have gotten me one of those when I could have…
You write:
•Today’s featured property was purchased on 8/31/2006 for $1,000,000. The owners used a $800,000 first mortgage, a $200,000 second mortgage, and a $0 down payment.
•On 5/14/2007 they refinanced the second mortgage for $291,000… they made $91,000 for owning about 9 months.
My reply
City-Data for 92606 shows real estate peaked at 900,000 in Quarter 2, 2006 and fell and peaked again in Quarter 2, 2007 at 780,000.
So they bought using the second at a premium of 100,000. And they they refinanced that second for an premium of which is 311,000 (20,000 +291,000).
Thus the holder of the second (whether it be the same party as the first), was very loose with lending; as some might say toxic with the lending; or intoxicated with lending.
The question comes up why was this home sold with no money down and then refinanced to a such a high premium? Perhaps it was due to the appraisers getting a fee and the mortgage lenders getting lucrative compensation; money to lenders had to have greasd the wheels. And the money for the loan had to come from Wall Stret securitization and financialization of either mortgage backed securities or even more toxic instruments like CDOs. All of these financial instruments were sold and resold globally and now reside in banks in Europe and Asia.
I do believe there is discrimination in lending with whites getting favor: would the lenders have sold a home in Chicago 60621, a non white area, with no money down and such a high premium on the second? No way never.
And I do believe tht there is discrimination in foreclosing, with whites getting a pass. The real estate market in Chicago 60621, a non white area, was wiped out by foreclosures; not so in Irvine.
The property might sell at the listed ($306/sq ft) as similar properties sell for more according to Redfin.
Chart shows regional banks, KBE, have lost twenty-eight percent of their value since April 26, 2010.
Banks have been decapitalized by debt deflation specifically a rising Japanese Yen, the end of the Federal Reserve QE, and contagion spreading from the European Sovereign Debt crisis.
Debt deflation is consequence of credit expansion. One of the most famous quotations of Austrian economist Ludwig von Mises is that “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”
The age of competitive currency devaluations commenced on June 7, 2010, when the US Dollar, $USD, turned down as the Euro, FXE, rallied on news of the call for the EFSF Monetary Authority to be established (it as of yet, still has to be approved by member states).
Competitive currency devaluation creates an investment demand for gold. Gold has risen as the sovereign world currency and storehouse of investment value.
All currencies, with the exception of gold, will tumble lower into the pit of financial abandon, and as they do so, there will be rising risks of sovereign debt default and bank default, like in the case of Spain, EWP, which in turn causes government debt, TLT, and IEF, to fall, and causes financial shares to fall further in value, and in the process takes real estate value, IYR, lower as well.
Banks will become further decapitalized as the value of the US Treasuries they have on reserve with the Fed falls in value: the banks are going to be forced to foreclose and sell; or foreclose and lease the properties.
Soon, there is no way that properties will command the high resale prices that they currently do like in Irvine at $305 to $335 per square foot.
I’m glad that you highlighted CRL. They’ve been working on this throughout the whole housing bubble inflation and collapse. There is a conservative element in NC who thinks that CRL was a contributor to, not a warner of the general housing bubble. They look at all loans to poor borrowers equally – the fair ones that Self-Help holds on to equal to the predatory loans from brokers, sold to investment banks, sliced and diced, and then sold off as AAA to institutional investors.
IR’s calculator says $30k income translates to about a $100k house, which seems about right in current conditions. At least in NC, that gets you a decent place.
“The White Majority”
this blog is deteriorating fast
I have to agree with Soylent Green Is People. At least in Irvine, whites are a minority. If you don’t count people over 65 I would guess whites are the minority in Orange County and probably all of Southern California. By white, I mean descendants of Europeans and not counting people with Mexican, Central or South American ancestry, Arabs or Persians.
I have been following the foreclosures in the 92603 zip code. While it seems that post of the purchases there are by non-whites, the majority of the foreclosure notices seem to have white sounding names.
LOL, I live in the 92603, and I assure you, you do not want to live in Lake Forest. The city council is horrid, they usurp the will of their own citizens, and use imminent domain to steal land from private citizens.
Lake Forest is one of the last bastions of true white repression, why do you think there are so many republicans down here? The schools suck (I’ve had 3 boys through the Saddleback system)…and I mean the schools down here REALLY suck, and lots of gang/drug (real drugs…not marijuana) problems.
The city council also encourages illegal alien activity as they only will enforce ONE federal law…no Medical Marijuana. Yea, move on down to wonderful Lake Forest…not. I almost contemplate defaulting on my house, getting a big chunk of my down payment back through free rent, and then moving to a city that I can actually enjoy…because Lake Forest sucks a huge lily white man ass.
Hello Wisconsin!!!!
Hope you’re enjoying your vacation there IR.
Cool pics.
I don’t believe racial politics is a factor here.
Economics trumps all. As long as the foreclosures and corresponding losses were relatively small and most of the larger loans were still performing, it was easy to foreclose.
But now that the dam has broken and we have millions of middle-to-high-end properties in default, values are being driven down relentlessly and the losses have grown too large for lenders to absorb.
You would really think that one of the derivatives math geniuses would have bothered to work this all out and could have seen just exactly where lending so many people 6X to 10X their income to buy laughably overpriced houses was going to lead. Who was going to buy these places away from their owners and make those loans good, Bill Gates and Prince Albert of Monaco?
The music stopped when there wasn’t a single greater fool left.
So very Co-Sign.
Only albinos are white, and if you go back far enough, we’re all of African descent. What race do I belong to? The human race.
OT: Talk about WTF.
For Sale (MLS-listed)
$4,700,000
$3133/sq ft. Nice.
$3,133 sq ft and it’s a SHORT SALE subject to lender approval. HAHA
Clearly the realtard made a data entry error, I’ll bet dollars to doughnuts that it’s $470,000. Still over $300 sq ft though.
Well, in most of the states with high foreclosues they have high hispanics populations and low black populations with the exception of Florida. And yes, Texas, a high hispanic population state and lower asian population state compared to California didn’t get hit as much. As for Taking away, public property, Dems cities like La and Santa Ana do more of take than Lake Forest and La and Santa Ana have made it easy for illegal aliens for years. Don’t just blame the Repubs the Dems are to be blame as well.