The Invisible Hand: Hispanics Disproportionate Levels of Foreclosures

You've gotta love "studies" as in "studies show..." A phenomenon may be obvious from anecdotal evidence and personal experience, but it doesn't exist in the eyes of the media and policy makers unless there is a "study." Now, a "study shows" that Hispanics in California faced nearly half of the foreclosures that have hit the state since the bursting of the housing bubble.

A review of the damage wreaked on California communities by the housing bust shows that Latino households suffered nearly 50 percent of the foreclosures and that loan defaults are concentrated in the state's Central Valley.

That area, which includes the Sacramento and San Joaquin valleys, features six of the top 10 California metro areas for foreclosure concentrations, according to the Center for Responsible Lending, which released a comprehensive report Tuesday.

No California communities have experienced a higher percentage of defaults than Modesto, Merced and Stockton - each of which had a foreclosure percentage of around 16 percent between late 2006 and 2009, the study found.

"The signature finding of this report, that there is a disproportionate rate of foreclosures for Latinos, is really stunning," said Paul Leonard, director of the California office for the Center for Responsible Lending. "The data shows that high-cost loans correlate with foreclosures and that there was a big presence of subprime lending to the (Latino) demographic and in areas where there are concentrations of Latinos."

Way to go. Of course, Michael Barone and (blush) Free Will were writing about this 18 months ago. Back then you had plenty of sob stories in the media about foreclosed homeowners and - even without explicit mention of race - it was clear that many of the distressed were Hispanics. This article in the NY Times about Washington Mutual's lax lending standards is a classic of the genre with its descriptions of subprime borrowers working as "gardeners," "maids," and even a "Mariachi singer." I don't know, I'm getting a mental image of these folks that correlates with the results of the above ""study."

I don't suppose we won't be reading any studies about how many of the foreclosed are in the US illegally, but I'm willing to bet that illegals would represent a significant percentage of the foreclosed. While the conventional wisdom has targeted banks, mortgage securitization and investment banks as being at fault for the bursting of the housing bubble, the fact is that borrowers were as much at fault as well. Liberals have sneered over some borrowers - namely grasping bourgeois buying Hummers and granite counter tops with home equity loans - but have been studiously quiet about borrowers who probably shouldn't have bought in the first place, yet were able to obtain loans through, at least partially, the ministrations of Fannie/Freddie and their liberal political patrons in Congress.

There's a lot of heartbreak behind the statistics, I'm sure. Hispanic borrowers were no different than anyone else: they wanted to buy a safe and secure homestead for themselves and their families: the American Dream that long predated any goofy government policy about artificially increasing homeownership. But, the fact is that many of them could not handle the financial costs of homeownership, and the rest of us have been left with the tab.

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