The housing crisis left few people unscathed‚ but there is much to suggest that minorities were hit especially hard. And now‚ as the country is making economic strides toward recovery‚ there is just as much evidence showing that those same families are struggling to rebound.
Our Los Angeles Chapter 7 Bankruptcy Attorneys know that most don’t see bankruptcy as an attractive option. However‚ when you start to consider the long-term financial consequences of always being several steps behind due to debt‚ it’s often revealed for many people to be the best solution.
While bankruptcy helps all individuals equally‚ new research suggest that minority families may need it now more than ever.
The Urban Institute‚ a Washington D.C.-based think tank studying national social and economic issues‚ reported that between 2007 and 2010‚ households headed by Hispanics lost‚ on average‚ about half of their home equity. Black borrowers lost nearly 30 percent of their home equity. White borrowers‚ meanwhile‚ lost about 25 percent.
Part of the reason why the housing bust hit minorities especially hard is because they tended to be buying up property later in the boom. That meant property prices were at an all-time inflated high‚ which in turn meant that when the recession hit and home values tanked‚ these individuals were left in poorer shape than those who bought earlier. As a result‚ Hispanics in particular have been particularly vulnerable to foreclosure.
Now‚ home sales are rebounding. But the institute found that white households are benefiting more than minority households. Whites have a home ownership rate of about 75 percent. For blacks‚ it’s about 45 percent. For Hispanics‚ it’s about 47 percent.
It doesn’t help that the banks are making it tougher for “risky” borrowers to get back into the housing market. That means those with a history of foreclosure are going to have a tougher time getting a new home. With most loans for homes now backed by Freddie Mac‚ Fannie Mae and the Federal Housing Administration‚ the lower the credit scores‚ the more expensive those loans are going to be. So having a lower score could actually end up costing on average an extra $100 a month throughout the life of the loan than one would have paid with a higher credit score.
The Center for Economic Progress has indicated that the disproportionate home ownership loss means that the wealth gap between whites and minorities is likely going to continue to grow.
This news comes as Bankrate.com released a survey announcing that two-thirds of Americans have little to no emergency savings and most are living paycheck to paycheck. The inability to save‚ along with a high debt-to-income ratio‚ is often a huge hindrance to boosting one’s credit score. While it’s true that a bankruptcy will hurt your score in the short-term‚ in the longer-term big picture‚ it could be one of the smartest moves you can make to improve your overall financial standing.
If you are contemplating bankruptcy in Los Angeles‚ contact Cal West Law to schedule your free consultation. Call (800) 568-0707.
Minorities aren’t gaining in housing rebound‚ June 28‚ 2013‚ By Les Christie‚ CNN Money