Rising foreclosures of minority-owned homes

The single-family housing splurge of recent years is coming back to haunt -- and hurt -- some of the most vulnerable families in the nation: lower-income minorities.

According to today's New York Times (see "For Minorities, Signs of Trouble in Foreclosures," [site requires free registration]), the housing boom that has helped push the minority home ownership rate above 50% has a down side. Specifically, "in the past several years, neighborhoods with large poor and minority populations in places like Cleveland, Chicago, Philadelphia and Atlanta have experienced a sharp rise in foreclosures, in some cases more than doubling," write authors Vikas Bajaj and Ron Nixon.

What's worse is that a middle-income family would be better able to weather the loss of a house because it typically has better credit history, higher earning potential, and access to capital; but a lower-income household might be more likely to face the option used by the homeowner who leads off the Times article: bankruptcy. Oh, and the bankruptcy laws were changed last year to be more punitive to the small guy. Oh, and minority homeowners "are twice as likely as whites to have taken out expensive subprime mortgages, most of which will jump to higher interest rates in the next two years" [emphasis added].

The article notes that the foreclosure rates are not even across the nation, and are in any way still relatively low. But apartment owners, managers and developers should read the whole story to get a better idea of what happened to some of their once -- and future? -- tenants who were lured to homeownership.