Since housing prices began their precipitous decline in January 2007 and foreclosure rates
skyrocketed, no one has assessed exactly how many mortgages have ended in foreclosure or
who has been affected. Although a number of useful mortgage databases are available, there is no
official, nationwide, publicly available census of completed foreclosures or associated demographic
information. In this report, we seek to shed light on the nation’s foreclosure crisis by using government
and industry data to estimate the number of foreclosures in recent years and their impact by
race and ethnicity. More specifically, we calculate foreclosure rates from 2007 through 2009 for
1,632 combinations of loan types, geography, occupancy types and closing years, and apply these
rates to mortgage origination data.
The results are these key estimates on completed foreclosures:
During the first three years of the foreclosure crisis, from January 2007 through the end of 2009, we
estimate that 2.5 million foreclosures were completed. The vast majority of these foreclosures were
on owner-occupied properties with mortgages that were originated between 2005 and 2008.1
• The majority (an estimated 56%) of families who lost homes were non-Hispanic and white, but
African-American and Latino families were disproportionately affected relative to their share of
mortgage originations.
• Among recent borrowers, we estimate that nearly 8% of both African Americans and Latinos
have lost their homes to foreclosures, compared to 4.5% of whites.
• The racial and ethnic disparities in these estimated foreclosure rates hold even after controlling for
differences in income patterns between demographic groups.
In addition to the 2.5 million foreclosures already completed,
available figures suggest this crisis is far from over. According
to data from the Mortgage Bankers Association’s National
Delinquency Survey (NDS), the proportion of mortgages in the
foreclosure process is at a historical high at 4.63%, nearly five
times higher than the average of all quarterly rates reported in the
NDS from 1979 to the start of the crisis and three times higher
than the next closest pre-crisis high.2 Combining borrowers who
are two or more payments behind on their mortgage with those
who are in the foreclosure process, we estimate that there are
5.7 million borrowers at imminent risk of foreclosure.
Looking ahead, independent analysts have projected that between
10 and 13 million foreclosures will have occurred by the time the
crisis abates.3 Examining the set of borrowers at imminent risk
of foreclosure, as defined above, we see that the racial and
ethnic patterns we have identified here are likely to continue
into the future:
• Non-Hispanic whites represent the majority of at-risk borrowers, but African-American and
Latino borrowers are more likely to be at imminent risk of foreclosure (21.6% and 21.4%,
respectively) than non-Hispanic white borrowers (14.8%).
• American Indian (16.5%), Native Hawaiian or other Pacific Islanders (18.6%), and Asian
borrowers (15.7%) all also show an increased likelihood of being at-risk.
When the number of homes that are in imminent danger of foreclosure is combined with homes
already lost, it is clear that the foreclosure crisis is affecting a large number of families. Expressed as
a share of the population of homeowners as of 2006, we estimate that 17% of Latino homeowners,
11% of African-American homeowners, and 7% of non-Hispanic white homeowners already have
lost or are at imminent risk of losing their home. . . . .
. . . . Owning a home has long been the most accessible way to build wealth and gain a foothold in the
middle class. As a result, the current foreclosure crisis has undercut the economic progress and
security of families across the country. . . . Homeowners
living in close proximity to foreclosures suffer depreciated home values—last year, CRL estimated
that, by 2012, surrounding property owners would lose $1.86 trillion in home value . . . .
. . . . While much has been reported on the foreclosure crisis, it is unclear exactly how many homes have
already been lost to foreclosure or who has been affected. . . . . .
A large number of homes—we estimate 2.5 million (2,480,650)—completed the foreclosure process
in the three-year period beginning in January 2007 when housing prices began their precipitous
decline.20 This figure is equivalent to roughly 1 in every 20 mortgages outstanding at the onset of the
crisis.21 During this same time period, more than twice as many foreclosures were initiated as have
been completed: we estimate that there were 6.9 million foreclosure starts between 2007 and 2009.22.
Looking more closely at the subsample of loans that were originated between 2005 and 2008,
we estimate that subprime loans have accounted for 64% of these foreclosures, despite the fact
that they comprised only 22% of originations during these years. In fact, at 16.5%, the estimated
completed foreclosure rate for subprime loans dwarfs the next highest category (non-subprime jumbo
loans, at 4.4%). . . . . (note: the above comments taken from the first 7 pages of a 23 pages report -- a report well worth the read) . . . .
Foreclosures by Race and Ethnicity: The Demographics of a Crisis
CRL Research Report, Debbie Gruenstein Bocian, Wei Li, and Keith S. Ernst
June 18, 2010
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