February 5, 2009

Mortgage expenses by race

Parapundit points me toward this AP article: "Financial burden of homeownership spread unequally" by Alan Zibel that provides a lot of good statistics, but, of course, fails to tabulate the foreclosure rate by ethnicity. Still, it's worth reading:

WASHINGTON (AP) — ... Inequality in America has traditionally followed familiar patterns of race, age and education. Those long-standing gaps have been magnified by the real estate boom and now the historic bust, according to an Associated Press analysis of 2007 Census Bureau data.

While minorities have made significant gains in wealth and home ownership since 1990, "things are going into reverse gear," and now the homeownership rate for blacks and Hispanics is falling, said Edward Wolff, a New York University economist who studies income and wealth distribution.

Nearly 9.5 million households, or nearly one out of every five of the nearly 52 million homeowners with a mortgage, spend 38 percent or more of their pretax income on their mortgage payment, property taxes and insurance, the AP's analysis found.

The traditional standard was don't go over 30% of your income, so 38% is a high standard.

Now this is only looking at homeowners with a mortgage, so it ignores every homeowner who has paid off his mortgage (a group, I would imagine, that is overwhelmingly white).

That's the new threshold to qualify for the loan assistance program launched last month by Fannie Mae and Freddie Mac, the mortgage finance companies now under government control.

Not surprisingly, the most financially burdened are in California, Florida, Nevada and the Northeast, areas hardest hit by soaring home prices and now foreclosures. ...

The AP's analysis reveals the enormous scope of the U.S. housing market bust and how unevenly the burdens are spread, both geographically and demographically. ... The burden is clearly more arduous among minority households, the AP analysis found.

Just under a third of Hispanic homeowners spend at least 38 percent of their income on housing expenses, compared with about a quarter of Asian and black households and nearly 16 percent of white households.

In much of the country, the trend is more pronounced. For example, included among those who spent at least 38 percent of their income on housing are:

About 40 percent of black borrowers in California, Nevada, Oregon and Massachusetts.

More than 30 percent of Asian borrowers in California and Florida.

Nearly half of Hispanic homeowners in Rhode Island and at least 40 percent in Alaska, California, Florida, Hawaii, Maryland, New Jersey and New York.

Many Latino families wound up with expensive subprime mortgages because they often have cash income and no bank account, said Janis Bowdler, associate director for wealth building at National Council of La Raza in Washington.

It is common for Latino families to have stable incomes

Well, at least until they stopped having stable incomes when the Housing Bubble Economy stopped. The circularity of the Hispanic Housing Bubble is still not well understood.

but limited credit histories — and hence lower credit scores, which lenders use to gauge risk. Many have multiple sources of income, some of it in cash.

And some claim to have multiple sources of cash income that they don't really have. Hey, I've got an idea for how to tell whether these Hispanics applying for big California mortgages are just cheating on their income taxes or whether they're flat broke: Require a decent-sized down payment! Oh, wait, George W. Bush and Angelo Mozila said down payments were discriminatory, denying minorities their fair share of the American Dream.

During the housing boom, consumer advocates say it was both faster and more profitable for mortgage brokers and loan officers to put Hispanic families in loans that didn't require proof of income, but charged higher interest rates.

"They had them out the door in a fraction of the time," Bowdler said. "They were definitely getting more expensive loans."

Now, Hispanic households like the Cazares family of Visalia, Calif are caught up in the mortgage crisis. ...

The AP's analysis also found that education level is highly correlated with income and mortgage expenses. Nearly one in three of those without a high school or college diploma spend at least 38 percent of their income on housing, compared with only 12 percent of those with advanced degrees, the AP analysis found. ...

But they also say that mortgage brokers and lenders took advantage of the elderly, immigrants and the unsophisticated.

For decades, the government and most lenders considered homeowners who spent 30 percent or more of their income on housing to be financially strapped.

My published articles are archived at iSteve.com -- Steve Sailer

5 comments:

Anonymous said...

"...Alan Zibel that provides a lot of good statistics, but, of course, fails to tabulate the foreclosure rate by ethnicity."

I couldn't imagine why. I guess we'll never know...But nothing another trillion or 5 can't fix, right?

David said...

[Steve, here is my comment again, now cleaned up. Thanks.]

A joke among conservatives used to be:

Q. What headline would the New York Times run on doomsday?

A. "END OF THE WORLD / Minorities, women, and gays hardest hit"

Now we are basically reading "MORTGAGE BUBBLE POPS / Minorities hardest hit"

Remember, the United States is supposed to exist exclusively for the sake of Non-Asian Minorities. (You recall your Social Studies classes, right?) Everything must be done in their name, or ultimately for their benefit or to their benefit. The USA lives for the sake of NAMs, in order to expiate its guilt for NAMs' being unequal with non-NAMs. Every event must finally be about them and their progress (if any). We have no higher reason for existence, and no higher national purpose PERIOD.

First, we must ensure that they can and do buy private houses (or have a college education), to which everyone in the world has a right - down payments (or testing-based admissions) being the modern-day equivalent of poll taxes - and make that an essential means of making a successful career in the banking system, whether one is a banker or a loan officer or a marketing flack (or in the education industry, whether teacher or lobbyist - or in the economy at large, whether call-center manager or Bill Gates).

Next, in the face of universal but still racially disparate defaults (or dropout rates or social sufferings of any sort), we must cushion the blow for them by sacrificing more evil whitey nerd losers.

It's all about the ever- and all-suffering NAMs, 24/7.

But the real question is (and it's a hand-wringer): How do we get more money into the pockets of more blacks? Because money, as every Great American is taught on his mother's knee, is the Summa Bonum. Mo' money will turn even the blackest person white (and safely Republican). It washeth away all sins. Yea, verily, it must and shall change literally even their very pigmentation, Hallelujah! Behold Michael Jackson, oh ye of little faith!

White America is so mentally twisted, it is stupefyingly. This is very depressing, but we must first of all consider how it will affect the NAMs.

Anonymous said...

People without good credit histories are more risky so it makes sense their mortgages would cost more. Isn't this basic finance?

Mark said...

Now this is only looking at homeowners with a mortgage, so it ignores every homeowner who has paid off his mortgage (a group, I would imagine, that is overwhelmingly white).

This isn't necessarily the case. A study I saw over a decade ago actually showed a surprisingly large number of blacks owning their homes mortgage-free - but they were homes they'd lived in for years, that had frequently been in the family for over a generation, that were rotting, aged, decrepit, and in the worst parts of town.

Just under a third of Hispanic homeowners spend at least 38 percent of their income on housing expenses, compared with about a quarter of Asian and black households and nearly 16 percent of white households

Asians tend to live in more expensive areas, but if the wage premium for living in a high cost area is enough it can make 38% or more doable. But I suspect that, even moreso than most Americans, a lot of Asians are staring morosely at a huge whole in their net worth right about now.

headache said...

Steve's been doing some excellent work unearthing all this boring yet significant and wilful contortion of the system. Ultimately everything is about NAM's. But is that really the case? Sure, the Jackson's, Obama's and Oprah's cash in and enjoy.

But are the real winners not the Ayer's and Dohrn's? People who are too self-conscious and amoral to just do a decent day's work and accept their pay. They want to control things but everyone can see through their dishonesty. So they use the NAM cause as a smokescreen to control whites and get the goodies. Some of it they hand over to the NAM's who did the dirty street work. But most they keep. And the control. Is it not these people who are the real drivers? The white, liberal, pseudo-intellectual crowd who are gaming the system because they are rebellious and do not want to submit to rules and standard morality?

I would like to know who is ultimately behind all this stuff.