Watch the Great Wealth Transfer: Foreclosure Auctions
Today's NYT contains a story about the bargains that opportunity-seeking small investors are finding at the auction of foreclosed homes. For those of us who specialize in the banking and commercial transactions field, the auction is a standard fixture of bad debt resolution procedures. For me, however, as I described below in an earlier post, Race and the Subprime Mortgage Crisis, there is racial a disparity in foreclosures, The four major conclusions of the ACORN study were as follows:
"For refinance loans, our findings show that in 2006:
1. High-cost loans made up a significant proportion of the home refinance loans made to
minorities.
2. Minority homeowners were more likely than white homeowners to receive a high-cost loan when
refinancing.
3. Racial disparities persisted even among homeowners of the same income level.
4. Minorities received a greater proportion of high-cost loans than they received of prime loans.
5. Lower-income homeowners of all races were more likely to receive a high-cost loan than upperincome
borrowers
" In 2006, 52.0% or one out of two, home refinance loans made to African-Americans were
high-cost loans and, 38.7%, or more than one out of every three, home refinance loans made to Latinos
were high-cost loans. In contrast, only 26.7%, or one out of four, home refinance loans made to whites
were high-cost loans."
The racial disparity in the distribution of these bad loans will lead to a racial disparity in the ownership of foreclosed properties . I encourage Blackprof readers to watch the headlines as the foreclosures accelerate. This will be a silent wealth crisis, that has the potential to further exacerbate the preexisting wealth disparities between blacks, latinos and whites.
