Foreclosure crisis has long way to go, report says

At least 2.7 million homes nationwide have been lost to foreclosure during the past five years, and more than 3 million more are at serious risk of being lost as well, according to a report released Thursday by the Center for Responsible Lending and Center for Community Capital at UNC Chapel Hill.

"The findings ... suggest that we are not even halfway through the foreclosure crisis, as millions of additional families are still at risk of losing their home," say researchers, who examined race, ethnicity and income of borrowers to see who has lost their home and who is still at risk.

More than 42 million people took out a mortgage loan between 2004 and 2008, the time period analyzed by researchers. As of February of this year, nearly 6.5 percent or borrowers had lost their home to foreclosure.

The homeowners that have been affected the most are white families with middle- and higher-incomes, researchers found. But minority homeowners are more than twice as likely to lose their home as white households, according to the report, "Lost Ground, 2011: Disparities in Mortgage Lending and Foreclosures."

Researchers found that one-quarter of Latino and African-American borrowers have lost their homes to foreclosure or are seriously delinquent, compared to just under 12 percent for white borrowers.

The racial difference in foreclosure rates can't be explained by income differences, the researchers say. For example, 10 percent of higher-income African-American borrowers and 15 percent of higher-income Latino borrowers have lost their homes to foreclosure, compared with 4.6 percent of higher-income non-Hispanic white borrowers.

Instead, researchers point to the types of loan a person receives as the reason for the higher foreclosure rates. Minorities were more likely to have loans with adjustable interest rates, high interest rates or prepayment penalties.

Geography also influences the type of borrower more likely to lose a home. In states where home prices rapidly appreciated, such as Arizona, wealthier borrowers were foreclosed on more often. In areas that saw little price appreciation - think Detroit - it is the lower-income families who are fighting to keep their homes.

For more information or to see interactive maps showing foreclosure rate breakdowns by state and metropolitan area, go to www.responsiblelending.org.

In other mortgage-related news released Thursday, 4.43 percent of home loans are in foreclosure, according to new data from the Mortgage Bankers Association.

Of prime adjustable-rate mortgages, 9.05 percent are in foreclosure, compared to 2.56 percent of prime fixed loans. More than 22 percent of subprime adjustable-rate loans are in foreclosure.

The pace of new foreclosures for all loans rose to 1.08 percent in the third quarter from .96 percent in the second quarter, according to the association.

The number of borrowers behind on their home payments, meanwhile, fell to its lowest point in three years. The delinquency rate fell to 7.99 percent during the third quarter from 8.44 percent in the previous quarter. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure

The pace of foreclosures is expected to pick up as lenders work through a backlog of loans. Many banks temporarily halted foreclosure proceedings after problems arose with how they were processing the paperwork. Banks have largely lifted those moratoriums.