Foreclosure Crisis: Kansas Hit Badly by Foreclosure

ACORN, the housing advocacy group, released their study of racial and income disparities this week. Their study focused mortgage lending in 173 cities, based on the facts obtained from the Home Mortgage Disclosure Act.

The report pointed out that uneven numbers of lower-income and non-white borrowers in Kansas City are more liable to lose their home to foreclosure, since they are the ones who are caught in the higher interest rates of the sub-prime loans. As per ACORN’s study, the chances of African-American buyers to a get a high-cost loan were 2.8 times more when compared to whites, whereas the chances of Latin-American buyers when compared with whites is 1.6 times more in case of high-cost loans.

The report also said that those who received high-cost loans also availed of refinancing tools almost one fourth times more than whites using the same loan scheme.

Similar disproportionate figures came in from other cities too, as per the report, though Kansas has the highest. In Kansas, the increase in high-cost loans increased tremendously in the past few years. Out of the total loans extended to the homeowners in Kansas, 31.3 percent is likely to fall in the trap of sub-prime mortgages, thereby increasing the chances of foreclosure in the current condensed market situation.

The existing sub-prime loans have already crossed the projected figure of ACORN’s study in 2005 by 16.2 percent. According to the national President of ACORN, Maude Hurd, the sharp increase in the foreclosure filings is mainly in the urban and minority communities. In such communities, the general mode of increasing wealth is to buy a property. According to her, many homeowners of these communities fall very easily for the adjustable-rate-mortgages, and were not given the flexibility, generally seen in lower or fixed-rate mortgages, by the lenders.

The Director of Center for Economic Information at the Missouri - Kansas city, Peter Eaton, who studied the issues of homeowners in Kansas City, said it was difficult for him to confirm the studies done by ACORN without knowing the know-how of the research techniques used for the same. However, he said, as the other references too represent the same picture for Kansas City, there are chances that the rate of foreclosure filings in the city will be more than other cities due to universal increase in sub-prime loans.

Peter Eaton also added that as a report suggested, Kansas City is among the first-tier of cities where foreclosure can hit homeowners really badly.

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