Here We Go Again: Communities of Color, the Foreclosure Crisis, and Loan Servicing Failures

Document Date: April 9, 2015

During the subprime lending boom of the early 2000s, communities of color were targeted for the riskiest, most predatory mortgages. Since the housing bubble burst in 2008, homeowners in these communities have disproportionately struggled with default and foreclosure. These are the communities that most desperately need solutions to the foreclosure crisis. Instead, new data obtained from the Consumer Financial Protection Bureau (“CFPB”) by MFY Legal Services, Inc (“MFY”) and the American Civil Liberties Union (“ACLU”) supports the conclusion that loan modification programs are failing homeowners in communities of color.

This report’s analysis of CFPB mortgage complaint data reveals a pattern: complaints about harmful servicer misconduct, the kind that places homeowners at risk of losing their homes, make up a larger share of complaints from communities of color than from predominately white communities.

We recommend concrete steps that federal, state, and local authorities must take to expose, address, and ultimately correct disparities in the way mortgage relief is reaching communities of color. These actions are crucial to ensure that communities of color are not, once again, bearing the brunt of systemic failures.

View the CFPB data here (.xls).