The housing crisis: An assault on black and Latino economic progress

Economists say that recessions hurt African-American and Latino workers the most because they are "the last hired and the first fired."

James Sparks at the AFL-CIO blog has an eye-opening post this week arguing that the home foreclosure crisis is working the same way: while affecting everyone, it's been especially devastating for blacks and Latinos -- draining billions of dollars in wealth built up over decades.

First the numbers:

The Joint Center for Political and Economic Studies reports that the rate of subprime mortgages for Latinos and African Americans is about double the rate for whites. In 2006, subprimes made up one in four mortgages (26 percent) made to whites, 47 percent of those to Latinos and 53 percent of mortgages that went to African Americans.

As Southern Exposure found in our award-winning series on predatory lending four years ago, the disparate racial impact isn't a coincidence. Sparks shows other evidence of racial targeting:

[E]conomist Algernon Austin ... says in a study released last week that creditworthiness -- alone or in combination with factors other than race -- cannot account for the disparities in subprime loan rates. When the Federal Reserve and the Wharton School of Business conducted an analysis that took into account how many adults in a neighborhood were high-credit risks, they still found a link between the amount of subprime loans and the number of minorities in the neighborhood.

An analysis by the Center for Responsible Lending found that even after taking into account individual credit scores, Latino and African American borrowers were more than 30 percent more likely to receive higher-rate subprime loans.

The result? A shocking report by United for a Fair Economy this year estimates that the subprime mortgage crisis will end up stripping away $213 billion from largely African-American and Latino communities -- the greatest loss of wealth in U.S. history.