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RISMEDIA, July 10, 2007—(MarketWatch)—More than a quarter million black and Hispanic families are expected to lose their homes in the next few years due to foreclosure. For many, the financial trouble will be traceable to a mortgage they should never have been given.

The heads of these households signed up for mortgages that appeared affordable, some with enticingly low starter rates. But what they were really agreeing to were loans with ultimately onerous terms, high costs and prepayment penalties that make refinancing the loan difficult.

The problem is worse for minority borrowers, consumer advocates say, because they were disproportionately pushed into these subprime mortgages even when, in some cases, they qualified for conventional financing. Subprime loans are generally made to those with blemished credit histories.

And the troubles have been exacerbated by a confluence of perilous conditions in the housing market — dropping home prices in many areas, sloppy lending practices and insufficient regulatory oversight.

Compared with their white counterparts, African American and Hispanic borrowers were more than 30% more likely to receive a higher rate on many types of loans, even after accounting for differences in risk, according to a 2006 report from the Center for Responsible Lending, a research and policy nonprofit. The Federal Reserve has also observed discrepancies in higher-priced lending across racial and ethnic groups.

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