The Unraveling of the American Dream

Based in large part on the increased availability of new mortgage products that were often aggressively marketed to minority households, a generally healthy economy, and government policies that encouraged homeownership, a substantial number of Black, Hispanic, and foreign-born households became homeowners in the last 15 years. As a result, the homeownership rates for these demographic groups rose dramatically in a relatively short period of time. For example, the Joint Center for Housing Studies at Harvard University has reported that Black households increased their homeownership rate from 42.5% in 1994 to 47.8% in 2007, and Hispanics increased their homeownership rate from 41.2% to 49.7% over the same period. According to a report by the Pew Hispanic Center, the foreignborn homeownership rate increased from 46.5% in 1995 to 53.3% in 2006. Researchers and policy makers have an acute concern that racial and ethnic minority households that recently became homeowners have disproportionately experienced foreclosures. Large numbers of new minority homeowners have recently used high-risk, high-cost mortgage products, sometimes generically referred to as subprime mortgages, to purchase homes.1 Even after accounting for a variety of factors related to credit risk, housing quality, and other variables, subprime mortgages have been strongly linked to foreclosures.2 Because very little research has focused on the relationship between nativity status (i.e., whether someone was born in the