10.04.2007

Latino Families Scramble to Keep Homes

In an editorial on the looming mortgage crisis, the NYTimes (Myths Spun by Lax Lenders - 7.10.07) noted that...

Mortgage defaults are rising, and worse is yet to come. Between now and the end of next year, the interest rates on $660 billion in adjustable-rate mortgages will increase for the first time. Over half of that is in subprime loans — those made to borrowers with weak credit — and is at high risk of default as monthly payments rise.

That same week, MarketWatch issued this warning (by Ruth Mantell, Minority Families Face Wave of Foreclosures - 7.6.07):

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 reason? According to Mantell...

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.
As predicted, Latinos and Africans Americans have begun losing their homes in large numbers. Enlace's Hiram Soto (translated by New American Media's Elena Shore) captures this evolving story in Latino Families Scramble to Save Homes.

Araceli Flores was so happy to buy a three-bedroom house that she didn’t ask many questions about the mortgage. “Everything I’ve achieved is suddenly falling apart.”
What's encouraging is that Latinos are a spunky people--and many of the homeowners are scrambling to preserve their hard-earned piece of the American Dream. However, the combination of expensive loans, language barriers and the unscrupulous practices of real estate agents, mortgage brokers and lawyers is too much for them to overcome.

Thankfully, a Latino professionals are mobilizing with the goal of providing assistance to distressed homeowners.

With volunteers from the National Association of Hispanic Real Estate Agents at the forefront, this coalition has begun offering clinics in Spanish to provide one-on-one help for families that have problems paying their mortgage. The workshops have been crowded to maximum capacity, with experts analyzing each family on a case-by-case basis and lawyers available to help with any irregularities.
Of course, much more needs to be done by the government, financial institutions, the real estate industry and by civic organizations to educate and protect new home buyers.

However, it is unconscionable that Latinos and African Americans are 2.5 times more likely than whites to receive risky, high-cost loans--even when they have similar credit. Where are the civil rights groups, prosecutors, Congress and the Courts?

Related:

Disparities persist between white, minority mortgage applicants
Foreclosure Wave Bears Down on Immigrants
More minorities denied mortgages
Subprime Loan Sharks
Minority Borrowers Steered Toward Predatory Loans
Mortgage Discrimination Is Alive And Well

US: Banks prone to sell minorities pricey loans
Wealthier minorities still face loan rejection