April 14, 2007

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  NEWS: Hispanics Hit Hard by Foreclosure Boom

   

  A report out of the state of California by voiceofsandeigo.org is showing evidence that Hispanic consumers are being hit particularly hard by the foreclosure wave sweeping the nation in the wake of the sub-prime mortgage industry depression. Advocates and real estate professionals say minority and immigrant populations are being disproportionately impacted, as they have historically been more likely to rely on risky loans as their way of attaining home ownership. In San Diego, the communities most slammed by foreclosure have tend to harbor larger-than-average Latino populations and tend to be nearer to the Mexican border.
  
  In the past ten years, a nationwide push to up the amount of Latino homeowners happened to parallel one of the lengthiest and most spectacular periods of appreciation for home values. Latino mortgage and real estate pros launched aggressive outreach campaigns in the community, while lenders appealed to massive, untapped sections of the market by lowering their standards for qualification. As a broader lending gate allowed many more Latinos and other minorities into the housing market than had come in previously, legislation looked favorably upon the lenders' efforts to extend homeownership to those groups. But these previously championed loans have taken a turn with decreasing home values and skyrocketing default rates. Experts describe a dangerous domino effect in these communities: foreclosures bring down neighborhood homes values, making homeowners "upside-down" on their loan-to-home equity ratio, prompting further default activity.
  
  Over fifty percent of Californian Latinos who bought a home in 2005 did so using loans intended for consumers with poor or weak credit, according to the Center for Responsible Lending. Those loans generally touted low introductory rates, but reset after a few years. Thousands of homeowners are now staring down the scary terms they'd assumed they would be able to avoid by refinancing or selling their home if finances were tight. Of the 84,000-some such loans made to the state's Latinos in 2005, the center predicts nearly 17,000 will foreclose – nearly a full twenty percent.
  
  
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