by José de la Isla
Aracely Panameño
A Jan. 5 Wall Street Journal story by Susan Schmidt and Maurice Tamman mugged some Latino leaders connected with housing advocacy. Congressional Hispanic Caucus members and CHC’s separate but closely allied nonprofit public policy institute came under close scrutiny for the appearance of an overly close association with troubled mortgage lenders. The article said congressional representatives and the institute received contributions for dubious purposes.
Schmidt and Tamman asserted Congressional Hispanic Caucus members “received donations from the lending industry and saw their constituents moving into new homes, pushed for eased lending standards, which led to problems.”
At least $2.3 million in political contributions were made to members of the Hispanic Caucus at the height of the subprime mortgage expansion in 2005.
Countrywide Corp., Washington Mutual, and New Century Financial, Ameriquest Mortgage Corp., Fannie Mae and Freddie Mac were among the companies mentioned that contributed and participated in an internship, research and advocacy program, called Hogar, administered by the Congressional Hispanic Caucus Institute.
Aracely Panameño, of the Center for Responsible Lending, was said to have attempted to warn Hogar with data about shortcomings in housing lending practices and impacts on Latinos.
The biggest judo chops were saved for California Congressman Joe Baca, the immediate past chairman of the Congressional Hispanic Caucus and a longtime advocate for opening up first-time homebuyer opportunities.
Roughly 9,200 families in San Bernardino, Calif., Baca’s district, lost homes to foreclosures.
AmeriDream Inc., a nonprofit housing company and an Hogar sponsor, provided a $25,000 charitable contribution in October 2008 to a foundation set up by Baca. Baca backed AmeriDream’s seller-financed down-payment assistance program with money that originated from home builders who made donations to the nonprofit.
The program was out-lawed last year through new housing legislation. Now Baca is cosponsoring a bill to allow similar, but not the same, approach for seller-financed down-payment assistance to low-income Federal Housing Administration borrowers.
The WSJ story’s tone and impression was that of borderline wrongdoing or at least ethically challenged activity. Lapses in good judgment, yes. Coming under the soft, romantic sway of money, probably.
But having Latinos take the brunt of the subprime mess is taking it too far.
There’s no question subprime schemes front-loaded Latino clients, although so far data is unavailable by ethnicity. Nationally 1.5 million homes (not just Hispanic households) were lost and another 2 million families with subprime loans are in danger of losing theirs in the near future.
Esther Aguilera, president of the Congressional Hispanic Caucus Institute, told WSJ she was shocked by the story’s conclusions and its accusations. They missed the point about the root causes of the housing crisis and “protections for families from unscrupulous predatory lenders,” she said.
Ed González of the Real Estate Associates Latinos in Houston, told me by e-mail that lending fundamentals were clearly compromised during the go-go years. Now, he asks “who/what made the decision to over look or minimize lending guidelines?”
There is plenty of blame to spread around and other aspects to investigate. But, for scapegoating purposes one would have to believe Latinos were turning the dials on world banking vaults and making puts and calls on hedge funds and packaging mortgages on Wall Street for Europe and China.
So trying to hang the jacket on what seems like an “Industrial-Latino Housing complex” is, to say the least, going too far. While it may have uncovered some of those reaching into the cookie jar, they are not the ones who baked the bad batch.
Getting little attention is another damage done by this housing collapse. It is one affecting many families of this generation who will now look at the American Dream thing as just another scam. Hispanic Link.
