Community in Peril: Latino Borrowers Struggling After Meltdown’
por César Castro
(Primera parte en una seria de cinco partes)
WASHINGTON, D.C. (Hispanic Link News Service) — Nationwide, the still unfolding foreclosure epidemic has crippled countless communities and drained the hard-earned wealth of many families. For an already economically fragile Latino community, this continuing financial meltdown has been nothing short of a catastrophe. States with large or rapidly growing Latino populations such as California, New Mexico, Nevada and Florida continue to lead the nation in the effects of this crisis.
These developments did not have to happen.
In 2006, the Center for Responsible Lending (CRL) published research that revealed Hispanic borrowers were more likely to pay for high-priced, riskier subprime loans than their white counterparts with the same credit scores1. In fact, more than 40 percent of the loans made to Latino borrowers in 2005 were in the form of riskier, high-priced loans2, the very type that sparked the surge in foreclosures over the last two years and resulted in the current recession.
Despite early warning signs, the subprime market grew in the Latino community as the financial appetite of Wall Street investors hungered for even more of the risky high-priced loans without accountability or regard for the future of these neighborhoods.
As marginalized borrowers with a historically documented lack of access to credit and financial literacy, Latinos were perfect prey for the flock of predatory lenders and resulting abuses.
Keep in mind that 90 percent of the high-priced loans that sparked this crisis were made to families who already owned a home. Doors to first-time homebuyers were not being opened by these toxic products, despite industry claims to the contrary. Now as millions of foreclosures continue to mount and a foreclosure filing occurs every 13 seconds, Latino families continue to be one of the groups affected the most by the crisis.
Hardest hit are states with large Latino populations: California, New Mexico, Nevada and Florida. In New Mexico alone, Latino families accounted for more than 36 percent of the foreclosures in 2009. In the more densely populated states of California and Florida, Latino households accounted for more than 243,000 foreclosures last year alone.
Even relatively new epicenters for Latino activity such as Nevada are not immune from the recent collapse in the financial sector. In 2009, Latino families in the state faced an estimated 72,157 foreclosures, with many more projected for this year.
Most regrettably, no end is yet in sight. As a nonprofit, nonpartisan research and policy organization, CRL projects that in the next four years more than 1.3 million foreclosures will occur in the Latino community. In addition, adjustable interest rates will likely soon reset, putting more pressure on families already struggling to keep up with mortgage payments in a sluggish economy. Even as new federal loan modification programs begin to reach affected families, new foreclosures will likely far outpace any help now available.
But as bleak as the situation may appear, there is a silver lining for the Latino community. Efforts are underway to make the federal home loan modification program more accessible to troubled borrowers. More importantly for the long-term financial health of the nation, Congress is considering legislation that would create a new agency dedicated to passing and enforcing safeguards for all consumers on every financial front, from mortgages to bank fees and small-loan programs.
The proposed Consumer Financial Protection Agency (CFPA) would unify and streamline consumer protection powers that now are scattered across several federal agencies and largely ignored. The Latino community needs to voice support for this legislation to elected officials at every level of government. The CFPA would be a giant step to helping all families across the country keep more of their hard-earned money and obtain a better financial future for themselves, their children and future generations.
Despite the setbacks in recent years, one thing is certain for Latinos: the dream of homeownership and family wealth remains steadfast. Now more than ever these hopes must be protected from the abuses and deceptive tactics of predatory lenders. Hispanic Link.
