Foreclosures Have Not Been Kind to Latinos

January 15th, 2009 | Tags: Foreclosures

The San Bernardino region has been one of the worst foreclosure hit areas in California. Most of the residents are Hispanics. Foreclosures have not been kind to these Latinos. There was a time when in an endeavour to promote house ownership among them was strong and they were persuaded to take sub-prime mortgages. The intention was good – promotion of the great American dream of owning a house. But when the mortgages turned sour due to various factors, it is the Hispanics who have been one of the worst affected communities.

Aracely Panameno is the director of Latino affairs at the Center for Responsible Lending. She said that during the peak hours of the housing boom she had tried to focus and show to the Hispanic Caucus with facts and figures how many of the Latinos were being pushed into risky and costly sub-prime mortgages but Hogar (the caucus that launched this housing initiative) did not pay much attention.

When the foreclosure meltdown began many new house owners found their houses on fire. The national figures on foreclosure avoided statistics on ethnic and racial groups affected by it. But there is clear proof that the Hispanic borrowers have been more affected than others. This is because the housing bubble was most prominent in those areas that had major slices of Hispanic residents – southern California, Florida and Nevada.

In the counties of America where the Hispanics are more than 25% of the population, out of every 1,000 residents banks have repossessed 6.7 houses since the beginning of 2006. In other places, the repossession is 4.6 houses per 1,000 residents. This is according to RealtyTrac.

The Hispanic advocates are blaming sub-prime mortgage lenders for the mayhem. It is the latter’s predatory lending on vulnerable and simple borrowers that has led to this sorry state of affairs. California Rep. Joe Baca has blamed the borrowers in a written statement accusing them of taking advantage of the financial illiteracy of the borrowers. He accused the lenders and brokers for being too eager to make “bigger profits”.

A more complicated picture emerges after taking a closer look at the network of events and organizations that were at work. The executives managing sub-prime mortgages were advisers to Hogar. For this $2 million was rolled out towards research funding. The lawmakers and the advocacy bodies pressed hard for the availability of easy credit that was the direct cause of this foreclosure crisis.