More Latinos face foreclosure

Joaquina Abrego and her husband decided to refinance their National City, CA home in August 2005, a home they were able to buy after many years of hard work. The loan agent they consulted said he could lower their mortgage payment to $900 after refinancing. "He said not to worry, that he was going to find me the best loan offer possible," she says. "He said he was going to take care of all the paperwork." What followed was a disaster for the Abrego family: Their monthly payments turned out to be $3,700. Because of the high stress, Joaquina's husband suffered a stroke. That led him to lose his job, meaning the family couldn't make the payments anymore. Last month the house was put up for auction and it sold for a fraction of its price. Joaquina's dream of owning a house came to an abrupt end due to the unscrupulous loan agent who never returned her calls. Joaquina's family is one of many Latino families that are facing foreclosure due to high-cost purchase loan. Unaffordable loans disproportionately impact minority and low- and moderate-income families and neighborhoods, and these loans that have led to the foreclosure crisis that is going on in the nation, according to a study by the Association of Community Organizations for Reform Now (ACORN). "We have seen a sharp increase in foreclosures in some of the urban and minority communities that most need to build wealth through home-ownership," says ACORN National President Maude Hurd. "Too many of our neighbors were steered into unaffordable exploding adjustable rate mortgages," she says, "without being given the option of fixed-rate (mortgages), and now face foreclosure, which harms their families and our communities." The study, called "Foreclosure Exposure: A study of racial and income disparities in home mortgage lending in 172 American cities," found that at the national level, Latinos were 2.3 times more likely to be issued a high-cost loan than white borrowers, while African-American home buyers were 2.7 times more likely to be issued such a loan. "Obviously there's discrimination against minority homebuyers," Aguirre says. "Sadly, it's a harsh reality." The study found that even when controlling for income, minority borrowers are more likely than whites to be issued a high-cost loan and are therefore more likely to end up in foreclosure. Upper-income minority borrowers are at higher risk of foreclosure than white borrowers regardless of income. "Many people believe that borrowers end up with a bad loan because they were desperate for money and could not get any other loan," ACORN said in a statement. "That is not at all what we have seen. Usually people are approached by a mortgage company or broker saying that they can get the homeowner a lower rate or money. They usually lie about the terms and conditions for the loans or just simply forget to mention that they could qualify for a better loan." In the San Diego metropolitan area, the study found that in 2006, one out of four home refinance loans made to Latinos were high-cost loans, and nearly one out of three home refinance loans made to African Americans were high-cost loans. In contrast, only about one out of eight home refinance loans made to whites were high-cost loans. Community groups like ACORN are calling on lenders and servicers to modify loans so that they will be affordable to borrowers. They are also calling on state and federal legislators to pass strong anti-predatory lending legislation that would protect consumers from abusive practices without pre-empting local legislation.