Hispanics' American dream hit hard by mortgage crisis
Hard times: A man hangs a sign reading 'Foreclosure For Sale' on a house in the Boston suburb of Dedham, Massachusetts. The US subprime mortgage crisis severely affected Hispanic immigrants. Picture: Reuters
Tuesday, March 20, 2007
HISPANIC immigrants across the United States are being hit hard by the subprime mortgage crisis, with many risking their life savings in a failed bet on the American dream of owning their own homes.
Hispanics hold up to 40 per cent of mortgages in the troubled subprime loan market, where higher interest rates are charged to buyers with a damaged credit history or little borrowing experience.
Often new to the country and with limited English, many say they were misled by mortgage brokers and never expected their payments to be so high.
"If we took that loan it was because we didn't understand it," said Maria, a 39-year-old Mexican mother of three who recently lost her home in Kansas City.
She and her husband Francisco, both illegal immigrants, sold a US$20,000 home and bought a US$114,000 property with the kitchen of her dreams. "This new house had four bedrooms and a bigger kitchen, and that's what interested me, because I like cooking."
Two years later, with interest rates higher, they were missing their monthly payments. Unable to refinance the loan or sell to cover their debts in a depressed market, they gave up and moved to a two bedroom rented apartment in October.
About 1.5 million homeowners will face foreclosure this year, an increase of at least 20 per cent from 2006, according to housing research firm RealtyTrac.
Some mortgage brokers were too aggressive in persuading people to buy homes they could not afford.
Hispanics were especially vulnerable because immigrants have little credit history and are natural customers for subprime loans.
"Their lack of financial education and their overwhelming desire to buy a home makes them the perfect victims of predatory lenders," said Gregory Cahn, from La Fuerza Unida Inc, a housing counseling agency in Long Island, New York.
"People call me from all over the country to tell how they've been cheated. There are from 350 to 400 types of loans in the market, but brokers just sell what's convenient for them," said Aracely Panameno, director for Latino issues at the Centre for Responsible Lending, a consumer advocacy group.
The Hispanic population in the United States stands at around 42 million, and Latinos also account for most of the country's estimated 12 million illegal immigrants.
Although some brokers went too far, the rapid growth of subprime loans in recent years gave many immigrants a chance to buy homes for the first time. Experts say many Hispanics trapped with expensive subprime mortgages are looking for second jobs or renting rooms in their homes to keep up payments.
Reuters
Hispanics hold up to 40 per cent of mortgages in the troubled subprime loan market, where higher interest rates are charged to buyers with a damaged credit history or little borrowing experience.
Often new to the country and with limited English, many say they were misled by mortgage brokers and never expected their payments to be so high.
"If we took that loan it was because we didn't understand it," said Maria, a 39-year-old Mexican mother of three who recently lost her home in Kansas City.
She and her husband Francisco, both illegal immigrants, sold a US$20,000 home and bought a US$114,000 property with the kitchen of her dreams. "This new house had four bedrooms and a bigger kitchen, and that's what interested me, because I like cooking."
Two years later, with interest rates higher, they were missing their monthly payments. Unable to refinance the loan or sell to cover their debts in a depressed market, they gave up and moved to a two bedroom rented apartment in October.
About 1.5 million homeowners will face foreclosure this year, an increase of at least 20 per cent from 2006, according to housing research firm RealtyTrac.
Some mortgage brokers were too aggressive in persuading people to buy homes they could not afford.
Hispanics were especially vulnerable because immigrants have little credit history and are natural customers for subprime loans.
"Their lack of financial education and their overwhelming desire to buy a home makes them the perfect victims of predatory lenders," said Gregory Cahn, from La Fuerza Unida Inc, a housing counseling agency in Long Island, New York.
"People call me from all over the country to tell how they've been cheated. There are from 350 to 400 types of loans in the market, but brokers just sell what's convenient for them," said Aracely Panameno, director for Latino issues at the Centre for Responsible Lending, a consumer advocacy group.
The Hispanic population in the United States stands at around 42 million, and Latinos also account for most of the country's estimated 12 million illegal immigrants.
Although some brokers went too far, the rapid growth of subprime loans in recent years gave many immigrants a chance to buy homes for the first time. Experts say many Hispanics trapped with expensive subprime mortgages are looking for second jobs or renting rooms in their homes to keep up payments.
Reuters
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