Statistics about California’s foreclosure crisis involving loans originated between 2004 and 2007 abound. During the period from July 2006 through October 2009, 48% of California homes foreclosed on and repossessed by lenders were owned by Latinos, the ethnic group hardest hit by California’s foreclosure crisis as reported by the Center for Responsible Lending (CRL).
Further, 54% of African-Americans and 47% of Latino homebuyers in 2006 were charged higher interest rates on their mortgages for single family residences (SFRs) than non-Hispanic, Caucasian borrowers. Today, Latinos account for nearly half of California’s foreclosure volume, but they only make up 21% of California’s homeowners and one-third of California’s adult population. However, the high volume of foreclosures these homebuyers suffered was not the result of their ethnicity, but rather the terms of the loans the lenders saw fit to give them.
first tuesday take: The most revealing factor in the CRL report is the fact lenders targeted then steered Latinos and other minority borrowers into unacceptable, improper real estate financing — adjustable rate mortgages (ARMs) — solely to increase profit without separate economic justification. With exposure to predatory lending practices, no first-time homebuyer was safe (much less protected by the enforcement of regulations) from knowingly risky mortgages made during the Millennium Boom. These ARM loans, improper when made, now weigh heavily as a contributing factor to the dire straits of California’s real estate market since nothing is being done to square loan balances with current home values. [For more information on ARMs, see the March 2010 first tuesday article The danger of an ARMs build-up.]
Re: “Dreams deferred: impacts and characteristics of the California foreclosure crisis” from the August 2010 Center for Responsible Lending report; “Foreclosures in state hit Latinos hardest” from the San Francisco Chronicle; “California home foreclosures hit Latinos hardest, study says” from the Sacramento Bee; “Study: how to stop unnecessary foreclosures” from the Orange County Register.
Violetta said: …”foreign & ethnic communities notoriously hire unlicensed agents & have no respect for the American way of doing busiiness (sic) – with regulations & guidlines.”
Shortsighted and Uninformed is how I would evaluate that statement!! Those very “regulations and guidelines” are the very ones that Wallstreet, the TOP of the Predatory foodchain used to RIG the whole R.E. Bubble.
Here’s how: in 1999, Den Phil Gramm (R-TX) pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.
But Gramm’s most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. … President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. “Nobody in either chamber had any knowledge of what was going on or what was in it,” says a congressional aide familiar with the bill’s history.
It’s not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act’s inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the SEC nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus “protect financial institutions from overregulation” and “position our financial services industries to be world leaders into the new century.”
Subprime 1-2-3
Don’t understand credit default swaps? Don’t worry—neither does Congress. Herewith, a step-by-step outline of the subprime risk betting game. **
** The link to the rest of the article, and it is and EYEOPENER explains how we were SCREWED by the Banksters who were Aided and Abetted by the Congress and a beleaguered president.
Certainly, the “Boots on the Ground” Real Estate Agents and Mortgage Brokers knew full well that some of these folks were gonna be unable to make their payment once they adjusted out of their “TEASER” phase but with a fat REBATE sitting on the table it proved to be waaaay too much temptation so they pulled the trigger on screwing the Uninformed buyer.
http://motherjones.com/politics/2008/05/foreclosure-phil
Is there any help for latino who invested in a second home as a investment?
the investment came from the primary home owner`s occupy equity!
I was in lending for many years and the above statements are absolutely correct in the Latino Community. Blind trust of there fellow Latinos and massive fraud was everywhere.
I completely agree with Violetta. We owned our own mortgage company and had hispanic clients come in and we would soon realize they did not have the proper documentation. We told them without the proper documentation they could not purchase property. They would tell us that they could get it done at another office. Sure enough a few months later we hear they bought a house and it would be through a hispanic agent who forged their documents and the clients knew it!
I have been in the business since 1988 & owned my company since 1992. I have discovered that in the Latino & black communities were served improperly by their own peers. Latinos & blacks preferr to use agents of their own ethnic & race & are exploited by these greedy, unscrupulous & unlicensed ‘agents’.
It is the same in the Asian & Middle Eastern communities – only these communities bargain down rates & fees.
The R.E. & mtg. companies of foreign & ethnic communities notoriously hire unlicensed agents & have no respect for the American way of doing busiiness – with regulations & guidlines.
I could not & did not compete in that arena. I had to let ‘agents’ go who came in with that training & attitude. I did not hire unlicensed agents – & that caused a stir in my own church too. The black & hispanic Christians behaved the same as the others – even those in leadership roles.