Current Issues in Latino Homeownership
The wave of foreclosures around the country is hitting Latino communities especially hard. Latinos hold up to 40 percent 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.
Latinos were 30 percent more likely than whites to receive a high-cost mortgage and twice as likely to receive an "option-adjustable rate mortgage" known as an ARM. In his opening remarks to the Latino homeownership summit, Congressman Albio Sires (NJ-13) detailed another chilling fact: as many adjustable mortgages begin to "reset" to much higher rates in the next year, the peak of foreclosures for Latino households will be in 2009 and 2010 - and the effects could be devastating.
However the tone of the summit was not one of despair, but instead a call to action and an examination of the best practices moving forward to help mitigate the damages caused by predatory lending and exotic mortgage financing mechanisms.
The new Obama Making Homes Affordable (MHA) program was cited as a step in the right direction, but also having significant challenges. Many Latino homeownership advocacy organizations, including summit presenters from the National Council of La Raza (NCLR) and the League of United Latin American Citizens (LULAC), call for an increased funding for financial counseling, fighting mortgage adjustment scams, and bilingual financial literacy programs.
Summit presenters also called for a multi-tiered credit qualification process for immigrant families, many of whom do not have access to traditional credit or a limited credit history. Summit sponsors Bank of America and the Federal Home Loan Bank of San Francisco committed that foreclosure prevention and responsible lending was their top priority. In closing, Congressman Sires reiterated that home ownership is still one of the surest way to establish wealth, ensure stability, and create strong, healthy, and vibrant communities.