Resources for Latino Families Affected by Foreclosure

February 2, 2009 by Elizabeth Beachy  
Filed under Civic Participation

Shortly before the foreclosure crisis, Latinos were accumulating wealth primarily through home ownership. Between 1996 and 2006, Latino expenditures on mortgage interest and charges had increased by 216%, bringing Hispanics and Non-Hispanics close to financial parity.

When the foreclosure crisis hit, it hit Latino communities harder.

According to the Center for Responsible Lending, in 2004 Latinos were between 29% and 142% more likely than Whites to receive a higher-rate loan. Predatory lenders advertising in Spanish then capitalized on language barriers in complex negotiation processes, and as ACORN reports, steered one- third to one-half of subprime borrowers to higher cost loans, despite the availability of better loan options.

Predatory lenders held a larger share of the mortgage market in predominantly African-American and Latino neighborhoods than in non-minority neighborhoods. A collaborative study released by the Woodstock Institute showed that high-risk lenders held 18.8% of the market share in neighborhoods that were comprised of over 80% minority population and only 5.3% in neighborhoods where minorities were less than 10% of the population.

These practices led to the foreclosure crisis and translate into Latino borrowers losing between $76 billion and $98 billion on mortgages made between 2000 and 2008 according to United for a Fair Economy. Alongside these losses, ACORN predicts an additional $32 billion lost due to falling property values. This is devastating to the financial well-being of the Latino community.

The rental market has also been affected by the foreclosures, leaving many renters evicted on short notice. This, in turn, increases rates of Latinos living in overcrowded conditions, the secondary symptoms of which include: homelessness, dependence on public services, and neighborhood conflict.

To read more about how the foreclosure crisis is affecting Latino communities, visit the Latinos United website or read their publication on Latinos and foreclosure.

Resources for Families Facing Foreclosure

A number of resources exist to help families facing foreclosure navigate the complex mortage systems and legislation.  The LSC Resource Information site offers a series of foreclosure resources to help legal aid services address issues related to home ownership; renter issues; building a home foreclosure mitigation project and others.  It also includes community legal education resources, pro-bono projects, and other resources that service providers can refer clients to.  Visit LRI’s Foreclosure Resources page for these and other resources.

The Federal Reserve Bank of San Francisco offers several tools for service providers seeking to mitigate the impact of home foreclosures, including a four-step toolkit. 

An excellent resource for families who are thinking about purchasing a home, is Freddie Mac’s “Don’t Borrow Trouble” website which offers tips to help families avoid predatory lending practices.

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