Wednesday, January 07, 2009

Subprime Lending Leads to Surge of Latino Foreclosures

A push for Latino homeownership by lawmakers and advocacy groups, followed by predatory lending, has contributed to a wave of foreclosures among Latinos, reports the Wall Street Journal.

By: http://www.diversityinc.com/public/5047.cfm

In 2003, the Congressional Hispanic Caucus created a housing program for Latinos called Hogar, which is Spanish for home. Hogar worked with the mortgage industry and with advocacy groups to increase mortgage lending to Latinos. At the time, the Latino homeownership rate was 47 percent, compared to 68 percent for the overall population. The program seemed to be a success, with Latino homeownership soaring to 6.1 million by 2007, an increase of almost 50 percent over 2000. Homeownership nationally grew only 8 percent in the same period.

But the growth was fueled by "reverse-redlining," according to Aracely Panameno, director of Latino affairs for the Center for Responsible Lending. Lenders were seeking out Latino borrowers and pushing them into risky subprime loans. In 2005 alone, subprime mortgages to Latinos jumped 169 percent, according to the Federal Financial Institutions Examination Council.

Now statistics suggest that Latinos are paying the price with a surge in foreclosures. The Journal reports that in counties where Latinos make up more than 25 percent of the population, banks have taken back 6.7 homes per 1,000 residents since the beginning of 2006. That's compared to 4.6 per 1,000 residents in all counties. Part of the problem is that there are also large Latino populations in states like California and Florida where housing prices have fallen steeply.

Click here to read the full story in the Wall Street Journal.

Click here to read "The Housing Crisis: Blacks & Latinos Targeted" on DiversityInc.com.

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