Foreclosures in state hit Latino homes hardest
Robert Selna, Chronicle Staff Writer
Wednesday, August 18, 2010
A review of the damage wreaked on California communities by the housing bust shows that Latino households suffered nearly 50 percent of the foreclosures and that loan defaults are concentrated in the state's Central Valley.
That area, which includes the Sacramento and San Joaquin valleys, features six of the top 10 California metro areas for foreclosure concentrations, according to the Center for Responsible Lending, which released a comprehensive report Tuesday.
No California communities have experienced a higher percentage of defaults than Modesto, Merced and Stockton - each of which had a foreclosure percentage of around 16 percent between late 2006 and 2009, the study found.
"The signature finding of this report, that there is a disproportionate rate of foreclosures for Latinos, is really stunning," said Paul Leonard, director of the California office for the Center for Responsible Lending. "The data shows that high-cost loans correlate with foreclosures and that there was a big presence of subprime lending to the (Latino) demographic and in areas where there are concentrations of Latinos."
The center, a national nonprofit organization dedicated to fair lending practices, reported that minorities and remote suburbs - where incomes did not keep pace with escalating housing prices and unemployment has been high - were disproportionately represented in loan defaults.
Contradictions
While identifying the state's hardest-hit regions and residents, the report, based on 877,173 properties foreclosed on from October 2006 through October 2009, also debunks some conventional beliefs about the foreclosure crisis.
According to the study, most defaulting borrowers were not stretching beyond their means to buy a big dream home. Instead, the report data show that the typical foreclosed property in California is relatively modest and valued below the median price for its region. It also indicates that just over half of foreclosures relate to refinanced loans.
The center hopes that the report will encourage lenders to aggressively pursue loan modifications and principal reductions and to invest in regions most harmed by the foreclosure crisis. It comes on the heels of the recent enactment of the Dodd-Frank financial reform bill, which includes some protections against predatory and discriminatory lending policies, including stricter underwriting rules and the creation of a bureau intended to rein in irresponsible lending practices.
The California Mortgage Bankers Association responded critically to the report. A representative said it ignores unemployment - one of the major causes of foreclosures - and argued that most of its recommendations were already under way.
"Merced, Modesto and Stockton, all in the Central Valley, were Nos. 4, 6 and 7 for unemployment in the United States in 2009, and that is not emphasized in this report," said Dustin Hobbs, communications director for the California Mortgage Bankers Association.
Hobbs also said that home values have depreciated significantly in the Central Valley, which is an important factor for lenders when deciding whether to extend loan modifications.
In recent months, the federal and state governments have initiated programs to try to help defaulting residents stay in their homes, including incentives for principal loan reductions and extended loan payment plans.
Push for requirements
While other efforts will begin in the coming months, so far, the principal reduction initiatives have encouraged, instead of required, lenders to work with homeowners.
State legislation, SB1275, which could come up for final approval any day now, requires lenders to contact a borrower prior to filing a default notice, provide them with a loan modification application and process the application before starting the foreclosure process. Unlike the federal initiatives, it gives the borrower the right to sue if the policies are not followed.
Tuesday's report also says that Latinos, who represent 36.6 percent of California's population, received 29.9 percent of all mortgage loans originated between 2004 and 2008, but were subject to 48.7 percent of foreclosures.
Latinos' share of higher-rate loans in California was 47.1 percent between 2004 and 2008, which correlates with general discriminatory lending practices at the time, the report said.
According to the study, it is well-documented that Latino and African American families disproportionately received the most expensive and risky types of loans during the subprime lending boom. In 2006, for instance, federal figures show that among consumers who received conventional mortgages for single-family homes, roughly half of African Americans and Hispanic borrowers received a higher-rate mortgage compared with about 18 percent of white borrowers.
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In Rep. Dan Tancredo’s district there have been more than 10,000 mortgages owned by illegals that went into foreclosure. It’s only part of the border to border crime wave perpetrated by illegals from Mexico.
Time to fight AMNESTY and OPEN BORDERS?
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E-Verify for Mortgage Applications (fraudulent claims from illegal immigrant)
Rep. Kenny Marchant Proposes Bill to use E-Verify for Mortgage Applications
Tuesday, February 9, 2010, 9:56 AM EST - posted on NumbersUSA
Rep. Kenny Marchant
Rep. Kenny Marchant (R-Texas) has offered the Mortgage E-Verify Act that would require a mortgagor to be verified through E-Verify when applying for a modification of a home loan owned by Fannie Mae or Freddie Mac.
"As a member of the House Financial Services Committee, I am happy to introduce my bill, the Mortgage E-Verify Act, which would require, as a condition for modification of a home mortgage loan held by Fannie Mae or Freddie Mac or insured by the Federal Housing Administration (FHA), that the mortgagor be verified under the E-Verify program," Rep. Marchant said in a press release. "My bill will potentially save millions by cutting down on fraudulent claims from illegal immigrants and protect taxpayers from subsidizing the restructuring or renegotiation mortgages of illegal immigrants."
Rep. Marchant's bill is a result of a major case in Nevada where a loan officer submitted false income and employment documentation to help illegal aliens secure FHA loans. The scam totaled $6.2 million in loans with many going into default, costing HUD nearly $2 million. The loan officer was found guilty on 32 counts of submitting false information.
"E-Verify is a fantastic program which I have supported making permanent for employers," Rep. Marchant said. "Mandating its use as a condition for home mortgage loan modifications would help eliminate waste, fraud, and abuse in the system and bring integrity to the process. In fact, the Treasury Department's Financial Crimes Enforcement division (FinCEN) estimates that mortgage fraud increased 1,411 percent from 1997 to 2005. Furthermore, two-thirds of fraud reports in the last decade are due to falsified statements on loan documents. My bill would curb these abuses and protect the taxpayers."
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Lou Dobbs Tonight
Monday, November 12, 2007
Mortgage giants Wells Fargo and Countrywide Financial are accused of slapping dubious fees on homeowners struggling to save their homes. With fewer new mortgages being written, these
companies appear to be leaning on these lucrative fees to stay profitable—with devastating consequences for homeowners. We’ll have that report.
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