**The following posting comes from fellow FH Hispania colleague and new blogger Ray Fohr in Houston.**
For many Latinos, homeownership means living the American dream. In my hometown state of Texas the number of Hispanic homeowners close to doubled from 1995 to 2005–similar to national trends. But most minority buyers were relying on subprime mortgages that came with adjustable rates, and soon saw dramatic increases in their monthly payments.
The increased risks of lending to borrowers with low credit records justified the industry’s higher rates, and experts offer multiple answers for the biased lending patterns. One answer is that banks tend to stay away from minority neighborhoods and therefore minority borrowers, another reason is mortgage companies usually set up shop in minority neighborhoods which are already scarce of traditional banks with full-suite services. For Hispanics, the problem increases due to language barriers and communities continuously referring relatives and friends to known loan officers who in the long run tend to prove deceitful.
What’s clear to most experts is that better monitoring and controls were needed. While foreclosures are getting a lot of ink in the media, the reality is that more consumer education is needed to effectively counsel buyers on the risks; what it means for them in the long run, where to go for help and how to avoid it.
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