July 10, 2012 - 3:01 pm
Latino households suffered greater loss of wealth during the economic downturn than their white counterparts, housing analysts said at the National Council of La Raza annual conference at Mandalay Bay.
In the past three years, Latinos have lost two-thirds of their wealth, compared with 16 percent for whites, said Maria Cabildo, president of East Los Angeles Community Corp. and panelist for Monday’s town hall meeting on housing at the Hispanic civil rights group’s convention.
Latinos’ average net worth fell from $18,000 in 2009 to $6,000 today, while Caucasians saw their net worth fall from $134,000 to $113,000, Cabildo said.
Many Latino families were steered toward “toxic mortgages,” and thousands lost their homes to foreclosure while they were going through the loan modification process, she said.
“How do we close the wealth gap? Homeownership is one of those ways,” Cabildo told an audience of about 300 at the meeting.
Nevada Attorney General Catherine Cortez Masto said an estimated 1.3 million Latino families have lost their homes to foreclosure across the country. That’s $54.4 billion in wealth that’s gone, she said.
“It’s just been devastating. This should be a time when young families should be able to buy a home,” Masto said.
Latino homeowners were among the hardest-hit in the downturn, and now they’re dealing with a dried-up credit market, said Richard Cordray, director of the Consumer Financial Protection Bureau.
Entire neighborhoods have been swamped by foreclosures after nearly a half century of steady home price appreciation, he said.
“Many saw their wealth go down the drain,” Cordray said. “One of the reasons for creating the CFPB is to restore confidence in the mortgage industry. When it comes to buying a home and shopping for a mortgage, we want to make sure people get a fair shake. People need to know this big investment is not a gamble. No more costs and risk buried in fine print, no more mortgages that are designed to fail, no surprises and fees they didn’t know about.”
The process of getting a mortgage is intimidating, and the paperwork is full of jargon, Cordray said. It is essential that all of the terms are clearly understood, and that interest rates, closing costs and monthly payments are clearly stated on the first page, he said.
Shaun Donovan, secretary of Housing and Urban Development, said Latino and African-American families are almost twice as likely to go into foreclosure than whites. Those statistics are “completely unacceptable,” he said.
Gerardo Ascencio, president of the National Association of Hispanic Real Estate Professionals, said he appreciated Cordray’s comments about transparency in the mortgage industry.
“I’m in the trenches. I see the pain in their eyes. All those statistics we hear, there’s a story behind it,” Ascencio said. “The other part is it doesn’t stop with foreclosures. There’s another battle. Let’s see if we can get that property back into the hands of someone who can buy a little piece of America.”
Ascencio said he has a stack of rejection letters from lenders on his desk.
“Wait. There’s all these foreclosures and vacant homes, and where are they going? I can tell you they’re not going back to the hands of owner-occupants. It’s time to apply pressure to banks and GSEs (Freddie Mac and Fannie Mae) to sell to owner-occupants, not somebody who lives 30 miles away,” the Realtor said.
“My clients need access to affordable financing and the house has to be in financing condition. Ten years from now, if we don’t fix this, we’re going to say we missed the boat because we didn’t remove the barriers.”
Contact reporter Hubble Smith at email@example.com or 702-383-0491.