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RISMEDIA, Oct. 17, 2007-(MCT)-California’s growing Latino population has been hit especially hard by the meltdown in the real estate market and many are now paying the price for purchasing homes with subprime mortgages that should never have been approved.

That was the conclusion reached [this week] by financing experts who addressed a homeownership conference held in Coronado that was sponsored by California’s Latino legislators.

Hispanic borrowers were especially vulnerable to unscrupulous mortgage brokers who in many cases did not verify applicants’ incomes. They had little knowledge of the home-buying process, and many were Spanish speakers unable to decipher documents that are unintelligible to people proficient in English, panelists said.

“Subprime lenders are absolutely irresponsible in the way they lent money to prospective home buyers, but there are a lot of good folks who are capable of being good homeowners and are not being served by the finance industry,” said Gary Acosta, co-founder of the National Association of Hispanic Real Estate Professionals, an organization founded in San Diego.

“We are not consumers of credit, we do earn income in a nontraditional fashion, and yes, we’re willing to do just about anything to achieve homeownership and sometimes that means taking a loan that isn’t the best choice,” Acosta said. “But if we don’t create products for Latino buyers, the state will suffer the consequences.”

“Homeownership: Where Will the New California Live?” was the focus of yesterday’s conference at the Hotel del Coronado organized by the Latino Legislative Caucus. It is one of several symposiums being sponsored by the legislators on the topics of health care, job creation and civic engagement. Local and state officials, lending industry representatives and home builders attended.

Although the Hispanic population continues to grow rapidly, homeownership rates among Latinos have continued to lag. Statewide, the overall homeownership rate is 58%, compared with 48% for Latinos.

Because many Hispanics are more comfortable purchasing goods with cash, they don’t have traditional forms of credit, making it more difficult for them to take out conventional home loans, said experts addressing a panel on financing homeownership. “Just because Latinos don’t have credit scores doesn’t make them more risky,” said Leonardo Simpser, co-founder of the Hispanic National Mortgage Association.

HNMA Funding, an affiliated lending company, has come up with a loan program and an underwriting system that takes into consideration the way Hispanics handle their finances, Simpser said.

But as lending standards tighten in the wake of escalating foreclosures, Hispanics will have a harder time getting home loans, Simpser said.

“We’re trying to be more flexible,” he said.

Landon Taylor, a corporate officer with The First American Corp., pointed out that there are already loan programs offered through Freddie Mac and Fannie Mae that use rent, utility and child-support payments as alternative measures of creditworthiness.

Still, there are obstacles ahead, Taylor warned.

“Latino homeownership is at risk because of this crisis,” he said. “Lenders are saying they don’t want to lend because they think it’s dangerous.”

Clearly, more regulation of the mortgage-lending industry is needed, said Paul Leonard, who oversees California operations for the nonprofit Center for Responsible Lending. The state Legislature could help, he said, by coming up with as much as $10 million in funding to help nonprofit counseling agencies that are overwhelmed with calls for help from borrowers who can no longer make their mortgage payments.

“Subprime lending has targeted minority buyers, it’s reckless, and it’s set up thousands of Americans to fail,” Leonard said. “You need more documentation to get a payday loan than a mortgage.”

Although lenders and loan-servicing companies are under increasing pressure to help modify the loans of troubled borrowers who are facing foreclosure, the solution is more complex than that, said Brad Blackwell, retail national sales manager for Wells Fargo Home Mortgage.

“Mortgages have been sold into the secondary market, and there is not a single investor,” Blackwell said. “The people who own your mortgages are all over the world. We as the servicer don’t have the right to change the loan, and if we do modify the loans, can the borrower even afford that loan?

“Not everyone can be saved and a lot of people should not have gotten these loans in the first place.”

Copyright © 2007, The San Diego Union-Tribune
Distributed by McClatchy-Tribune Information Services.