Foreclosures are non-discriminatory. They affect all races, genders, ages, and classes. While we hear about the effects of foreclosure on the real estate market and the economy on a daily basis, we don't often receive specifics on how it may affect one group more than another.
According to the National Council of La Raza (NCLR), Latinos have been significantly impacted by the increase in foreclosures. Among Latino homeowners, more than 17 percent have or will soon lose their home to foreclosure (based on a CRL Research Report entitled "Foreclosures by Race and Ethnicity: The Demographics of a Crisis.") This news is particularly disturbing, even devastating, to the Latino middle class who historically have invested 2/3 of their entire wealth in home ownership.
The crisis faced by Latino homeowners involves more than housing. With the majority of their wealth tied to their homes, foreclosed Latinos lose the equity needed for their future. As a result, there is a diminished potential to fund their retirement or further their education or that of their children. "Foreclosures by Race and Ethnicity" states that foreclosure will result in approximately $177 billion lost by Latino families. With one million Latino families affected by foreclosure, the loss of equity and wealth could result in the elimination of the middle class for this group.
Unemployment has further complicated matters, making it difficult or impossible to obtain a loan modification which could keep Latinos in their homes. Insufficient income is the main reason for modification denials, and with stagnant job growth, long-term unemployment is likely to be experienced by those out of work. Therefore, the NCLR proposes a grace period longer than the average three months offered by most banks -- one that is more aligned with the average time it takes the unemployed to secure employment and boost their income.
As Latinos face the loss of wealth, the loss of their homes, and high unemployment rates, the triple impact does more than lower the income class of these families, it also has negative impacts on the family as relationships become stressed and children have difficulty at school. The Latino middle class is currently feeling the brunt of the foreclosure crisis, and the NCLR is offering potential solutions to help them stay in their homes and to provide them with support and options if they cannot.
The NCLR publication, entitled "Will the Foreclosure Crisis Consume the Latino Middle Class?," stresses the devastating impact foreclosures have on Latinos, and the recommendations provided to curb that impact could benefit Latinos, as well as other at-risk homeowners:
• NCLR recommends a homeowner advocate office to help homeowners who have been wrongfully denied loan modifications.
• They support mandatory loss mitigation requiring banks to afford families all other options to save their home before foreclosing.
• They call for bankruptcy judges to be given the authority to reduce homeowner debt for primary residences.
• NCLR also suggests increased measures to help foreclosed families transition after losing their home, such as giving them an opportunity to rent their home back from their lender, with the possibility of buying it back.
These measures could provide relief to struggling homeowners everywhere, but they are particularly important to Latinos, who are among the hardest hit. "Foreclosures by Race and Ethnicity" states that among all races, Latinos (17%) and African Americans (11%) are the highest foreclosure rates among all demographics.
Anna Cuevas, known as "America's Loan Modification Guru," has guided thousands of Americans in keeping their homes from foreclosure. A popular blogger (askaloanmodguru.com), Cuevas has been called a "superhero of the loan modification industry" and has been nominated for CNN's Heroes. She is the #1 bestselling author of Save Your Home Without Losing Your Mind or Money.