News Release

June 4, 2010

Contact: Erin Angell Collins, 202-220-6317, ecollins@nw.org
Doug Robinson, 202-220-2360, drobinson@nw.org

NeighborWorks America Report Shows Hispanic Homeowners
Hard-Hit by the Foreclosure Crisis
8 Percent of All Homeowners Are Hispanic Homeowners, Down 3 Percent from 2009

Washington, D.C. –Today NeighborWorks America, the administrator of the Congressionally authorized National Foreclosure Mitigation Counseling (NFMC) program, announced that of the more than 870,000 homeowners who received foreclosure prevention counseling as a result of NFMC funding through January 31, 2010, 21 percent were Hispanic homeowners, more than twice their representation of total homeowners. In all, 52 percent of NFMC Program clients were minority homeowners, or more than twice the overall percentage of minority homeowners.

Hispanic homeowners are the only racial/ethnic minority group to see a decrease in total homeownership since 2009. Nationwide, the number of Hispanic homeowners decreased by 3 percent from 2009; Hispanic homeowners now make up only 8 percent of the nation’s homeowners, according to industry studies. African American homeowners account for
9 percent of the nation’s homeowners, and Asian/Pacific Islanders account for 4 percent.

“During the housing boom, many Hispanic homeowners were steered into high-cost loans by unscrupulous lenders in order to gain a foothold into the housing market. Now that the boom has gone bust, the foreclosure crisis is disproportionately affecting Hispanic homeowners,” said Ken Wade, CEO of NeighborWorks America.

The data reported today are part of the fifth NFMC report distributed to Congress on May 28, 2010, and are based on client information provided from more than 1,700 HUD-approved housing counseling intermediaries, state housing finance agencies, and nonprofit housing counseling agencies that received NFMC funding through January 31, 2010.  As of May 24, 2010, more than 967,000 homeowners have received foreclosure prevention counseling as a result of NFMC funding.

For the first time, all NFMC clients who sought foreclosure prevention counseling were more likely to hold fixed rate mortgages than adjustable rate mortgages (ARMs). In 2009, Hispanic clients who sought foreclosure prevention counseling were more likely to hold adjustable rate mortgages (ARMs) than fixed rate mortgages: Forty-seven percent
(47 percent) of Hispanic NFMC clients held ARMs, and 41 percent held fixed rate mortgages. The report released today found that Hispanic clients were now more likely to hold fixed rate mortgages (54 percent) than ARMs (38 percent). African American clients were twice as likely to hold a fixed rate mortgage (61 percent) than an ARM (30 percent). White clients were more than twice as likely to hold fixed rate mortgages (67 percent) than ARMs
(25 percent). Nationwide, only 18 percent of outstanding mortgages are ARMs.

The report also noted that lower-income homeowners are likely to have a greater rate of foreclosure starts than higher-income homeowners. Twenty-one percent (21 percent) of Hispanic NFMC clients reported earning 80 percent or below their Area Median Income.

The NFMC program is positively affecting the lives of real people like Francisco of North Miami Beach, Florida.

Francisco had steady work as a tour guide in Miami, Florida, until the recession hit. “Suddenly, people stopped coming,” he said. Eventually the owners closed the company, and Francisco found himself without a job. His wife, Josefa, makes a little money taking care of children in their condominium building, but it wasn’t enough to support them.

They had previously refinanced their condominium, which they had owned since 1990. Around the time Francisco lost his job, the interested rate adjusted, increasing the monthly payment from $1,500 to $1,850.   On top of that, there was a $550 monthly maintenance fee on the condo. “I didn’t make any money, not even a penny, for three or four months,” Francisco remembered. “It was impossible to make the payments.”

Francisco and Josefa hired a lawyer who said he could talk to the bank and help them sell the condo. They paid him $500 a month for his services, but he took their money and did nothing. “Every month I paid the $500 and asked him about a loan modification. After seven months, he didn’t even return my calls,” Francisco recalled.

By this time, Francisco was working with various tour companies, but he was making a fraction of what he had previously earned. Francisco and Josefa didn’t make a mortgage payment for six or seven months, and their lender informed them that they planned to foreclose.

It was then that Francisco’s sister saw a television ad for the Hope hotline and gave him the phone number. When he called, he was referred to Pastor Darryl Lovett at Brownsville CDC, a NFMC Program Sub-grantee funded through Mission of Peace, a NFMC Program Grantee. They immediately scheduled an appointment to talk in person. “I talked to him for more than two hours,” said Francisco. “He told me what papers to bring, and I did everything he said.”  

After one week, Pastor Lovett had worked with the bank to reduce the interest rate, resulting in a monthly payment of $698 a month. Francisco and Josefa paid on time during their three-month trial period, and they continue to pay on time now. “I pay online the 28th of every month,” said Francisco. He and Josefa are able to stay in their home and enjoy visits from their grandchildren.

Francisco was impressed with Pastor Lovett’s patience in dealing with the mortgage company. “He was talking to them forever. They put him on hold for 15 minutes at a time,” he said. “But he waited; he was very patient. My wife says he’s an angel.”

“We continue to urge homeowners facing foreclosure to talk to the right people – nonprofit, HUD-approved housing counseling agencies, like those funded by the NFMC Program. If you are facing foreclosure, nonprofit housing counselors will work with you one-on-one to help you determine your best options in order to avoid foreclosure,” said Ken Wade, CEO of NeighborWorks America.

Homeowners who would like to receive foreclosure counseling from a NFMC Program-funded counseling organization in their community can visit www.findaforeclosurecounselor.org.  

For more information about the National Foreclosure Mitigation Counseling program, visit www.nw.org/nfmc.

About NeighborWorks America

NeighborWorks America creates opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. Since 1991, we have assisted nearly 1.2 million low- to moderate-income families with their housing needs. Much of our success is achieved through our support of the NeighborWorks network ― more than 235 community development organizations working in more than 4,400 urban, suburban and rural communities in all 50 states, the District of Columbia and Puerto Rico. In the last five years, NeighborWorks organizations have generated more than $15 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals.