Black and Hispanic communities have disproportionately high foreclosures and higher denial rates in refinancing and home-purchase loans compared to Caucasian borrowers, shows new lending data for 2009 under the Home Mortgage Disclosure Act (HMDA).
Unfair loans with high-cost terms led to high foreclosure rates, making it harder for borrowers in those same neighborhoods to get loans. In Queens, the foreclosure rate is at an all-time high.
Realtor James Van Horn, who works mostly in Jackson Heights, believes that many of these first-time homeowners didn’t know enough about the process of buying a home, which can be overwhelming and intimidating, and didn’t have enough help from their attorneys.
“Many of the people in these minority communities are immigrants who came here looking for the American Dream by buying their own home,” said Van Horn. “Instead they’re living the American Nightmare.”
Van Horn said real estate agents and mortgage brokers don’t know enough to give tax or legal advice and that’s why some people hire a lawyer. He said many of the contracts drawn up when buying a home are written in legal terms the average person may not understand. If an attorney never took the time to review the documents and advise their clients of the terms, they might not have gotten a fair deal or known their rights.
Anthony Carollo, owner of Carollo Real Estate in Whitestone, said the economy is to blame for the foreclosures. Carollo said unless more jobs become available, this problem will only continue. He pointed out that unemployment levels are higher for minorities than Caucasians. He said unemployed people fall behind on their mortgage payments, their credit scores take a hit and then they can’t qualify for refinancing. On top of that, the prices for utilities have increased in the last few years.
“How do you help them when everything is working against them?” asked Carollo.
Carollo said a solution is to create special programs to help those communities suffering the most.
Dennis Rappaport, owner of Dream House Funding in Cambria Heights, said although ethnic communities face the most obstacles and were victimized the most in this mortgage crisis, there is a bright side. There are Federal Housing Administration (FHA) mortgages available to them, with criteria that are more flexible and fair.
“Believe it or not, there are greater opportunities out there now than I’ve seen in 40 years,” Rappaport said. “Prices are getting better and properties are going for less money.”
