Mortgage Brokers Largely Responsible for Engulfing the Hispanics with Foreclosures
Posted on January 13, 2009
Filed Under Foreclosure Homes | 9 Comments
The mortgage brokers were the key players in engulfing the Hispanics with foreclosures.
Phi Nguygn was formerly a broker. He worked with two firms based in Washington that employed many from among the Latinos. Jumbo firms like Countrywide and other sub-prime lenders frequently sent their representatives to the offices of the brokers. These representatives cleverly showed them the “little tricks of the trade” to make the borrowers qualified. Often the name of the borrower was added to the bank account of a relation – this itself being an illegal step. Today Nguygn is helping foreclosure victims negotiate with the banks.
The loans given to Latino borrowers were not based on verified income of the latter but on what they stated. These no-document loans promised higher commissions for the all concerned and much less paper work.
NINA presented another problem. NINA stood for no-income-no-assets loans Originally these were meant for those who were self-employed persons of substance. But in reality NINA targeted those who did not have the requisite qualifications for getting the loan. If their finances were checked they would have run into troubled waters. It was the Hispanics among them who were disproportionately victimized.
One of the principal players in this respect was Freddie Mac. The latter says that from 2004 it started to tighten regulations and stopped purchasing NINA loans totally from 2007. Ronald Rosenfeld of Federal Housing Finance Board (it regulates banks that make house loans) said, “It’s very hard to get in front of a train loaded with highly profitable activities and stop it.”
The areas of foreclosure concentration in California, Nevada and Florida are densely populated with Hispanics. Many of them were engaged in the construction industry during the time of the boom. When the markets began to stumble the soured loans of the neighbours spread like a virus infecting all. The areas are now dotted with vacant foreclosed units.
When the housing slump struck in full force many of those involved in the Hispanic lending network began to have doubts about pushing the Latinos into these toxic loans. Sandos the head of National Association of Hispanic Real Estate Professionals admitted that many of the past members of his group had been motivated by high commissions to steer the borrowers into these risky loans. Meanwhile complaints have been filed by NAHREP with the regulators of the state against some of these brokers.
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