Celebrating National Homeownership Month

By Elizabeth Drake, Communications Department Intern, NCLR

HousingDiscrimination_blogpic_newHomeownership represents financial security for Latino families and a better life as they work every day to achieve the American Dream. Homeownership is great for Latino families and for society as a whole as it fosters investment in the community, as well as safe and stable neighborhoods.

For NCLR’s National Homeownership Network (NHN), this is an integral part of our mission. NHN helps Latino families purchase a home and reduces the large homeownership gap between White and Latino owners. Homeownership rates had been steadily increasing until the foreclosure crisis in 2007 hit. Since then, the rate of Latino homeowners has dropped significantly. According to the State of Hispanic Homeownership Report, in 2012, the rate of Latino homeownership was down to 46.1 percent.

In order to stop the decreasing rate of Latino homeownership and ensure that all families are getting the necessary information and opportunities to become homeowners, the NHN provides prepurchased homeownership counseling directly to the community. They also emphasize one-on-one counseling in order to prepare Latino families to become mortgage-ready. A plan is created to ensure that even if the clients are not immediately ready to purchase a home, they have short- and long-term goals that work toward owning a home.

We spoke with Lautaro “Lot” Diaz, Vice President of Housing and Community Development, to learn more about NHN and how he became involved in Latino homeownership.

NCLR: How long have you been helping Latinos become homeowners?

Diaz: Well, the NCLR Homeownership Network started in 1998, so we have been helping Latinos for around 17 years.

NCLR: What are the biggest issues you see that are important to helping or hindering Latino homeownership?

Diaz: There are three main issues: providing awareness and knowledge on homeownership, the family’s income and the prices of available products, and credit scores. NCLR trains and provides information to consumers and access to products to ensure that consumers are receiving the lowest cost possible. We educate and prepare families for mortgages and provide Latino families with work plans. We monitor the process of these plans to improve the cost and credit. If it turns out that families don’t immediately qualify, we are there to make sure they do over time.

NCLR: What are some trends or patterns you have seen over the years?

Diaz: Up until 2007, there was consistent growth in Latino homeownership, but the foreclosure crisis in 2007 caused reduction and after that homeownership has gone down significantly. In recent years, though, it has begun to slowly rise again.

 NCLR: What do you expect for Latino homeownership in the future?

Diaz: After the foreclosure crisis, homeownership went down by 2–2.5 percent, but I expect the rate to increase again, hopefully by another 2 percent. There is a desire to own a house in the Latino community and Latinos are a prime market for mortgage these days. We want to ensure that lenders provide low-cost products for the community and NCLR will partner with these lenders in turn.

NCLR: How many families has NCLR helped to become homeowners?

Diaz: We have helped a range of about 35,000 families and around 500,000 clients since the network first started, and we hope this rate keeps going up. We strive to serve as many Latino families as possible given the size of the group and the resources available.

The CFPB Empowers Homebuyers

By Nancy Wilberg Ricks, Senior Policy and Communications Strategist, Wealth-Building Policy Project, NCLR

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Yesterday, the Consumer Financial Protection Bureau (CFPB) released new online tools to help consumers be better informed when purchasing a home. Whether you dream of buying a home years down the line or are in the midst of closing now, these tools can give you helpful information specific to your needs.

Richard Cordray, Director of the CFPB, discussed the new tool, housing trends, and market improvements at The Brookings Institute. In the live webcast (also below), he emphasized the need to change the market culture by empowering homebuyers with better information when purchasing their house—the largest asset that many will ever acquire. “When people take out a loan to buy a home, they deserve to have confidence that they are not being set up to fail,” said Cordray.

Full speech below:

These essential tools also come at the one-year anniversary of the CFPB’s mortgage servicing standards. In January 2014, the Bureau implemented new standards to improve deplorable customer service to homeowners, especially for those who need help saving their home from unnecessary foreclosures.

To closely follow compliance with these standards, NCLR and the National Housing Resource Center surveyed its housing counselors and synthesized the findings in a report last week. We were encouraged that the new rules improved the market for families, but we also see room for improvement. Read more here!

For Latinos in Large Cities, High Rent and Stagnant Income Mean the American Dream is Slipping Away

While a majority of Latinos believe that homeownership is part of the American Dream, high housing costs and low incomes coupled with a lack of mortgage credit are locking them out of achieving it.

In the 10 cities in the nation with the highest median rents, households devote an average of 44 percent of their income to rent. NCLR overlaid the large Latino populations in these cities to show the high burden of rent on Latino households, who tend to earn below-median income, especially in places like Los Angeles, San Francisco, New York, and Miami.

While we’ve highlighted trends in the past indicating Latinos are being locked out of the American Dream of homeownership due to tightening mortgage credit standards, this analysis highlights the difficulty many Latinos have in simply affording rent, let alone being able to pay off debt to improve credit scores or saving for a mortgage down payment.

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Between 2009 and 2013, an estimated 1.3 million Latino families lost their homes to foreclosure and were made to downsize or switch to renting rather than paying a mortgage. As income has stagnated for much of the American middle class, rents have sharply risen, leaving Latino families with few options and forcing them to devote even larger portions of their paychecks to rent. A report by Reis, a real estate research firm, shows that rents today are 15.2 percent higher than they were at the end of the recession in 2009, with no sign of this trend slowing down anytime soon. Though Latino household income did rise slightly last year, it is still shockingly low, and long-term stagnation of wages is damaging to the American economy.

Across all 10 cities, families devote close to half of their incomes to rent, with the average rent-to-income ratio a staggering 45.4 percent.

In Los Angeles, the city with the nation’s largest Latino population, average monthly rent for a one-bedroom apartment now costs $1,740, while the city’s median monthly household income is just $4,145. This means a family making the median income living in a median-rent apartment devotes 42 percent of monthly income to rent.

In Miami, where Latinos make up 70 percent of the population, the rent-to-income ratio is even starker, with 61.9 percent of income going toward rent each month in families making the median income. Only in notoriously expensive New York City is this rate higher, with families devoting more than 68 percent of their income to rent.

Low wages and high rents trap many Latinos in a vicious cycle of poverty and debt, putting homeownership out of reach. With such high housing costs, Latino families may have little income left over to pay off outstanding debt, which leads them to take on further debt, which can lower their FICO credit scores. Low credit scores, in turn, make qualifying for a mortgage even more difficult. According to recently released data from the Home Mortgage Disclosure Act, the top three reasons Latinos were denied mortgages in 2013 were debt-to-income ratio, credit history, and down payment issues.

While a majority of Latinos believe that homeownership is an important part of the American Dream, high housing costs are locking them out of achieving it. Because Latinos are increasingly the face of America’s housing market, how Latinos fare in the housing recovery will have implications for the entire nation’s economy. Sensible policies like increasing the minimum wage can help ease the burden by improving stagnating incomes. Similarly, housing regulators can reduce barriers to homeownership by making sure lenders stop the overcorrection in credit standards that are shutting millions of creditworthy borrowers out of the housing market. We must ensure Latino families aren’t kept out of the home-buying process at a time when recovery is needed most.

Citigroup Settlement Penalties Are the Largest in History

Gavel and Law BooksThe U.S. Department of Justice recently announced a $7 billion settlement with Citigroup Inc. over the bank’s faulty mortgage securities and egregious practices. The settlement includes the largest civil fraud penalty ever levied by the Justice Department under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) and is more than twice what many analysts expected.

The government’s description of Citi’s wrongdoing closely mirrors conduct outlined in the Justice Department’s settlement with J.P. Morgan Chase. In both cases, the banks, or entities that they acquired, acknowledged repeatedly giving investors misleading information about mortgages underlying the securities. In many cases, those mortgages didn’t meet internal underwriting guidelines—which ensure that safe and secure loans are issued and help set the terms of the loan—but were included in packages and sold to investors.

Since the housing crisis hit in 2008, NCLR supported the efforts of state attorneys general in pursuing financial institutions whose predatory lending practices decimated the household wealth of millions of families, which was particularly devastating to Latinos and other communities of color. Working alongside advocates, housing counselors, and champions within the administration and the attorney general coalition, a national settlement was reached that made key changes to the mortgage servicing industry.

In California, NCLR worked closely with Attorney General Kamala D. Harris in the state’s successful passage of the Homeowner Bill of Rights, the first legislation of its kind that gives homeowners protections against abusive foreclosure practices by banks, and put an end to dual tracking.


This settlement is a reminder of the main causes of the financial collapse: poor practices in subprime mortgage lending, lack of transparency in the complex securitization process, and lax regulatory enforcement and oversight. Regulatory reforms are now in place that, we hope, will substantially improve the financial system.

The agreement also appears to improve on prior settlements by including affordable housing financing and counseling funds as permissible activities, a strong monitor, and it references relief to reach hard-hit areas.

That said, it will be important to assess how well the settlement is administered. Citi can make amends by working in good faith to ensure that hard-hit areas receive the relief and attention they deserve. In addition, the bank can significantly improve the financial system by collecting and reporting impact data by race and ethnicity, adding a substantial measure of transparency and accountability to the process. In doing so, the bank can ensure that those most harmed by their wrongdoing receive the help they need.

It is important for banks and mortgage lenders to settle accounts with the public for the 2008 crisis once and for all, and to provide as much relief and help as possible to those damaged by it. In doing so, they will help to build a better and stronger financial market in the future.

Family in front of houseLatinos are expected to comprise 40 percent of new households over the next two decades, and 50 percent of homebuyers will be Latino. Even with the recent foreclosure crisis, the desire for Latinos to be homeowners has not abated. According to a poll conducted by Latino Decisions and NCLR, the majority of Latino voters still believe that a key component of the American Dream is owning a home. Overall, 53 percent of Latino voters and 58 percent of immigrants agree that homeownership is a principle of the American Dream.

Latinos can contribute to the recovery of the nation’s housing market, but the widespread availability of safe and affordable mortgages depends on whether financial reforms can create a housing finance system that is accessible, transparent, and accountable for all Americans.

On HAMP’s Fifth Anniversary, Don’t Push Struggling Homeowners Over the Edge

Photo: Jeffrey Turner

Photo: Jeffrey Turner

For five years now, the U.S. Department of the Treasury and U.S. Department of Housing and Urban Development have successfully administered the Home Affordable Modification Program (HAMP) for struggling homeowners. Through this program, working homeowners secured lower and more affordable mortgage rates, enabling families hit hard by the financial crisis to stay in their homes and avoid foreclosure.

This year, the program is set to begin winding down and expire entirely in 2015. That means the nearly 800,000 homeowners with HAMP mortgage adjustments will see their monthly payments rise as soon as this year. While the rate increases can vary widely from state to state, the national average increase will be $200 a month. In states with more HAMP mortgages, such as California and Hawaii, rates will jump by $300 and $356 per month, respectively. While this might not sound burdensome to some, for working families on the brink it is potentially catastrophic.

To keep 800,000 struggling American families in their homes during our weak economic climate, HAMP’s low mortgage rates should be extended or made permanent for all participants.

When HAMP was first drawn up in 2008, the idea was to temporarily stop the bleeding from the foreclosure crisis and ease the lowered mortgage rates back to their original market levels once the economy improved after two years. In 2008, that seemed like plenty of time for homeowners to get back on their feet.

Unfortunately, this is not the reality in 2014. Incomes are stagnant for all but the richest Americans, and the economy has not sufficiently recovered. Unemployment remains stubbornly high, with Latinos especially affected. The Latino community lost vast amounts of generational wealth during the recession, and millions of families are barely scraping by.

Recognizing that the Great Recession was much deeper and the recovery slower than thought in 2008, HAMP has already been extended twice.

To raise the rates on 800,000 families now would only further damage the economy by pushing an unconscionable number of working Latino families into default. During a weak recovery, the solution cannot be to force families out of their homes.

For the sake of nearly one million American families and our entire economy, affordable HAMP mortgage rates must be preserved through an extension or made permanently available.