Predatory Lending, Other Real Estate Scams Targeting Latinos on Rise

Group posts "Home Buyer Bill of Rights" to inform public.
RISMedia
Drawn to the American dream of homeownership – yet unfamiliar with U.S. real estate practices and wary to report abuse – Latinos are twice as likely as other groups to be targeted by a growing wave of predatory lending and other real estate con games.

To help Latinos avoid falling victim to real estate scams, www.CaseNuevaHouston.com has posted a "Home Buyers Bill of Rights" that highlights the most common abuses.

Unfortunately, there has been no shortage of real estate con games aimed at Latino home buyers. Widespread examples include:

• Fictitious fees, including unethical real estate agents charging hundreds or thousands of dollars just to look at homes. In the United States, agents are paid by the seller, not the buyer, and payment occurs only at closing.

• Padding loans with inflated and unauthorized charges. There have been reports of predatory lenders charging up to 10 points to originate loans, while the standard origination fee is 1 point (or 1 percent of the loan amount.)

• Channeling borrowers into loans with much higher interest rates, even when they would qualify for a lower rate.

• Selling properties for more than their market value and covering up major structural problems.

• "Bait and switch" tactics that stick buyers with much higher interest rates, prepayment penalties and other onerous terms. Predatory lenders often do everything they can to force buyers to default, so they can resell the property to more victims.

CasaNuevaHouston.com decided to create the "Home Buyer's Bill of Rights" when its founders kept hearing stories of predatory lending and other real estate scams from consumers and real estate agents in Houston's Latino community.

"Latinos are quick to embrace the American dream of homeownership, because in most Latin American countries, mortgage lending as we know it doesn't exist," said Anita Sparks-Bohn, a founder of CasaNuevaHouston.com. "This eagerness creates a wide opening for scam artists, especially when combined with a language barrier and a general lack of understanding about the home buying process."

Sparks-Bohn said creating a "Home Buyer's Bill of Rights" was a logical step for CasaNuevaHouston.com, launched in 2005 to help educate Latinos about the home buying process in Houston and other cities. A San Antonio version, www.CaseNuevaSanAntonio.com, was launched in 2006.

Some of the rights described in the "Home Buyer's Bill of Rights" take direct aim at preventing abuses such as those described above, while others are designed to improve understanding of opportunities available to Latino home buyers who may or may not be U.S. citizens.

For example, many Latino buyers may have the right to purchase a new home in the United States even if they do not have a Social Security number, lack traditional credit, or receive part of their income in cash. Some buyers may also be eligible for programs that provide assistance with down payments and closing costs.

"When more Latino home buyers understand their rights, options and opportunities, they will hopefully be less likely to be taken advantage of," said Sparks-Bohn.

The complete "Home Buyer's Bill of Rights" can be found at www.CasaNuevaHouston.com.

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