Friday, April 13, 2007

More Perfidy at the Chronicle

"Minorities are the emerging face of the subprime crisis"

BOO HOO. Watsonville emerges as the butt of a sick joke on White, e.g. Real America. Before all-white Watsonville was ethnically cleansed and replaced by gang bangers and slum lords, it was a gem of rolling hills and quaint country homes. Now its a pile of shit filled by volatile America-hating aliens. THANKS JEWS.

By Carol Lloyd, Special to SF Gate

Friday, April 13, 2007

When Alberto and Rosa Ramirez began looking for a home, they never imagined that 18 months later they would personify a national real estate crisis. It's not that they bought a house with walls crawling with toxic mold or inherited an insane neighbor next door or, even, God forbid, that they didn't buy at all. They bought, and they love, their slice of the American Dream.

"It's all very nice and beautiful," Rosa tells me through a translator. "The neighborhood is very peaceful. The problem is not with the house at all. It's the price of the house."

Indeed, in a different era (when housing prices were lower), their story might have been one of those bootstrap tales about homeownership transforming immigrant lives. The husband and wife work as strawberry pickers in the fields around Watsonville, and each earns about $300 a week. They have three children. Not only did they dream the impossible dream, they managed to finance it.

It all began when they were talking to another family about escaping their subsidized apartments and getting a real house. The other couple -- Jesus Martinez and his wife, who also have three children -- work as mushroom farmers, earning about $500 a week each when there is work. The two couples decided to pool their resources and begin house-hunting. Given their total income, they estimated that they could afford payments of $3,000 a month. They spotted an ad in the local magazine La Ganga for Maria Avila of Rancho Grande Real Estate and called her.

"We wanted to live in Watsonville," says Rosa. "But [the real estate agent] said the houses there were older and more expensive." One of the first homes they were shown was a "new" four-bedroom, two-bath house in Hollister for $720,000. When the Ramirez's heard the price, they worried that they couldn't afford it.

But the couple says that their real estate agent and broker reassured them it was possible. "The monthly payment was supposed to be $4,800, but then after we bought it, it went up to $5,378," says Rosa, speaking of their zero-down mortgage with a one-month "teaser rate." "Our agent told us that once we refinanced, we could get the payments down to $3,000 or less." For a number of months Avila, who arranged for the loan with New Century Mortgage, paid the difference between what the buyers had said they could afford -- $3,000 -- and the actual loan payment. According to the buyers, this arrangement was supposed to carry them over until the group refinanced.

The money-saving refinance failed to materialize, and eventually, Avila stopped subsidizing their current mortgage. (According to my analysis of interest rates during the period, hitting the magic $3,000 number would have been virtually impossible under any circumstances. An interest-only $720,000 loan at a miraculous 5 percent interest rate [15-year fixed] yields a $3,000 mortgage, but such low mortgage rates weren't available to anyone, much less a laborer with low income, no down payment and no other assets. Plus, that doesn't count another $750 a month in taxes and insurance.) The two families stayed on the same loan, sometimes sacrificing basic necessities, other times borrowing more. "It was very difficult," Rosa says. "Sometimes we would eat less, and we took out personal loans from Bank of America."

(Maria Avila and Rancho Grande Real Estate declined to comment for this story. Earlier this month, New Century Mortgage, the nation's second largest subprime mortgage lender, filed for bankruptcy. It's also facing a federal criminal probe.)

Last November, the families stopped paying their mortgage and sought the advice of Pamela Simmons, an attorney who specializes in predatory-lending cases. Upon reviewing the loan documents, they discovered more bad news. Despite the intention that both couples would be buying the home together (they'd submitted income information for three of the four buyers), the loan was made exclusively in Alberto Ramirez's name. This meant that he was solely responsible for the debt. The couple also discovered that the home wasn't nearly as valuable as they thought: When a new real estate agent valued the house, he told them he'd list it between $560,000 and $580,000. They have sent a letter of demand to Rancho Grande, claiming the brokers breached their fiduciary duties by selling Alberto Ramirez a home he couldn't afford.

How did a strawberry picker earning $15,000 a year qualify for a loan of $720,000? The answer, say the experts, lies in a lending industry that got too innovative for its own good.

Last week, a coalition of civil rights groups, including the National Council of La Raza, the Center for Responsible Lending and the NAACP, called for a national six-month moratorium on foreclosures -- after observing that the subprime crisis disproportionately affected minorities. "The point is to just take time out and provide services to families who might be vulnerable as a result of payment shock," says Janice Bowdler, senior policy analyst for housing for the National Council of La Raza, referring to the hybrid loans that begin with low fixed rates, then jump to adjustable-rate mortgages. Bowdler adds that they are hoping many homeowners can avoid foreclosure by taking advantage of such financial tools as changing their current loan terms or refinancing.

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