From the Voice of San Diego:
Foreclosure Wave Said to Hit Latinos Hard
Rosa Gonzalez used to pay cash for everything. She passed up credit cards offered her at Sears. When she wanted to buy something, she saved up enough money and bought it, free and clear. She’d moved to the United States from Mexico as a teenager and, as an adult, rented the same apartment in National City for more than a decade.
A house cleaner, Gonzalez’s first foray into credit was for a car, which she’s still paying off. But when she was left $10,000 by two clients who passed away, she decided to invest it in a home. She found a two-bedroom, two-bathroom condo in Barrio Logan for $235,000. Because she hadn’t built a very thick credit file, she ended up with a loan geared toward those with bad credit. The two loans she got in September 2004 to cover the cost of her home were at interest rates of 7 and 11 percent. The standard mortgage rate at that time was just less than 6 percent.
Since then, she said she’s been paying only the interest on the loans, and even that, at $1,500, is $200 more than she’d told the broker she could afford each month. And that doesn’t account for taxes, insurance and homeowners’ association fees. She was intimidated by the fact that the loan papers, laden with technical and legal terms, were in her second language, English.
“You sign the papers, but it’s so hard to understand,” she said.
In September, she’ll have to start paying part of the loan’s principal, forcing her to either refinance or face much higher monthly payments. Her brother already lives with her to help with the mortgage. She said she doesn’t know what she’ll do if she can’t make the loan more manageable come September.