Tuesday, November 18, 2008

The "F" Word

What do the cities of Vallejo, Daly City, Stockton and Las Vegas have in common?

Aside from each being home to a Jollibee Filipino fast-food restaurant, all have large Filipino populations and the highest foreclosure rates in the US.

The dirtiest word in the Filipino community now, the new “F” word is foreclosure. While it is affecting all races throughout the US, it is disproportionately crushing Filipino homeowners.

Las Vegas, home to the fastest growing Filipino community in the US, had the highest foreclosure rate in the past month, with one in every 62 housing units receiving a foreclosure filing. Daly City, with a 35% Filipino population, has the highest foreclosure rate in San Mateo County. Vallejo, with more Filipino elected officials than any other county in California, has the highest foreclosure rate in the entire San-Francisco Bay Area. And Stockton, with its Little Manila and soon-to-be FilAm history museum, has the highest foreclosure rate in the entire United States.

According to MDA Dataquick, home foreclosures in the state of California rose 228% for the quarter ending September 30 when compared to the same period last year. In actual numbers, a total of 79,511 homes were lost during the three-month period alone as compared to 24,209 in the same period last year.

Annualized, this totals to about 320,000 foreclosed homes in California alone in one year. And this problem doesn’t just affect those who receive their foreclosure notices, because even those still fortunate to own their homes are heavily impacted by the foreclosures of others as they have led to a decline of about 34% in median home prices for the state this year. This means that the “nest egg” that many people rely on for their retirement years was just cut by a third.

Compound these housing figures by the stock market which is off by about 40% for the year, the accelerating unemployment and underemployment, and the tightening of available credit and you can understand why these are not ordinary times.

The Filipino Dream has been to immigrate to America and to own your own home here complete with white picket fences and all modern appliances. Upon arriving in America, however, many Filipino immigrants realized that their entry level low incomes would never provide them with enough funds to buy a house of their very own.

The solution to their American dream was the “S” word. S as in “subprime” loans where financial institutions provide credit to borrowers deemed "subprime" or "under-banked". Subprime borrowers are generally those with a history of loan delinquency or default, those with a recorded bankruptcy, those with limited debt experience or those whose incomes have to be creatively embellished to qualify for loans.

In the past few years, aggressive lenders and mortgage brokers pushed subprime loans on people who couldn't really afford them and even to some who could qualify for conventional loans. Subprime loans often came with low "teaser" rates. As those rates have expired in recent months, millions of homeowners around the country have seen their mortgage payments soar, have been unable to keep up and have received notices of default from their lenders - the first step in the foreclosure process

I have personally met the faces behind the grim statistics and I know that they are hurting. They are homeowners being evicted from homes they've lived in and cherished for years. They are employees losing their jobs and health insurance. They are small business owners declaring bankruptcy after years of operation. They are losing hope.

The gross incompetence in Washington over the last 8 years, the greed of Wall Street, and over-consumption from Main Street have created a toxic brew that have turned these Filipinos' "American Dream" into an "American Nightmare."

But all is not lost. Cities and counties are fighting back. Solano County became the first county in the U.S. to call for a moratorium on all foreclosures. And the State's Attorney-General has been pressuring lenders to negotiate in good faith with their borrowers in order to stem the tide.

Community organizations are answering the call too. For its part, the National Federation of Filipino American Associations (NaFFAA), in partnership with the Mabuhay Alliance, is hosting a Foreclosure Training Program on November 17 and 18 at the Residence Inn in South San Francisco to help train professionals from the mortgage and real estate industry to learn foreclosure intervention and counseling.

These trained counselors are expected to help out at the Solano County Foreclosure Prevention Clinic to be held on Saturday, December 13, 2008 in which hundreds of beleaguered homeowners as well as loss mitigation specialists from all the major lenders are expected to attend.

NaFFAA expects to replicate the program throughout California and the other foreclosure hotspots in the U.S.

These are positive and encouraging developments. Indeed, there needs to be a concerted effort on the part of everyone involved to slay this problem that is threatening the economic vitality of the country.

To those Filipinos struggling with “F”, don't give up. Here are a few suggestions:

First, educate yourself about the issues and read the news (for instance, the FDIC, which has taken over IndyMac, says that more than half of those struggling borrowers who were sent letters to modify the terms of their loans did not even bother to respond).

Second, review your real estate and loan documents. Then negotiate with your lender proactively. If the person on the other line wouldn't budge, ask for his or her supervisor.

Lastly, if the lender has really been unresponsive or if you feel you've been a victim of unscrupulous third-parties and you need the services of a counselor or a legal professional, pick up the phone and make the call. You owe it to yourself, your family, and your neighbors who will be affected by another foreclosure in the neighborhood.

Fight for your American dream, for your piece of the pie.

1 comment:

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