Maria Alarcon Garcia and Julio Romero’s plight isn’t rare. The
number of default notices in Gilroy nearly tripled in early 2007
compared to early 2006, according to a DataQuick Information
Services analysis recently published in the Mercury News.
Gilroy – Maria Alarcon Garcia and Julio Romero’s plight isn’t rare. The number of default notices in Gilroy nearly tripled in early 2007 compared to early 2006, according to a DataQuick Information Services analysis recently published in the Mercury News. From January to March 2007, 62 Gilroy homeowners defaulted on their loans. The trend is driven by sagging home values, which have prevented owners from simply reselling their homes when overdue payments stack up.
“Honestly, I don’t think we’ve even begun to chip away at the iceberg in South County,” said Nuemi Guzman, a predatory lending intake worker with the Fair Housing Law Project based in San Jose. “Down here, I don’t think that a lot of people know what you can do legally.”
Most of Guzman’s clients fit two demographic profiles: seniors and first-time homeowners who don’t speak English. Lured by Spanish-language advertisements that promise big, many victims sign English contracts they don’t understand. Nearly all mortgage ads in Spanish media are for riskier subprime loans, which are granted to higher-risk borrowers on less favorable terms, according to an August 2006 study by the National Council of La Raza. From her desk at the “Don’t Borrow Trouble” hotline, Brisa Carrillo says Garcia and Romero’s story of signing an English contract they didn’t understand is a familiar one.
“I see it all the time,” said Carrillo, who says calls to the hotline have skyrocketed, the vast majority of them from Spanish speakers. “They say, ‘I didn’t understand. I completely trusted this person.’ Either the agents don’t explain it to them, or they don’t know to ask.”
The influx of cases has overwhelmed groups such as FHLP, which stopped taking clients in May. Too few attorneys understand real estate law, said Guzman, let alone understand it and take cases pro bono. Another group, Bay Area Legal Aid, only accepts cases from very low-income families: Romero and Garcia’s monthly earnings of less than $4,000 exceed the groups income cap by more than $1,000.
“There’s nowhere to send these people,” said Carrillo.
Civil rights groups have called for a six-month moratorium on subprime home foreclosures, reporting that people of color disproportionately receive subprime loans, and are bearing the brunt of the foreclosure crunch. No such moratorium has occurred, but as more and more predatory lending cases come to light, lenders have become more willing to work with homeowners in default, said Realtor Mike Sanchez.
“The lender often takes a hit on this,” added Martin Eichner, director of dispute resolution programs for Project Sentinel, a tenants’ rights organization with an office in Gilroy. “It’s the guys in the middle – the brokers – who make the money.”
