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Community in Peril: Latino Borrowers Struggling After Meltdown'

Nationwide, the still unfolding foreclosure epidemic has crippled countless communities and drained the hard-earned wealth of many families.

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Nationwide, the still unfolding foreclosure epidemic has crippled countless communities and drained the hard-earned wealth of many families.  For an already economically fragile Latino community, this continuing financial meltdown has been nothing short of a catastrophe. States with large or rapidly growing Latino populations such as California, New Mexico, Nevada and Florida continue to lead the nation in the effects of this crisis.

   These developments did not have to happen.

   In 2006, the Center for Responsible Lending (CRL) published research that revealed Hispanic borrowers were more likely to pay for high-priced, riskier subprime loans than their white counterparts with the same credit scores1. In fact, more than 40 percent of the loans made to Latino borrowers in 2005 were in the form of riskier, high-priced loans2, the very type that sparked the surge in foreclosures over the last two years and resulted in the current recession. 

   Despite early warning signs, the subprime market grew in the Latino community as the financial appetite of Wall Street investors hungered for even more of the risky high-priced loans without accountability or regard for the future of these neighborhoods.

   As marginalized borrowers with a historically documented lack of access to credit and financial literacy, Latinos were perfect prey for the flock of predatory lenders and resulting abuses.

   Keep in mind that 90 percent of the high-priced loans that sparked this crisis were made to families who already owned a home. Doors to first-time homebuyers were not being opened by these toxic products, despite industry claims to the contrary. Now as millions of foreclosures continue to mount and a foreclosure filing occurs every 13 seconds, Latino families continue to be one of the groups affected the most by the crisis.

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