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Keeping the bank at bay
Latino homebuyers face uphill battle in effort to keep homes
Francisco Zapien put his home up for sale after an adjustable rate mortgage turned into an unmanageable loan with payments close to $4,000 per month. Jorgen Gulliksen/Register | Buy photos
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CommentFor Francisco Zapien, the deal was too good to be true.
In October of 2006, Zapien signed a contract for a home on Bryan Avenue in Napa. The $550,000 mortgage he was approved for required no down payment.
In October of 2006, Zapien signed a contract for a home on Bryan Avenue in Napa. The $550,000 mortgage he was approved for required no down payment.
Today Zapien, who has worked at Silverado Farming Company as a tractor driver and machinist for the past four years, is caught in a vise. His monthly mortgage is more than he can pay. His home has lost value.
“I have put my home on the market,” said Zapien. “It’s too much money to pay each month.”
“I have put my home on the market,” said Zapien. “It’s too much money to pay each month.”
Zapien knew his monthly costs would be high, so he rented two rooms in his home. The rooms yielded an extra $1,000 a month to help pay the $3,600 monthly mortgage. But with utility bills and other expenses, Zapien said he still was scrambling to pay $2,900 a month.
“If the home doesn’t sell, I will have to turn it in to the bank,” he said.
“If the home doesn’t sell, I will have to turn it in to the bank,” he said.
Zapien is one of thousands of homeowners across the country facing this dilemma.
Real estate experts say the mortgage mess has hit the Hispanic community especially hard, in part because Latinos represented such a large chunk of the class of first-time buyers who — it seemed — finally had a chance to borrow money and chase the dream of homeownership.
In many cases, people simply bit off more than they could chew.
In some cases, mortgage brokers helped bring people into the market who they knew or should have known would struggle, according to real estate professionals.
Not fully understanding the terms of a loan put many first-time home buyers in a bind, said Heidi Rickerd-Rizzo, executive branch manager at the St. Helena office of Pacific Union Real Estate.
“There’s the layer (to the overall foreclosure problem) where there really are victims and there was greed involved in the underwriting process ... giving people products that they didn’t understand, with first-time buyers relying and trusting on professionals giving them advice.”
Lack of understanding
Zapien’s story sounds familiar to Gerardo Hurtado, of Suisun, and Evodio Perez, of Napa, who both work alongside Zapien. They said they signed mortgages that they didn’t fully understand.
Hurtado said he is happy to have sold his Suisun home and be released from a mortgage that was too much for him to meet.
Perez is playing a waiting game; in January 2009, he will find out if he has to sell his house or keep it. After refinancing a condo he owned in Napa and making a $60,000 down payment, Perez moved into his El Capitan Way home in 2006.
After a few months of barely making the $1,800 mortgage, Perez realized that his adjustable-rate loan was too much. He considered refinancing, but the terms of his loan required him to make regular mortgage payments for three years before refinancing or selling the property. Otherwise, he’d face hefty penalties.
In January, Perez said he will find out how much his house is worth. If it’s gone down in value, he will have to sell — if not, he will look to refinance. “I feel frustrated,” he said. “I bought my home with the intent to progress.”
Hurtado was in the same situation as Perez. If he refinanced early, he would face penalties.
Feeling trapped in a loan that he couldn’t afford, Hurtado put his home on short sale and accepted an offer for $360,000. That is about $70,000 less than what he was asking, he said.
Hurtado said he thought that he was entering into a loan that would allow him to re-finance within a year; he was surprised to find out that it was actually three years.
“They never explained that to me,” he said.
The housing crunch is causing a ripple effect, Rickerd-Rizzo said; people are moving out of neighborhoods and sometimes leaving possessions behind.
Margarita Fernandez, a real estate agent for Marin 1 Real Estate, specializes in helping Latino clients, but observed that the problem is more widespread.
“There are houses that are devalued,” she said. Homeowners who signed onto adjustable and other creative mortgages are finding “Their interest (rate) is going up, so now they are faced with high payments. The majority of my clients are Latinos ... (but) other people are facing the same thing.”
Fernandez said she goes out of her way to make sure that her clients fully understand the terms of their loans.
Laura Sanchez, a Realtor at Heritage Sotheby’s International Realty, also breaks the language barrier and helps her clients understand what they are getting into. But she said that the underwriting process can be complex.
“When you sign all those documents, most of them are in English and there are so many rules,” Sanchez said. “When you sign, you need to be very careful.”
Sanchez pointed out that if home buyers aren’t comfortable with the paperwork, they have a 24-hour grace period in which the lender can help them understand or negotiate the terms of the loan.
Sanchez and Fernandez say that homeowners struggling to make payments should call their loan officers and try to negotiate for more favorable terms.
“Contact their banks or whoever they have their loans with and see if they can work out some kind of deal,” she said.
Zapien said he hopes to sell his home and make a profit. He said he will eventually move into an apartment in Napa so he can remain close to his job. Perez said he will find a way to make the payments until 2009, and hopes then to refinance or modify his loan in some way.
As for Hurtado, he said he plans to move in with his son in Suisun and maybe one day buy a home again.
“To part with the home is to part with stress,” Hurtado said.
Marin 1’s Fernandez said that banks often do not want to seize homes and would rather have the homeowners stay in them.
“There are different circumstances, but I just admire those people who don’t give up and continue (to keep their homes),” Sanchez said. “There are good opportunities in the market and you can take great advantage of it. What’s going on right now ... it’s not going to be forever.”
A free seminar is planned for Sunday, April 13, to help people handle the risk of foreclosure. The seminar, presented in both English and Spanish, is scheduled to start at 1:30 p.m. at St. John’s Hall, 924 Napa St., Napa.
The seminar will give homeowners the opportunity to receive one-on-one counseling sessions with mortgage specialists who can help avoid foreclosure.
“What we are hoping to do is provide people with resources,” said Mora Cronin, spokeswoman for the Napa Foreclosures Prevention Forum. “In many cases, I guess what happens is people will walk away if they get a default notice ... without asking for help. For many people, they can get help. They can re-negotiate a mortgage.”
The foreclosure forum is free. To register, call 253 4219.
Foreclosure Seminar
The Napa Foreclosures Prevention Forum is holding a free seminar in Spanish and English to help people handle the risk of foreclosure. Professionals will be on hand to offer one-on-one counseling sessions with homeowners.
The event is on Sunday, April 13, from 1:30 to 5 p.m. at St. John’s Hall, 924 Napa St., Napa. To register or for info, call 253-4219 or e-mail ForeclosureForum@co.napa.ca.us.
Real estate experts say the mortgage mess has hit the Hispanic community especially hard, in part because Latinos represented such a large chunk of the class of first-time buyers who — it seemed — finally had a chance to borrow money and chase the dream of homeownership.
In many cases, people simply bit off more than they could chew.
In some cases, mortgage brokers helped bring people into the market who they knew or should have known would struggle, according to real estate professionals.
Not fully understanding the terms of a loan put many first-time home buyers in a bind, said Heidi Rickerd-Rizzo, executive branch manager at the St. Helena office of Pacific Union Real Estate.
“There’s the layer (to the overall foreclosure problem) where there really are victims and there was greed involved in the underwriting process ... giving people products that they didn’t understand, with first-time buyers relying and trusting on professionals giving them advice.”
Lack of understanding
Zapien’s story sounds familiar to Gerardo Hurtado, of Suisun, and Evodio Perez, of Napa, who both work alongside Zapien. They said they signed mortgages that they didn’t fully understand.
Hurtado said he is happy to have sold his Suisun home and be released from a mortgage that was too much for him to meet.
Perez is playing a waiting game; in January 2009, he will find out if he has to sell his house or keep it. After refinancing a condo he owned in Napa and making a $60,000 down payment, Perez moved into his El Capitan Way home in 2006.
After a few months of barely making the $1,800 mortgage, Perez realized that his adjustable-rate loan was too much. He considered refinancing, but the terms of his loan required him to make regular mortgage payments for three years before refinancing or selling the property. Otherwise, he’d face hefty penalties.
In January, Perez said he will find out how much his house is worth. If it’s gone down in value, he will have to sell — if not, he will look to refinance. “I feel frustrated,” he said. “I bought my home with the intent to progress.”
Hurtado was in the same situation as Perez. If he refinanced early, he would face penalties.
Feeling trapped in a loan that he couldn’t afford, Hurtado put his home on short sale and accepted an offer for $360,000. That is about $70,000 less than what he was asking, he said.
Hurtado said he thought that he was entering into a loan that would allow him to re-finance within a year; he was surprised to find out that it was actually three years.
“They never explained that to me,” he said.
The housing crunch is causing a ripple effect, Rickerd-Rizzo said; people are moving out of neighborhoods and sometimes leaving possessions behind.
Margarita Fernandez, a real estate agent for Marin 1 Real Estate, specializes in helping Latino clients, but observed that the problem is more widespread.
“There are houses that are devalued,” she said. Homeowners who signed onto adjustable and other creative mortgages are finding “Their interest (rate) is going up, so now they are faced with high payments. The majority of my clients are Latinos ... (but) other people are facing the same thing.”
Fernandez said she goes out of her way to make sure that her clients fully understand the terms of their loans.
Laura Sanchez, a Realtor at Heritage Sotheby’s International Realty, also breaks the language barrier and helps her clients understand what they are getting into. But she said that the underwriting process can be complex.
“When you sign all those documents, most of them are in English and there are so many rules,” Sanchez said. “When you sign, you need to be very careful.”
Sanchez pointed out that if home buyers aren’t comfortable with the paperwork, they have a 24-hour grace period in which the lender can help them understand or negotiate the terms of the loan.
Sanchez and Fernandez say that homeowners struggling to make payments should call their loan officers and try to negotiate for more favorable terms.
“Contact their banks or whoever they have their loans with and see if they can work out some kind of deal,” she said.
Zapien said he hopes to sell his home and make a profit. He said he will eventually move into an apartment in Napa so he can remain close to his job. Perez said he will find a way to make the payments until 2009, and hopes then to refinance or modify his loan in some way.
As for Hurtado, he said he plans to move in with his son in Suisun and maybe one day buy a home again.
“To part with the home is to part with stress,” Hurtado said.
Marin 1’s Fernandez said that banks often do not want to seize homes and would rather have the homeowners stay in them.
“There are different circumstances, but I just admire those people who don’t give up and continue (to keep their homes),” Sanchez said. “There are good opportunities in the market and you can take great advantage of it. What’s going on right now ... it’s not going to be forever.”
A free seminar is planned for Sunday, April 13, to help people handle the risk of foreclosure. The seminar, presented in both English and Spanish, is scheduled to start at 1:30 p.m. at St. John’s Hall, 924 Napa St., Napa.
The seminar will give homeowners the opportunity to receive one-on-one counseling sessions with mortgage specialists who can help avoid foreclosure.
“What we are hoping to do is provide people with resources,” said Mora Cronin, spokeswoman for the Napa Foreclosures Prevention Forum. “In many cases, I guess what happens is people will walk away if they get a default notice ... without asking for help. For many people, they can get help. They can re-negotiate a mortgage.”
The foreclosure forum is free. To register, call 253 4219.
Foreclosure Seminar
The Napa Foreclosures Prevention Forum is holding a free seminar in Spanish and English to help people handle the risk of foreclosure. Professionals will be on hand to offer one-on-one counseling sessions with homeowners.
The event is on Sunday, April 13, from 1:30 to 5 p.m. at St. John’s Hall, 924 Napa St., Napa. To register or for info, call 253-4219 or e-mail ForeclosureForum@co.napa.ca.us.
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vocal-de-local wrote on Mar 23, 2008 1:16 AM:
orange99 wrote on Mar 23, 2008 5:21 AM:
kbf wrote on Mar 23, 2008 7:29 AM:
skippert wrote on Mar 23, 2008 7:41 AM:
skippert wrote on Mar 23, 2008 7:46 AM:
opiniagirl wrote on Mar 23, 2008 9:04 AM:
Skip M. wrote on Mar 23, 2008 9:08 AM:
anotherguyinnapa wrote on Mar 23, 2008 10:53 AM:
Kevin Eggers wrote on Mar 23, 2008 11:04 AM:
Sure, you’ll have loan agents pushing loans. That’s their job. Some of their products are good, and some are bad. The ultimate blame for getting into the wrong loan goes to the individual that signed on the dotted line. Thomas Jefferson said that the most important thing for any education curriculum was to teach an individual how to do everyday business, so they wouldn’t be taken advantage of in the business world. Today, most Americans don’t have any idea how money is created out of thin air, but they sure know how to be culturally and morally tolerant.
I suggest you read the “Creature From Jekyll Island” (where the Fed was devised by the “money power” in 1910), so you can gain an understanding of how our fiat money is created and how the “money power” controls our monetary system. “The Coming Battle”, written in 1899 by M.W. Walbert presents a good history of how the “money power “ bought their way into our Universities and the different branches of government—this book covers how the “money power” created panics, recessions, and depressions in 1811, 1833, 1837-41, 1873, and 1893.
In 1797, John Adams wrote to Thomas Jefferson, "All the perplexities, confusion and distress in America arise, not from defects of the Constitution or Confederation; not from any want of honor or virtue, as much as downright ignorance of the nature of coin, credit and circulation."
"
lebertm wrote on Mar 23, 2008 11:37 AM:
skiph wrote on Mar 23, 2008 12:08 PM:
tiredofcomplainingnapkins wrote on Mar 23, 2008 4:28 PM:
irishman wrote on Mar 23, 2008 7:30 PM:
badlandgrl wrote on Mar 23, 2008 8:08 PM:
joejoes2008 wrote on Mar 23, 2008 8:18 PM:
larrysbird wrote on Mar 23, 2008 10:53 PM:
nuttinpersonal wrote on Mar 24, 2008 6:20 AM:
There are people whose English isn't very good but they still have common sense and can do basic math. They steered clear.
Still, if I were in Mexico and signed a mortgage for hundreds of thousands that I couldn't afford because I can't read Spanish, how sympathetic would the locals be? "
PastNapan wrote on Mar 24, 2008 7:33 AM:
Skip especially, your posts rock ! Keep em coming "
commentgirl wrote on Mar 24, 2008 1:56 PM:
kingsavage wrote on Mar 24, 2008 7:03 PM:
speakdatruth wrote on Mar 24, 2008 9:51 PM:
Dwayne wrote on Mar 25, 2008 11:20 AM:
bornin74 wrote on Mar 25, 2008 2:01 PM:
raised here
still here, married with two kids
h.s. diploma, no college
wife in the same boat....
we work our tails off to provide a home for our kids....
Many of us are all probably in the same or similar positions, but what I cannot comprehend is how ANYONE can sign loan papers for the BIGGEST purchase of your entire life and NOT read the fine print....
you are sitting down for the first time with a pen in hand and signing a document that locks you in to at least $500,000.00.my hands were sweaty and shaking the first time! I was buying a house in a crappy neighborhood...Gotta start somewhere..... and have done the 2 years and sell and "move-up" until recently..... NOW is the TIME to buy.... for those posters who have stated they can NEVER afford it here you are wrong... you just can't afford the house in the best place.. but you gotta take that jump, buy a bad house in a decent neighberhood make some improvements and when the market recovers in two years SELL, move to a better spot in town... If you really truly want something then it has to be worked for, AND you have to take an educated risk. NOBODY will ever have enough money for a comfortable down payment, your house payment will ALWAYS be too high... but it is the satisfaction of home ownership, especially in this valley.... People who have moved away from here because you get More bang for the Buck..well... are misguided... Because now they will never be able to move back...If you know someone who wants to buy NOW IS THE TIME, prices haven't been lower in years... by this time next year the market will be back on the rise "
napan007 wrote on Mar 25, 2008 4:10 PM:
PastNapan wrote on Mar 25, 2008 4:39 PM:
opiniagirl wrote on Mar 25, 2008 5:52 PM:
Skip M. wrote on Mar 25, 2008 6:55 PM:
kdbk wrote on Mar 25, 2008 10:19 PM:
Hopefully the housing market nationwide will recover soon. But in any case, I believe that what we read in the Register on a daily basis tells us that local housing values may never return to their former status. This town is changing in many negative ways.
There once was a time when Napa was well removed from the problems of the inner city. But that is no longer the case. There once was a time when the immigrant population was much better assimilated and was a more balanced part of the coummunity. Anyone who cares and who pays a little attention knows exactly what is going on. Will enough people acknowledge the problem before it's too late? Most of the negative changes in this community in recent years can be easily traced to one particular circumstance. "
007WYNWM wrote on Mar 25, 2008 10:43 PM:
PastNapan wrote on Mar 26, 2008 7:26 AM:
At first it was very hard leaving Napa, now when I go back to visit I can hardly wait to leave and come back to my beautiful peaceful town. To SKIP M. I feel for you, I thought I would spend my entire life in Napa, I looked forward to retiring there. "
Skip M. wrote on Mar 26, 2008 10:00 AM:
napadad wrote on Mar 26, 2008 10:14 AM:
smogone77 wrote on Mar 26, 2008 12:47 PM:
if you and your wife both make over 100k and you're telling you cant afford a house here you are a flat out liar. my brother and his wife make far less than that and own a home here, my mother makes less than that and owns a home here as well. You may not get the biggest and best house napa has to offer, but you certainly can own a home here. And bornin 74 is right, now is the time to get on board the market. I feel bad for all who got caught up in this whole housing fiasco, my brother actually squeaked by a months he told me. He bought his him for 300k. it quickly rose to 550k, he refinanced and then the market dropped. "
Skip M. wrote on Mar 26, 2008 1:09 PM:
napadad wrote on Mar 26, 2008 2:01 PM:
winemd wrote on Mar 26, 2008 3:29 PM:
There is also an implication that the language barrier caused the Latino homeowners to be more at risk of being victims in this type of scenario. I think the article would have been fine if the headline had just said "homeowners face uphill battle..." The rest of the story is pretty factual. The whole mess is very unfortunate for a lot of people, not just Latino homeowners. "
dantsea wrote on Mar 26, 2008 4:31 PM:
napadad wrote on Mar 26, 2008 6:30 PM:
jakeass wrote on Mar 27, 2008 10:29 AM:
And I don't want to bail out anybody with the taxes I pay again and again(that's to you, Uncle Sam). By the way, the People's Republic of China had 30 billion invested in sub-prime lenders. Nobody owns property. You just borrow it for a little while from Mother Earth, then you die. "
jellybean wrote on Mar 27, 2008 12:45 PM:
PastNapan wrote on Mar 27, 2008 1:55 PM:
Skip M. wrote on Mar 27, 2008 2:28 PM:
brown eyes wrote on Mar 27, 2008 4:07 PM:
glenroy wrote on Mar 27, 2008 10:53 PM:
How silly...the hill is the same height, length and slope for everybody. Hispanic home owner rates are much better than others based on stupid race classifications....the market will get better and if they can’t afford a payment then they should do like the rest of us, rent for while and buy again...and again...and again....and again..whatever it takes. Look around this State and you’ll some very wealthy Hispanics whose only skill when they got here was a big heart and a willingness to work for tomorrow instead of worrying about yesterday.
"
petebo wrote on Mar 28, 2008 11:47 AM:
glenroy wrote on Mar 28, 2008 1:14 PM:
This market correction is not going to be nearly as bad as it has been in the past and looked like it was going to be just a few weeks ago...why? With respect to the first time buyer market, take a look at the rental rates...say a Bel-Aire home is roughly $1700.00 monthly...by converting that monthly rental rate to a payment using the current market rate 5.5% mortgage, and declining, you have a bottom market home value of $400,000.00 home..many Bel Aire rents are higher but few lower... when it's cheaper to buy then to rent it's time to start buying again.
Home buying is the last best bet for the wage earner to built a little nest egg....
"
common sense wrote on Mar 28, 2008 5:17 PM:
anotherguyinnapa wrote on Mar 28, 2008 11:58 PM:
Skip, let's go smoke a doobie at Folsom to celebrate! "
nuttinpersonal wrote on Mar 29, 2008 12:32 AM:
1) The alternatives to the home.
2) The ability for buyers to pay for Napa home ownership.
Ie, supply and demand.
A 10-20% downpayment for a $400K home is $40K - $80K. "No skin in the game" loans are extinct. In a city where the median income is probably about $55K, how many Napa households can do this and meet the requirements of a conforming loan (debt-to-income limits, documentation, assets leftover)?
My guess is not too many (never mind the effect a rather bad recession is going to have on rent and housing.) There is much more to the rent vs. buy calculation for a new homeowner than looking at monthly rent vs. the monthly mortgage payment.
As for supply, the number of homes in the market in Napa is up by more than 75% in just the last 2 years ending in Feb. The number of sales has gone down by 35% in that same time frame. More supply, less demand despite a price per square foot drop of at least 15% (see DataQuick and ZipRealty). You will see an explosion in inventory after this spring. And this is ignoring any new construction.
You might see a little bit of a rebound as the knife-catchers come in and get burned, but in less than 2 years from now, you will see housing prices at least 20% cheaper than they are now.
Do we get petebo's 50% drop from here? $170 per square foot homes does seem like a stretch, especially in this inflationary environment. OTOH, we've never had a housing bubble this bad before. ARMs don't stop resetting until the end of 2010.
Interesting times.
"
Ephemerol wrote on Mar 29, 2008 3:19 AM:
"
opiniagirl wrote on Mar 29, 2008 1:00 PM:
You don't know what you are talking about! We make well over $100k (+perfect crdit) and CANNOT afford a house in Napa. $300k houses do not exist in Napa.
But when people are all "sharing" Social Security Numbers the Income level shows ebough to be approved for a $550k loan. Anyone wanna share my SSN? I need some additional income maybe then our family would qualify for a 3 bedroom piece of crap, were not into renting rooms out to entire families, sorry! "
badlandgrl wrote on Mar 29, 2008 10:49 PM:
It should be pretty much Black and White. Here are what your payments are, property taxes etc..... can't afford it????? Don't buy you morons! "
KCK wrote on Mar 30, 2008 7:31 AM:
KCK wrote on Mar 30, 2008 7:38 AM:
KCK wrote on Mar 30, 2008 7:39 AM:
109823 wrote on Mar 30, 2008 10:23 AM:
Dirty Napkin wrote on Mar 31, 2008 12:15 PM: