SAN DIEGO
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Cesario Gonzalez, behind on payments on the duplex he cannot afford, told his troubles to a “homeowner preservation” counselor yesterday with hopeful eyes.
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Correction
Because of an editing error, a story Sunday about the state's Hispanics and blacks being hit especially hard in the housing crisis incorrectly said that distressed homeowner Cesario Gonzalez put a down payment on the duplex he purchased last year. In fact, his purchase was 100 percent financed and he did not have to make a down payment.
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With each twist of the tale – an interest rate climbing to 12 percent, desperate attempts to cover a $4,200 monthly mortgage by borrowing cash on a credit card – counselor Adelina Enriquez's eyes grew soft and sorrowful.
“This is a familiar story,” said Enriquez, a counselor with Community Housing Works, a San Diego nonprofit that offered free counseling to distressed homeowners yesterday at the Tubman Chavez Multicultural Center. “He could see his neighbors being owners of houses. He trusted the Realtor and the loan officer. He wanted a home.
“Once you sign the loan papers, you take the responsibility and the risk,” Enriquez said. “But he didn't understand what he was doing.”
In San Diego's once-overheated housing market, home buyers like Gonzalez, a construction worker who speaks little English and dropped out of school after the fifth grade, dared to dream big – with encouragement from loan officers pushing risky loans.
Now the dream is growing dim for many Hispanic and African-American homeowners, who make up a disproportionate share of the thousands of Californians who have lost their homes to foreclosure or are in default on loans, affordable-housing watchdogs say.
Across the nation, minority borrowers accounted for half of the increase in homeowners from 1995 to 2005, according to Harvard's Joint Center for Housing Studies. But about 46 percent of Hispanics and 55 percent of blacks who took out mortgages got higher-cost loans, compared with about 17 percent of whites and Asians.
“Many of these people with subprime loans were misled. In some cases, fraud was involved and some just got in over their heads,” said Gregg Robinson, co-chair of the Affordable Housing Coalition of San Diego, which sponsored the forum that drew about 40 homeowners. “For a lot of them, this was their first experience getting a loan. They just wanted the American Dream.”
Gonzalez said he was encouraged to go for his first home last year by a mortgage broker handing out business cards in front of Pancho Villa Farmers Market on El Cajon Boulevard.
Gonzalez said through a translator that he still is uncertain what kind of loans he signed up for on the $565,000 duplex he purchased in May 2007.
With monthly mortgage payments of $4,200 and monthly income of $3,200, the purchase appeared dubious. But Gonzalez, who had a down payment, planned to live on one side with his wife and three children, rent out the other side for $1,200 and take on another job.
The plan didn't work. Construction work ground to a halt as the housing market went south, and Gonzalez's income went with it. He scraped by with odd jobs, emptied his savings account, borrowed from his brother and opened a credit card account to borrow on it for his mortgage payment.
Gonzalez tried to refinance the two loans on the duplex, one with a 9 percent interest rate and one with a 12 percent rate. But the loan officer told him he couldn't refinance because the value of his duplex had dropped from $565,000 to $340,000.
Last month, for the first time, Gonzalez couldn't make his mortgage payment. Last week, his lender, Countrywide, called to ask why he was late.
“I really wanted a house, like everyone else, for the future, for the children,” said Gonzalez. “Now I have no more savings, my brother has no more savings, that's it – we are cleared out.”
