FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? 1 FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? The National Council of La Raza (NCLR)—the largest national Hispanic civil rights and advocacy organization in the United States—works to improve opportunities for Hispanic Americans. Through its network of nearly 300 affiliated community-based organizations (CBOs), NCLR reaches millions of Hispanics each year in 41 states, Puerto Rico, and the District of Columbia. To achieve its mission, NCLR conducts applied research, policy analysis, and advocacy, providing a Latino perspective in five key areas—assets/investments, civil rights/immigration, education, employment and economic status, and health. In addition, it provides capacity-building assistance to its Affiliates who work at the state and local level to advance opportunities for individuals and families. Founded in 1968, NCLR is a private, nonprofit, nonpartisan, tax-exempt organization headquartered in Washington, DC. NCLR serves all Hispanic subgroups in all regions of the country and has operations in Atlanta, Chicago, Los Angeles, New York, Phoenix, Sacramento, San Antonio, and San Juan, Puerto Rico. Transcript provided by DC Transcription www.dctmr.com Copyright © 2009 by the National Council of La Raza Raul Yzaguirre Building 1126 16th Street, NW Washington, DC 20036 (202) 785-1670 Printed in the United States of America All rights reserved FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? Foreclosures and the Mortgage Mess: How Do We Save Latino Homeownership? Transcript of a Town Hall at the 2008 NCLR Annual Conference Monday, July 14, 2008 Moderator Evy Ramos Panelists Alan Fisher Martin Gruenberg Secretary Rosario Marin Carol Ornelas FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? Table of Contents Foreword i Acknowledgments ii Executive Summary iii Opening Remarks 1 Panelist Introductory Remarks 3 Secretary Rosario Marin 3 Carol Ornelas 4 Martin Gruenberg 5 Alan Fisher 6 Discussion 7 Questions from the Audience 11 Conclusion 17 Panelist and Speaker Bios 18 FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? Foreword Homeownership has long represented stability. In July 2008, NCLR held a town hall discussion to confront Traditionally, it has been the primary means for low- and the challenges of a retracting housing market. In this moderate-income families to acquire assets, provide for discussion, experts from a variety of perspectives analyze their children’s education, and build their own retirement. the causes of the problem and ways to salvage household Unfortunately, the “perfect storm” of an overinflated finances, and suggest innovative approaches to weathering mortgage market, the mainstreaming of predatory lending the economic fallout. Although the panelists come from practices, and inadequate regulation has severely shaken diverse perspectives, there appeared to be a strong the foundation of homeownership. Families are losing consensus that any effective response to the housing generations of wealth because their seemingly secure crisis must include certain essential elements—systemic investment has been badly compromised at best, and too loan modifications, greater transparency, and increased often lost entirely. accountability for financial institutions that accept public support. I’m pleased that at least the initial proposals from The mortgage crisis has unmasked weaknesses throughout the new administration and Congress appear to include the nation’s entire financial system, and low-income and these components. Latino families are among those most affected. If this is to be a year of recovery, we must make building up the assets of I hope that readers find this discussion helpful as they families who have lost, or may lose, their homes a top priority. shape, design, and implement real solutions to the housing This is not just a matter of helping those families recover: it’s foreclosure crisis. an essential element of any strategy to help all families, and the nation’s ailing economy, get back on their feet. Janet Murguía President and CEO NCLR i FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? Acknowledgments This town hall, “Foreclosures and the Mortgage Mess: Alan Fisher, Executive Director, California Reinvestment How Do We Save Latino Homeownership?,” was Coalition coordinated by Janis Bowdler, Associate Director of Martin Gruenberg, Vice Chairman, Federal Deposit the Wealth-Building Policy Project, National Council of Insurance Corporation La Raza (NCLR). Nancy Wilberg Ricks, Policy Analyst, Wealth-Building Policy Project, prepared the transcript for Rosario Marin, Secretary of State and Consumer Services publication. Eric Rodriguez, Vice President of NCLR’s Office Agency, State of California of Research, Advocacy, and Legislation, provided guidance Carol Ornelas, Executive Director, Visionary Home Builders and feedback. Jennifer Kadis, Director of Quality Control; of California Kari Nye, Assistant Editor; Karen Nava, Director of Graphics and Publications; and Rodrigo Alvarez, Production Assistant We also thank the Ford Foundation for its support and Graphic Designer, prepared the report for publication. of NCLR’s work in wealth-building, as well as Freddie Mac, title sponsor of the event, and Fannie Mae, event We thank Evy Ramos, Reporter, Digital Correspondent, cosponsor. 10News ABC (San Diego), who served as the panel moderator, and we extend a very special thank-you to the The discussion and conclusions included in this transcript panel participants, including: are those of the panel speakers alone and do not necessarily reflect the opinions of the Ford Foundation or the event sponsors. All panel participants had an opportunity to review the transcript for clarification, but did not materially or substantively alter their comments. ii FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? Executive Summary On July 14, 2008, the National Council of La Raza There was consensus among the panelists about various (NCLR) convened a Town Hall at the 2008 NCLR Annual aspects of the foreclosure crisis. First, they agreed that Conference in San Diego, California titled “Foreclosures there is no magic bullet. From the needs of individual and the Mortgage Mess: How Do We Save Latino communities to the challenges on a national scale, Homeownership?” Panelists discussed their work in the solutions should not be applied with sweeping strokes. field of homeownership and foreclosure and specifically Second, the onus of homeownership should sit on the discussed: shoulders of lenders and not just homeowners. Loan securitization plucked lender accountability from the • How and why high-interest subprime loans continue mortgage process. This allowed bad loans to propagate at to disproportionately affect low-income and Latino an alarming rate, with severe and lasting consequences. communities Third, while low-income and Latino communities are unevenly affected by the current wave of foreclosures, • Whether homeowners, lenders, or regulators are all Americans are impacted by the reckless activity of the responsible for the foreclosure fallout mortgage industry. Everyone has a stake in finding ways • Policy recommendations on the national and state to repair this utter loss. Finally, all par ticipants agreed that levels to stop the current bleeding and to prevent industry practices need an overhaul. Consumers need recurrence greater protections against fraudulent loans, and once wealth is established within a community, more effective • Approaches to counseling homeowners on how to measures should be taken to secure it. avoid risky and predatory loans iii FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? iv FORECLOSURES AND THE MORTGAGE MESS: HOW DO WE SAVE LATINO HOMEOWNERshIP? Opening Remarks Announcer Voiceover: Now, please give a warm welcome Now, the topic for today’s discussion is very [relevant] in to NCLR Board Treasurer and Executive Director of La Casa the sense that none of us want to end in a circumstance de Esperanza, Mr. Anselmo Villarreal. where we have not provided enough Americans with the American Dream…we may have found ourselves in the Mr. Anselmo Villarreal: On behalf of the Board of situation where we have, in fact, [created] the American Directors of the National Council of La Raza, it is my nightmare. Too many American families—Latino families pleasure to welcome you today to this great town hall and others—are suffering because they either unwittingly meeting. As we all know, homeownership is the American or, in other circumstances, simply found themselves Dream, a dream that has clearly become a nightmare. We in a lending or mortgage circumstance that does not also know that [many] Latinos and Latinas who obtained allow for them to be successful with the American a mortgage during 2005 and 2006 are in foreclosure right Dream. At Freddie Mac, we want you to know that we now. And in 2008, it is expected that about two million believe that the issue at hand is to help more and more homes are going to be in foreclosure. Americans find success with homeownership, and not simply find homeownership a burden for families where To address this key issue that affects our Latino community they ultimately turn in the keys