Foreclosure Wave Bears Down on Immigrants

Laissez-faire regulatory policies made other government agencies reluctant to intervene.

"The market changed so investors were setting the standards for qualifying people for mortgage lending," said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "They had a higher appetite for risk, which led to the lax standards that are resulting in delinquencies. The regulators should have been more concerned about protecting consumers than about protecting financial institutions."

Officials at the Mortgage Bankers Association were unavailable for comment. In previous interviews, they have said that loosened credit policies allowed more families to become homeowners and that reputable lenders do not make loans that cannot be repaid.

Many immigrants initially welcomed the lending changes as the only way they could afford to buy.

Places where immigrants cluster have been particularly hard-hit. Semidey said that the most calls are coming from Manassas, Woodbridge and Dale City in Virginia and Gaithersburg, Germantown, Capitol Heights and Langley Park in Maryland. But one recent caller was the owner of a $1.5 million home in McLean, a restaurateur who has seen her business slide in recent months as the slowdown in the construction industry pinches the pocketbooks of her Latino patrons. Another was an illiterate carpenter who bought a $750,000 house in Ashburn Village, Semidey said.

Francisco Santos, 31, who lays tile, makes $60,000 a year by working seven days a week. He became convinced that real estate was a can't-lose proposition after the value of the townhouse he had bought in Woodbridge in 2002 for $95,000 climbed to $230,000. He and his wife, Linda, a homemaker, traded up to another house and banked part of their profits. The Spanish-speaking real estate agents with whom he negotiated the purchase persuaded him to borrow against his equity to move up again.

"They called me every day; they said we can do more business, that it's a good time to do it," he said in a mixture of English and Spanish. "They talked very sweet into my ear. I believed. I believed these people, and I did this business."

So Francisco and Linda went to visit a spacious red-brick house on Lord Culpeper Drive in Woodbridge, with its master bedroom suite and well-equipped kitchen, priced at $540,000. Linda nearly swooned with pleasure as she looked around the interior. She thought: Here was her dream house.

They decided to buy the house, which was fairly easy because the Santoses had excellent credit, equity in the other house and money in the bank. The mortgage broker made things even easier by doing the settlement in their home, something many Hispanic families find more comfortable. That also made Francisco's life easier because he typically works until 8 at night, making it hard to get places during normal business hours.

He tried to rent out their former house, but the tenants didn't pay their rent, so the Santoses used up their savings to keep up payments on the two houses. They put the houses on the market but found no buyers. When they couldn't make payments, their credit rating deteriorated.

The stress on the family mounted as collection agencies began calling, over and over. With two small children and another one on the way, the pressures grew. The couple quarreled, and Francisco Santos said he sometimes yelled at the kids for little provocation.

"I feel terrible," said Santos, a legal immigrant. "I'm trying to keep control because my wife is pregnant, and I don't want her to feel bad. It's difficult. I was thinking about my kids, and their opportunity to have a good life. My wife, she says, 'Why? Why?' "

The loan servicing company, American Home Services, will foreclose on the new house Saturday. The Santoses will move back to their old house and hope that they will be able to leave the problems of the new house behind them.