Immigration and the Housing Bust

The collapse of the real estate bubble has not only sank the world economy, it also destroyed most of the savings of the near retirees for whom the IMF wants to cut Social Security ($6 trillion in home equity and $4 trillion in retirement funds were lost in the housing bubble flameout). The vast majority of middle-income retirees have most of their wealth in their home equity; this home equity largely disappeared when the bubble burst.” So the IMF and global banking cartel are setting the conditions for social unrest and pushing for policies that will provoke it, and the Pentagon is preparing for a military response. As scary and unbelievable as all this may sound, we are on a fast track to this scenario. As the economic downturn continues, what is now a passive and confused population will eventually devolve into an explosion of violence. Without a coherent non-violent movement to provide a viable alternative, without an outlet for severe and legitimate grievances that provides any chance for urgently affecting necessary political change, people will resort to violence as a last desperate act of vengeance and frustration. - David DeGraw, The Global Banking Cartel Has One Card Left to Play, Amped Status, September 28, 2010

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The housing crisis has claimed more than five million American homes—about 10% of all homes with a mortgage. It began in lower-income neighborhoods and has spread to some of the most exclusive addresses in the United States. Many experts believe that the mortgage meltdown started years ago when banks, discovering the high returns from selling bundles of securitized mortgages, relaxed lending standards and originated millions of adjustable-rate subprime mortgages (ARM). These loans were designed to allow just about anyone to get a home loan.

During the real estate bubble years, Hispanics accounted for more than half of the U.S. population increase, exceeding estimates in most states as they crossed a new census milestone: 50 million, or 1 in 6 Americans. Many Hispanic families had multiple wage earners working multiple cash jobs, but had no savings or established credit history to allow them to qualify for traditional loans.

The Latino community appeared to be a a largely untapped demographic in the U.S. housing market. For years, immigrants to the U.S. have viewed buying a home as the ultimate benchmark of success, yet in 2003 the national Latino homeownership rate was 47%, compared with 68% for the overall population. Low-income housing groups, Hispanic lawmakers, a congressional Hispanic housing initiative, and mortgage lenders and brokers all were pushing hard to increase homeownership among Latinos.

In 2003, the Congressional Hispanic Caucus created Hogar to work with industry and community groups to increase mortgage lending to Latinos. Members of the caucus, who received donations from the lending industry and saw their constituents moving into new homes, pushed for eased lending standards, which fueled the subprime phenomenon among Latinos.

Between 2000 and 2007, as the Hispanic population increased, Hispanic homeownership grew even faster, increasing by 47%, to 6.1 million from 4.1 million, fueled by "non-prime" mortgages, which often don't require solid credit ratings or documentation of employment. (Over that same period, homeownership nationally grew by 8%.) In 2005 alone, mortgages to Hispanics jumped by 29%, with expensive nonprime mortgages soaring 169%.

Hispanics’ increasing numbers in the so-called “sand states” had a lot to do with the bubble’s disproportionate influence in those regions. When the interest rates for subprime borrowers' low capital, easy-credit, subprime ARM loans started climbing, many borrowers began falling behind on their payments, leading to the first wave of defaults.

Without the large levels of Hispanic immigration over the past decade, the bubble may still have happened but it seems unlikely that it scale would have been quite so huge and the wave of defaults quite so numerous.

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