Economic Crisis Hits Heart of Immigrants' Dreams

When former homeowner Sidney Pires looks at the current economic crisis, he feels sick of the finger pointing. But his fingers still lean toward the Republican Party.

"Republicans don’t believe in regulations. For those with high possessions [it] is easy to believe in [the] free market. If they had regulations preventing people from refinancing a home before five years, I would still have mine,” Pires says.

In 2000, Pires, a Republican Party supporter, got a subprime loan to pay for a three-bedroom home in Framingham, Mass.

The property was financed by Washington Mutual bank. Three months later, brokers started calling to offer refinancing options, with whopping profits ranging from $30,000 to $50,000.

One year later his bills came in the name of Option One.   “They sold my mortgage on my back. Some brokers conducted home appraisals even without my consent,” Pires says.

Pires says he was not exposed to all the details of a variable-interest-rate mortgage. After he finally agreed to refinance his home, he used much of the $30,000 equity on the property’s value to change the home’s basement.

Soon after Pires lost his job as a computer engineer, his home faced foreclosure in 2004.

For Portuguese real estate broker Antonio Roxo, the US economy is “sobering up from a binge drinking habit.”

“We saw this [crisis] coming. A lot of homes were sold to people who couldn’t pay their mortgage,” says Roxo, who admits that short-sale, a modality of negotiation with the bank that allows homeowners to legally walk away from their mortgage contracts, is at an all-time high.

According to a survey by RealtyTrac, an online marketplace for foreclosure properties, more than 303,000 properties were put in foreclosure last August alone. The statistics show a 12 percent increase from the previous month and a 27 percent hike from August 2007.

Thousands of those houses belonged to immigrant families, like the Bertolinis of Milford, NH, people who found in homeownership a big piece of their American dream.

José Bertolini’s recipe to surviving economic crises is simple: “Work harder.”

The 65-year-old factory worker has the scars to show for a past filled with financial hardships. When the 1980s’ inflation rates of 80 percent per month plagued Brazil and ate his salary, he sought a second job.  To make ends meet, Bertolini coupled his freelance photographer job with a door-to-door salesperson one.

Then, in the 1990s, President Fernando Collor, perceived to be the young reformer that Brazil needed, confiscated the savings of everyone who had more than $50,000 cruzeiros in the bank.

Bertolini’s hard-earned savings were washed away.  Migrating to the US was ideal solution for the Bertolini family 10 years ago.

But after three years of living in a three-bedroom home in Milford, the Bertolinis had to abandon the property. The subprime mortgage rates exploded – from $780 to more than $2,000 a month – and was no longer in their reach.

For economist Alvaro Lima, a director of research for Boston’s City Hall, the financial crisis is punishing immigrants and natives equally.

Everybody suffers the same. It all depends on the choices you made in the past. And the subprime market appealed to a lot of low-income families,” he says.

Even immigrants who did not buy a home, explains Lima, will soon be affected by this crisis’ second wave. That’s when a shortage of credit lines will hit vital sectors of the economy for them, like the market of services and car leasing.

Lately, at the Latino Community Center, in Nashua, NH, director John Perez has been receiving about five calls a day from people who have lost their jobs.

“We try to help out, crafting resumes, or referring to temp agencies,” say Perez, who also confessed that the center, a two-people operation based in a church, is facing financial issues of its own.

“Our operational budget is about $200 a month. We need more financial support from the community to simply maintain our services, let alone invest in new programs,” says Perez, a former general practitioner from the Dominican Republic.

Last month, the Consumer Credit Counseling Services (CCCS) of New Hampshire and Vermont, a Concord, NH-based nonprofit that provides financial counseling services, noticed an 11 percent increase in the demand for services.

The nonprofit's typical client, says director of communications Sara Varela, are American women, in their 40s, who are swamped with debt.

“Some people are really embarrassed when they come to us. In some cases they have so much debt and no income that can only offer [them] bankruptcy options,” she says.

In 2007, the CCCS assisted 5,113, people. In the fiscal year that ended June 30 of this year, 5,739 clients knocked on their door.  Of those, 462 were seeking housing counseling.

“Too many consumers don’t know how to spot a reputable credit counseling agency. A helpful tip I share is: if the company’s agent is paid by commission, he won’t represent your interest as much as his own,” Varela said.

A survey by the National Foundation for Credit Counseling released in June revealed that “Latinos lack the building blocks [of] financial security” and are at risk, too.

The study says that 20 percent, or roughly 6.6 million Latinos, admit to struggling to pay their bills each month.  For most households, housing costs make up the single largest monthly expense. About 1.7 million Latinos reported that they either paid their mortgage late or missed a payment in the last 12 months.

But Roxo and Lima disagree that the Congress' bailout is the solution this country needs. For Roxo, the broker, the $700 billion is “rewarding bad behavior.”  For Lima, “someone has to help the economy back to its feet to free up the credit line the middle class depend upon.”

At this point, all Sidney Pires can do is look back and remember a friend’s warnings in 2004: “‘Let’s get out now before this market crashes.”

“I didn’t believe the situation was that serious,” says Pires.

For more information on Consumer Credit Counseling Services, including tips on how to spot a reliable credit counseling agency, visit TakeChargeOfYourMoney.org