Subprime lenders targeted Manatee County blacks, Hispanics and minority neighborhoods during the housing boom with high-cost loans that are now helping fuel the record rise in foreclosures, federal data shows.
Nearly half of all home loans taken out by Manatee blacks from 2004 through 2006 were subprime, while for whites it was one in five, according to data that lenders supplied under the federal Home Mortgage Disclosure Act. Hispanics also were more than twice as likely as non-Hispanics to get subprime loans.
Manatee's minority neighborhoods, particularly East Bradenton, Oneco and Samoset, had significantly higher concentrations of such loans than mostly white areas such as Lakewood Ranch and Anna Maria Island.
Those subprime figures mirror the nation, in which 52 percent of black loans, 41 percent of Hispanic loans and 22 percent of white, non-Hispanic loans were subprime, according to the fair-lending advocacy group Committee for Responsible Lending. Subprime loans are offered to borrowers with poor credit histories at higher-than-prime interest rates but little or no down payment.
For minorities, a subprime loan often was the only type of loan they sought or knew about to buy a home during the 2004-06 housing boom. They flocked to subprime lenders, fearing that if they didn't, escalating prices would lock them out of home ownership forever.
In turn, lenders took more chances on subprime borrowers, forgoing traditional loan requirements such as providing statements of income and assets.
But those loans often put borrowers in homes they could ill-afford at prime interest rates, with double-digit rates that adjusted upward. When those rates began resetting in 2006, borrowers could no longer afford their mortgage payments - and began falling into foreclosure.
Nina Perry, an attorney with Legal Aid of Manasota Inc., represents low-income homeowners facing foreclosure. More than half are minorities with subprime loans.
"Almost every case I have has a little bit of fraud, a little bit of toxicity and a little bit of predatory lending," she contended.
She points to the case of Mario Garcia, a Mexican national who was making $12.50 an hour at a Bradenton lumber company when he bought a Ruskin mobile home for $279,000 in 2005.
Washington Mutual's subprime arm, Long Beach Mortgage, gave him two loans, one for 80 percent of the purchase price and the other for 20 percent, a common practice at the time for borrowers with no down payment. To qualify Garcia for the loans, the mortgage broker listed his annual income at $60,000.
Garcia said when he asked about the figures at closing, he was told not to worry.
"I said, 'I can't read it,' " he said through an interpreter. "And they said everything was fine."
It was a costly mistake. With the loans' high interest rates - 10.269 and 11.538 percent, respectively - he would have paid more than $1 million through the 30-year life of the loans.
He lasted just five months. With his income nowhere near the $2,350 monthly mortgage, he exhausted his savings before moving out.
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