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Predatory Lenders Target New Asian Immigrants

International Examiner, News Report, Nhien Nguyen Posted: Apr 26, 2006

Seattle - When Sophorn Sim bought her first home in 1993, she never imagined that the American dream could turn into a nightmare.

About three years ago, Sim and her husband found themselves jobless, and as a result, they had a hard time paying the mortgage. Having lived in their dream home in White Center for the past decade, they were desperate to find ways to lower their payments.

Sim turned to a loan officer she had found through a fax solicitation. Initially, the re-financing deal lowered her payments; she was shocked when her payments started jumping up and up after the fifth month.

He was very convincing, Sim says about the loan officer. I really believed him that I would pay less than what I had [been paying before].

Sim turned to her relatives for help in saving her house. Then she brought the paperwork to Elaine Magil, International District Housing Alliance (IDHA) homeownership program assistant manager, who explained the terms of the loan and offered counseling and referrals to reputable lenders.

Magil says that the home buying and financing process is counter-intuitive and overly complicated, not just for recent immigrants, but also well-educated, established citizens.

For Sim, who immigrated to Seattle from Cambodia in 1985, terms like negative amortization and interest-only meant little to her. As an activist in the Cambodian community for years, she never thought that she would be a victim of predatory lending.

Stella Chao, IDHA executive director, says that predatory lending has ballooned in the past four to five years. Regulations have relaxed, more products are available and marketing of these products have become more aggressive.

Limited English speakers are specifically targeted not just by lenders, but also product marketing. Moreover, Chao says that limited English speakers end up engaging in offers more often than other groups.

Sim says that she and other community members look for homes they like. If they dont qualify for a loan, they will stretch the numbers and push the loan officer to do whatever they can to get the house, regardless of whether its a bad loan or high interest.

The problem with predatory lending, says Magil, is that these businesses know the laws very well. They know what is legal and illegal, pushing the limits of what they do so that will keep them from getting sued.

With immigrants and limited English speakers, there is often an automatic trust when you meet someone in the community.

In my community, were very trustworthy, says Sim. Once they work with someone, they are afraid to get out of that relationship or feel obliged to stick with them.

I caution people, even if they are friends, colleagues, compatriots, to be just as careful, says Magil.

Theres nothing wrong with asking questions.

Asian and Pacific Islanders are 25 percent more likely to receive discriminatory treatment in the home buying process, according to research by the Department of Housing and Urban Development, and pay an average of $1,400 more in closing costs.

When limited English speakers get good faith estimates, they have different levels of comfort at negotiating fees, such as title insurance, than native English speakers.

Any community that is disadvantaged has less access to information, says Magil.

Magil advises that it is best to get as much information as possible to find the best deal. Banks and other lending institutions may be aware of programs such as down-payment assistance, but they dont bother to tell clients because the process is time-consuming, says Magil.

People dont know how much power they have in their hands, says Magil. Clients get pushed through the process.

Chao points to recent television ads which charge anywhere from $100 to $2000 for a manual of free government programs that can save homebuyers money. IDHA offers manuals like this at no cost.

IDHA serves to educate first-time homebuyers and current homeowners with non-biased, multilingual counseling and information. Interested clients prepare for buying a home by getting help finding affordable rental housing and credit repair.

Sim, who was so grateful to receive assistance from IDHA, now works for the agency as a financial literacy coordinator.

Our community needs to be educated, says Sim.

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