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Foreclosures, immigration linked in report Areas hit hardest have high percentage of foreign-born heads of household By Timothy Pratt (contact) Wed, May 13, 2009 (2 a.m.) Las vegas Sun Counties with high foreclosure rates also tend to have large immigrant populations, according to a Pew Hispanic Center report released Tuesday. The study ranked Clark County sixth nationwide in foreclosure rates last year with 8.9 percent of the valley’s houses in the courts. Nearly 1 in 4 heads of household locally were foreign-born, much higher than the national rate of 4.7 percent. Half of those immigrants were Hispanic. But the study’s main author, Rakesh Kochhar, cautioned that focusing on those factors can lead to a “chicken and egg situation.” “The two things appear together, but is there a causal relationship? Not necessarily,” he said. Kochhar noted that jobs building houses drew many immigrants to the Las Vegas Valley in the past two decades. An unknown number of those workers bought homes. The report also shows that Hispanics, blacks and minorities in general entered subprime mortgages at higher rates than the rest of the population. Nationwide, for example, 27.6 percent of home loans to Hispanics in 2007 were high-priced and a third of loans to blacks were in the same category. Only 1 in 10 loans to whites were high-priced. So areas with higher shares of minorities tend to have higher numbers of homeowners with loans at risk of entering foreclosure. Kochhar’s report, titled “Through Boom and Bust: Minorities, Immigrants and Homeownership,” shows that counties with high foreclosure rates exhibit other factors, including rising unemployment rates and sinking home values. Clark County’s unemployment rate for March was 10.4 percent, tenth-highest among major metropolitan areas nationwide. The Pew report looks at unemployment rates only for 2008 as a whole, which in Clark County was 6.5 percent. The construction sector is among the hardest-hit in terms of job loss. And home values in Las Vegas dropped 31.7 percent in 2008, second most in the nation behind Phoenix, according to a recent Standard & Poor’s report. So there are several factors related to high concentrations of immigrants, each somehow related to another. As Kochhar wrote, “the presence of immigrants in a county may simply signal the effects of a boom-and-bust cycle that has raised foreclosure rates for all residents in that county.” Ian Hirsch, who manages Fortress Credit Services and has taken on hundreds of clients seeking to adjust their mortgages to avoid or get out of foreclosure, said the report’s conclusions match his on-the-ground experience. “It doesn’t surprise me,” Hirsch said. He pointed to the dozens of minority and immigrant clients he has seen who say, “This is not what I was told I was getting into” when they come to his office for help. The adjustable rates in their mortgages and the lack of financial assets they brought to the table lead many of those clients to foreclosure, he added. Some of those clients worked in the construction industry, building the homes that came with the boom. Now, Hirsch noted, with the construction of CityCenter and other large commercial projects nearing an end, unemployment may continue to rise in the coming months. This could bring more foreclosures and failed businesses. “Unfortunately,” Hirsch said, “I think it’s going to get worse before it gets better.”
article de bloomberg