October was the first month that Hugo and Rosa Chavez did not make the payment on their mortgage. Income was down for Hugo, who works as a banquet server at the Omni Tucson National Resort; his number of shifts had declined.
“In the beginning it was okay because he was working all week and he was getting good tips and his checks were really good,” Rosa said. But soon they could not afford the mortgage for their house on Tucson’s northwest side. Rosa is pregnant and will have to stop working in a few months, decreasing their income.
Hugo and Rosa were worried and wondered if they would be able to afford to stay in their home.
“We were thinking ‘What are we going to do?’ ” Rosa said. “We’re just going to lose the house.
Hugo and Rosa are not alone.
Arizona ranked third in the nation in home foreclosures for the third quarter of 2008, according to RealtyTrac, a national database of foreclosure listings. While Maricopa County and Pinal County were among the hardest hit in the state, Pima County still has a high rate of foreclosures, said Jay Young, a senior researcher with the Southwest Fair Housing Council.
In 2006, there were 2,767 notices of foreclosures filed at the Pima County Recorder’s Office, according to a report released by the Southwest Fair Housing Council. In 2007, foreclosures jumped 67.7 percent to 4,640. As of July 2008, 4,841 foreclosures had been filed. Hispanic Rate Higher
The rising rate of foreclosure in Pima County affects all socioeconomic groups, from those barely making ends meet to those foreclosing on million dollar homes, said Cheri Horbacz, project manager for Don’t Borrow Trouble, a predatory lending education center that works with homeowners facing foreclosure.
However, Hispanics in Pima County have experienced higher rates of foreclosure.
In 2002, Hispanics accounted for nearly 35 percent of foreclosures, but received less than 19 percent of loans and account for 30 percent of the population. In 2006, Hispanics accounted for 36 percent of foreclosures but received 24 percent of loans and now account for more than 32 percent of the population, according to the report.
“The study in 2004 showed that Hispanic borrowers were affected more than most, and a lot of the foreclosures were in South Tucson, a highly Hispanic area,” Young said.
Foreclosures broken down by zip code show that areas with high Hispanic populations have higher rates of foreclosures.
Hispanics are more likely to have taken out sub-prime mortgages as well.
In 2006, 42 percent of loans made to Hispanics were sub-prime. Amongst white borrowers, 17 percent of loans were sub-prime, according to the report.
While the Hispanic population continues to have higher rates of foreclosure, the rest of Tucson’s population is catching up. Many homes in Tucson’s suburbs that were financed using exotic loan products, are likely to have higher rates of foreclosure.
“You still had South Tucson and the Hispanic areas that were hard hit, but you also started to see outer-ring suburbs that were new suburbs where a lot of these exotic mortgage products were used to buy homes,” Young said of the current foreclosures. “It started to be less about race and income and more about product.”
Help for Borrowers
The Primavera Foundation has seen an increase in the number of troubled borrowers coming through their doors for help, though they are not sure if that is due to the word spreading that help is available or because an increased number of people needing assistance.
The foundation offers educational programs for those considering buying homes as well as assistance for borrowers facing foreclosure, said Renee Bibby, marketing coordinator for Primavera.
Hugo and Rosa were two people who found their way to Primavera for help. The first time they went to Primavera, they found emotional relief. They were reassured that they were early on in the process and could still save their home and credit rating. Hugo attended classes to learn about finances and foreclosure.
Primavera’s classes are offered in English and in Spanish.
The foundation counseled a total of 120 borrowers from July 1, 2007 to June 30, 2008. Of those, 74 percent were Hispanic, according to an analysis released by the foundation.
Don’t Borrow Trouble also offers help in English and Spanish for Tucsonans facing foreclosure. They have been advertising to zip codes with a high percentage of Hispanics to let them know of upcoming foreclosure workshops or events, Horbacz said.
Foreclosures in the Future
Current projections indicate the rate of foreclosures will continue to rise for the next few years.
A high percentage of sub prime adjustable rate mortgages, an increase in delinquency on mortgage payments, a continuing decline in home prices and a weak economy are all factors that indicate foreclosures will remain high, according to the Southwest Fair Housing Council Report.
Changing guidelines for lenders and borrowers, the precarious state of the economy and future stimulus programs could affect the rate of foreclosure locally, Horbacz said.
Pima County is projected to have more than 8,000 foreclosures by the end of this year, Young said, with the same predicted for 2009. The rate of foreclosure could increase depending on different factors, such as unemployment.
“We’re still spinning out of control in my opinion,” Horbacz said. “I don’t know about how much more of a bottom we can go but we’re not on our way up. Even if we stay where we are it’s only, to me, going to get worse.”
For Hugo and Rosa, the story ends happily. They renegotiated their mortgage and are now paying around half of what they were paying per month, Hugo said. They will stay in their home.
