Predatory Lending Scams Target Hispanics

As predatory lending practics and harmful home loans escalate around the country, is there a demographic most at risk for falling victim to these scams and raw deals? According to a recent study, the answer is YES.

According to, CasaNuevaHouston.com, Latinos are twice as likely as other groups to be targeted this growing wave of real estate. To assist those who are unsure about the mortgage process, the website has posted a Home Buyers Bill of Rights highlighting the most common abuses.

Reaching out to first time, ignorant home buyers

This site was created in Houston due to that city’s large Latino population. It’s also relevent for those seeking a Florida home loan, however, because there are over 2.5 million Hispanics residing in the Sunshine State, over one million in Miami alone.

“Latinos are quick to embrace the American dream of home ownership, because in most Latin American countries, mortgage lending as we know it doesn’t exist,” said Anita Sparks-Bohn, a founder of CasaNuevaHouston.com. “This eagerness creates a wide opening for scam artists, especially when combined with a language barrier and a general lack of understanding about the home-buying process.”

Some of the rights described in the posting take direct aim at preventing common abuses, while others are designed to improve understanding of opportunities available to Latino home buyers who may or may not be U.S. citizens.

For example, many Latino buyers may have the right to purchase a new home in the United States even if they do not have a Social Security number, lack traditional credit, or receive part of their income in cash. Some buyers may also be eligible for programs that provide assistance with down payments and closing costs.

Examples of predatory lending

Examples of predatory lending and other real estate scams described at the Web site include:

• Fictitious fees, including unethical real estate agents charging hundreds or thousands of dollars just to look at homes. In the United States, agents are paid by the seller, not the buyer, and payment occurs only at closing.
• Padding Florida home loans with inflated and unauthorized charges. There have been reports of predatory lenders charging up to 10 points to originate loans, while the standard origination fee is 1 point (or 1 percent of the loan amount.)
• Talking borrowers into unfair, exotic home loans with much higher interest rates, even when they would qualify for a lower rate.
• Selling properties for more than their market value and covering up major structural problems. “Bait and switch” tactics that stick buyers with much higher interest rates, pre-payment penalties and other onerous terms.

Predatory lenders often do everything they can to force buyers to default, so they can resell the property to more victims. Before you take out a Florida home loan, be aware of the risks and scams out there.