LINDA KODY
Homeowners at risk
After seeing a significant spike in the number of foreclosures in Lawrence last year, a nonprofit community development group is planning to step up its efforts to educate city residents interested in purchasing homes.
Lawrence CommunityWorks is organizing a series of free educational workshops next month as part of the first-ever Latino Home Expo, a one-day free event designed for Latino homeowners and prospective homebuyers in the Merrimack Valley.
The workshops will offer tips to consumers about the homebuying process, refinancing, applying for a mortgage, establishing good credit and saving money on energy costs.
“It’s extremely important in this area to educate the community about the importance of obtaining homeowner education and also provide access and knowledge about the different programs that are out there for first-time homebuyers,” said Juan Bonilla, a homeowner and credit counselor for Lawrence CommunityWorks.
Bonilla blames the increase in foreclosures in Lawrence, in part, on the aggressive marketing tactics used by mortgage brokers offering access to subprime rate loans.
“In Lawrence, you’re bombarded by the lenders who offer these subprime loans,” said Bonilla, noting that there are multiple advertisements on Spanish radio programs and newspapers targeting Hispanic consumers.
According to Bonilla, some of those lenders are steering homebuyers to such loan packages, which feature higher fees and rates, when the buyers may actually qualify for better rates or less costly loans.
“I think we’re hoping that first-time homeowners will seek counseling and get prepared for the process,” said Bonilla. “What we’re looking for is stable homeownership – not just getting someone in the house, but getting them in there permanently.”
The Latino Home Expo is being organized by CrespoGroup, a Lawrence-based multicultural marketing firm, and El Mundo newspaper. The two organized the Latino Career Expo in Lawrence last year, which was so successful that city and community leaders urged them to host another business event.
Ed Crespo, principal of CrespoGroup, said he was interested in putting together a business event that also had a “social cause” and after doing some research on the city’s foreclosure history and predatory lending patterns, he decided on an expo centered around the housing industry.
“We honestly believe that buying a home is not necessarily the American dream, but instead that keeping a home is the American dream,” said Crespo.
Homebuyer education is critical, according to local real estate brokers who have seen an increasing number of homeowners with nontraditional and subprime rate loans in Lawrence and other cities struggle to keep their homes.
Lawrence’s foreclosure rate jumped 116 percent last year compared to 2004. According to ForeclosuresMass, there were 53 foreclosure filings in Lawrence over the last three months, and the city had more foreclosed properties than nearly all other Bay State communities in the last two months.
‘A Big Concern’
Linda Kody, a real estate broker in North Andover, has seen many homeowners in Lawrence and other communities in the Merrimack Valley who have stretched their finances to purchase multifamily homes face foreclosure.
Kody said most buyers of multifamily homes rely heavily on rental income to pay off the mortgage – and when they have trouble filling vacant units or encounter tenants who refuse to pay rent or face unanticipated repair costs or other expenses, they fall behind on payments.
Additionally, some of the borrowers obtain risky interest-only or no down-payment loans as well as subprime loans with higher rates, explained Kody, and when interest rates climb or their financial situation changes, the homeowners are at great risk of losing their homes.
And refinancing to secure a more traditional mortgage loan with a lower interest rate isn’t always an option because multifamily home prices have flattened or dipped, said Kody, who has taught classes in Lawrence, Lowell and Haverhill for first-time homebuyers.
“I think that many times when they’re buying a multifamily property, they walk in with some expectations not realizing there’s a downside,” said Kody, owner of Kody & Co. in North Andover. “They’re buying the property before they’re getting the education.”
Kody currently has about 35 bank-foreclosed properties listed for sale, including nine multifamily homes in Lawrence and 12 single-family homes in other communities in the Merrimack Valley.
Neily Soto, a Hispanic real estate agent who works for Century 21 McLennan, Ortega and Fermin, said she has concerns about predatory lending practices in Lawrence and advises first-time homebuyers to get educated before securing financing and purchasing a home.
“It’s [predatory lending] still a big concern,” said Soto, whose firm will exhibit at the Latino Home Expo.
Soto added that the Hispanic community has been victimized by smaller mortgage brokerage companies with Spanish-speaking representatives because Hispanics tend to trust and believe “in their own people.”
“There’s the feeling that ‘these are ‘my people and they’re going to do good by me,'” she said.
That’s why an event like the home expo is important, because it will provide a “one-stop shop” where consumers can get the education they need about the entire homebuying process and about maintaining homeownership, noted Soto.
Bonilla, of LawrenceCommunity Works, said most of the homeowners dealing with foreclosures in Lawrence did not attend any type of counseling program that could have given them insight and sound advice about securing the appropriate financing to purchase a home. LawrenceCommunity Works hosts two homebuyer educational seminars each month, in Spanish and English.
“We want to let people know that if you fix your credit and save money, it will help in the long run. You don’t have to pay higher interest rates and closing costs, which make it difficult to maintain a home,” Bonilla said.
More than 1,500 are expected to attend the Latino Home Expo. In addition to the workshops hosted by Lawrence CommunityWorks, the expo will feature exhibits by real estate companies, developers, mortgage brokers, financial institutions and home design firms.
Crespo said several lending institutions – including Bank of America, Sovereign Bank and TD Banknorth – will be exhibiting.
All the lenders are approved by the Federal Home Loan Bank and Massachusetts Housing Partnership, which is a sponsor of the event, to ensure that participants come in contact with only reputable financial institutions, according to Crespo.
The Latino Home Expo will take place June 4 between 1 p.m. and 7 p.m. at the Lawrence Elks Club at 652 Andover St.
