One of the most affected by the subprime housing disaster is the Hispanic community, and many are turning to loan modification to solve their problems. This housing catastrophe would have been prevented if the subprime lenders were stricter in checking and implementing their loans to possible home buyers. Instead, they turned too greedy and turned a blind eye on everything else.

Many immigrants, like the Latinos, have viewed buying a home as the ultimate measure of success. From 2000 to 2007, the Hispanic population grew from 4.1 million to 6.1 million, spurring massive home buying in the United States. Over that same period of time, 8% were already homeowners. For instance, In 2005 alone, mortgages to Hispanics increased by 29%, with nonprime mortgages soaring 169%.

When the national housing market started breaking apart piece by piece, the Hispanic borrowers were greatly affected, because most of them bought houses in Southern California, Nevada and Florida - and these places were the housing bubble was pronounced. Many of them worked in the construction industry during the housing boom, and when the housing markets started to decline in strength, bad loans depressed the value of neighboring properties, creating a downward spiral. Neighborhoods are now dotted with vacant homes. According to the statistics, 25% of the US population is Hispanics, and banks have taken back 6.7 homes per 1,000 residents since Jan. 1, 2006.

Many Latino families are the hardest hit because they were the ones who took the most expensive subprime mortgages. This is because in most cases, these families had stable incomes and limited credit histories, opting to keep their cash at home and avoid the banks. So when the housing boom started, mortgage brokers and loan officers put these families on loans that didn't require proof of income, but charged higher interest rates to compensate. This was the reason why they were the ones who were tremendously affected when the housing crisis hit the bottom big time.

Now that the crisis is going on, the only positive thing that Hispanic community can do is to try saving their homes. However, it's not easy to do, especially when ongoing foreclosure notices keep pounding on the door and equities are drained to the last drop. In these cases, the best advice that lenders give these families is to apply for a loan modification. Generally, a loan modification is an offer to permanently change a borrower's mortgage agreement. It aims to:

• Lower interest rates to acquire lower payment terms.
• Modify interest rates, from adjustable to fixed rates
• Lower payments by lengthening loan terms
• Decrease the principal loan balance, and in some cases, waive off the second mortgage. This is especially useful for upside down mortgage without equities.


There are other ways to stop foreclosure, but most of the situations that these homeowners face are quite the same. Usually, they don't have money left for refinancing, so the best option for them is to apply for loan modification. In most cases, choosing to modify their loans was the best option in getting their homes back where they belong.

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