The foreclosure crisis is eroding the stability of Latino families and children in Detroit and nationwide, according to a new study by the National Council of La Raza (NCLR).
The Housing Opportunity Center (HOC) at Southwest Housing Solutions is one of five nonprofit organizations in the country that provided data for the NCLR study. All the organizations offer housing and foreclosure counseling to Latino families.
“One of every four families that we counsel at the HOC is Latino,” said Hector Hernandez, head of the HOC. “Our counselors know firsthand the financial and psychological toll that the foreclosure crisis is having on Latino families and children. The crisis is causing a deep loss of wealth in southwest Detroit, where about half the population is Latino.”
The NCLR study estimates that, nationally, 1.3 million Latino families will lose their homes to foreclosure between 2009 and 2012. In the foreclosure process, the average Latino family exhausts its financial resources and loses almost $90,000. Because two-thirds of the net worth of Latino homeowners is tied up in their houses, the loss of the home is particularly devastating.
“Losing this bedrock asset puts their entire financial future at risk, often with great consequences for the entire family,” said Janet Murguía, NCLR President and CEO. “Beyond the financial consequences, homeownership remains a powerful symbol of the American middle class. Thus, the loss of the home also comes with social and psychological effects.”
The NCLR study found that relationships between spouses, children, and extended families suffered during and after the foreclosure. Parents reported problems with their children’s physical, mental and emotional wellbeing and academic performance.
Families that experienced foreclosure were left with no financial safety net. They skipped trips to the doctor. They also had to change their plans to help pay for their children to go to college. As a result, their dreams of helping their children achieve a better life were severely compromised.
In light of the study’s finding, NCLR is calling for stronger government measures to help families avert foreclosure and regain their economic stability.
“We encourage policymakers interested in understanding the true cost of foreclosure to look beyond Wall Street and into the faces of the millions of children affected by this crisis,” said Roberto Quercia, one of the authors of the study and the director of Center for Community Capital at the University of North Carolina.
Guadalupe Zarate is one of the individuals who was interviewed for the NCLR study through the HOC. The Detroit-area home that she shared with her three children went into foreclosure after she was divorced and then lost her job. After the foreclosure, she moved in with her mother, but there was only room for one of her children. She kept her youngest daughter with her, but had to send the others to live with her former husband.
“It was devastating for my daughter to be separated from her siblings,” Guadalupe said. “My kids and I are a very close-knit family. We rely on each other for support, and to be apart during a very difficult time only made things harder on all of us.”
Guadalupe added that her daughter sometimes goes by their former house and becomes emotional when she sees it. “She still considers it her home,” Guadalupe said.
Guadalupe now works for the HOC and helps counsel Latino families who are having homeownership issues.
The NCLR study is called “The Foreclosure Generation: The Long-Term Impact of the Housing Crisis on Latino Children and Families.” The five organizations that participated in the study are all part of the NCLR Homeownership Network.