Foreclosure's shadow falls across diverse set of US homeowners

At the housing boom's peak in 2005, 20 percent of new mortgage loans were subprime, four times the share a decade earlier.

from the April 9, 2007 edition

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The borrowers are a diverse group:

• Many have low incomes, but Mr. Ynigues says he was pulling in nearly $3,000 a month when he took out his loan.

• A disproportionate share of subprime borrowers are black or Hispanic, but Ms. Beyer is among the large number of at-risk homeowners who are white.

• Many were buying homes for the first time, but many others, like Beyer, were refinancing loans originated years before.

• High-interest loans (often subprime) are common at the smaller end of the loan spectrum, but in 2005 they also accounted for 19 percent of large loans – those for $250,000 or more. Those large loans were just as numerous, and were growing faster, than those for less than $100,000, according to a Federal Reserve study published last fall.

• Many subprime borrowers fell into trouble because their loan payments adjusted upward, but Mr. Castro's challenge arose because of income more than interest rates. He lost a good job and is having difficulty collecting rent from a tenant downstairs.

"I thought it was a step forward," says the tall, soft-spoken man from the Dominican Republic, referring to the day he bought his home four years ago.

At the time, land prices were surging in the Boston area, even in Lawrence, where Latino immigrants now occupy neighborhoods that once housed textile workers along the Merrimack River.

Now it looks as if Castro will likely have to take a big financial step back.

The home, where the second floor has made a comfortable residence for his wife, child, and sister-in-law, is up for sale. So are two other homes on his block – homes that are now vacant and on their way toward foreclosure.

Castro hopes he can get about $300,000 for his house and then give the lenders what's left after the sales commission – probably about 75 percent of what they are owed.

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