Understanding Foreclosure Risk: The Role of Nativity and Gender

Introduction

Six years after the start of the foreclosure crisis, millions of American families are at risk of foreclosure. While over 1.3 million homes were lost to foreclosure by May 2012, many more homes have been at risk through some part of the previous four-year period (RealtyTrac, 2012). In the earliest years of the crisis, risks were largely borne by owners with subprime mortgages, but as unemployment rose in the last years of the decade, many more families across mortgage types and geographic areas found themselves at risk. While housing insecurity has affected all types of homeowners, some are at far greater risk than others. People of color and lower-income owners face larger risks, in part because their communities were targeted for subprime and predatory lending in the years leading up to the foreclosure crisis (Bocian et al., 2008).

These inequities are often obscured in a public policy and public discourse deeply influenced by neoliberalism and a commitment to individualism. Neoliberal approaches to economic participation cast all participants as individual actors in a free market unfettered by structural inequalities. Economic policies and regulations in the United States enshrine this ideological approach, providing few protections and failing to act to level the playing field. Social location, shaped by experiences of migration, gender, ethnicity, and race, rarely figures in this framework and is seen as antithetical to equal treatment in policy and law. Housing policies assume buyers choose housing options freely and have equal access to information. The underfunding of public housing and rental vouchers, and a federal policy that spends $6 assisting homeowners to every $1 assisting renters (Landis and McClure, 2010), leaves other housing options with little support or attention.

From this neoliberal perspective, homeownership is figured as a mark of success and hard work, an accomplishment that represents higher social status than renting. All buyers are imagined to face similar costs within the housing market, and the additional financial burdens that accrue to buyers, like property taxes and homeowners’ insurance, are expected to vary in ways that are fair. In other words, increased tax burdens accrue to those who are receiving a greater return on their investment, either through high quality public schools or other community amenities.

If economic participation, and homeownership in particular, are figured as individual acts of disembodied (de-raced and de-gendered) rational actors, then foreclosure is figured as an individual failing. While those disadvantaged financially are recognized as more vulnerable, other categorical differences – such as gender or immigration status – appear to have little impact on either the likelihood of mortgage default or the experience of it. This paper challenges that assumption and we ask: Do immigrant homeowners, women, and owners of color get into mortgage trouble through the same pathways as native born, white male owners and married couples? Since we know that single mothers, immigrants, and people of color are more likely to lose a home to foreclosure, are these patterns simply due to income and wealth disparities across groups, or are there other factors shaping these gaps? In this paper, we draw on intensive interviews and fieldwork in foreclosure prevention workshops to argue that experiences outside of the lending industry and labor market contribute to housing risk for women and immigrants, and that public policies need to account for these factors in the development of approaches to reduce the number of foreclosures.

Ownership and Risk

Contemporary life in the United States is marked by uncertainty and unpredictability, particularly for low- to moderate-income individuals and families. In their jobs and families, many Americans experience rapid change and increased complexity, leaving them with a greater sense of risk and instability. This sense of risk arises not only from the advent of the most recent economic downturn, but as a consequence of globalization and national disinvestment in the safety net. As globalization increases and accelerates the flow of people and goods across national borders, flexibility and liquidity increase in value. The consequence of these rapid changes is often job insecurity and downsizing, leaving many workers trying to re-tool and retrain.

In the midst of this increased risk, the search for control and stability becomes more challenging. Homeownership is imagined as one way to achieve some sort of stability amid uncertainty. The home represents a private and bounded realm that can offer its inhabitants a sense of security and predictability in an insecure world, a sense of ontological security (Dupuis and Thorns, 1998). Giddens (1991) defines ontological security as a sense of confidence and trust in the world, established in childhood but maintained through daily routines. In order to bolster ontological security, Dupuis and Thorns (1998) argue that the home provides a site of constancy, a secure base around which to construct identities, and a place where people feel in control of their lives and free from surveillance. The homeownership ideology of the US links this idea of home as security with owner occupation, leaving renting or other forms of tenure seeming less secure (Ronald, 2008). Symbolically, ownership may hold even greater importance for those more vulnerable to insecurity. For immigrants, ownership is often linked to success and belonging in their chosen country (Becerra, 2012). Similarly Darke (1994) found that pride and security in homeownership were especially significant for single women. Homeownership works in concert with neoliberal economic and social policies, individualizing responsibility for shelter and stewardship over the local environment.

The federal government has encouraged homeownership since 1934, with the creation of the Federal Housing Administration (FHA) which insured privately issued mortgages. Federal policies that encourage and reward homeownership today include: the mortgage interest and local property tax deductions; the capital gains tax exemption (up to $250,000 per owner) for house sales; and subsidies and insurance for mortgage loans through government-sponsored enterprises, such as Fannie Mae and Freddie Mac. These policies do not affect all buyers equally; the Mortgage Interest Deduction, for example, disproportionately rewards higher-income buyers and only one-quarter of homeowners, primarily those with the greatest income and most expensive homes, reap its rewards (Ventry, 2010). Roughly 75% of all government spending on housing goes to support homeownership (Landis and McClure, 2010).

In the 1990s and early 2000s, increasing low-income homeownership and improving ownership rates in communities of color became a goal of federal housing policy. Under the Clinton administration, new national homeownership goals were put in place with an emphasis on expanding and democratizing access to ownership. As part of President Clinton’s National Homeownership Strategy, lending standards at Fannie Mae and Freddie Mac were loosened to allow for lower down payments on loans, minimal closing costs, and affordable rates on 30-year fixed rate mortgages. Federal efforts accelerated under President Bush as a part of his goal of an ‘Ownership Society’. Again federal housing agencies were encouraged to increase ownership rates, particularly among low-income and minority groups and this became a central part of the mission of the Department of Housing and Urban Development (HUD) (Santiago et al., 2011). The Bush administration explicitly encouraged subprime lending, prompting lenders to push interest-only loans, to offer low introductory rates on adjustable rate mortgages (ARMs), and to provide loans for down payments and closing costs (Ventry, 2010).

These subprime loans were much riskier than prime loans, yet their risk was initially diffused, as lenders sold pieces of these mortgages packaged together in securities. Since lenders were not holding the mortgages and were receiving their portion of the profit up-front, their incentive was to increase the number of mortgages sold, creating riskier products toward that end. While regulators and ratings agencies ignored the risk, mortgage products grew far riskier, with higher loan-to-value products, no or low documentation mortgages, and adjustable rate mortgages with very low teaser rates sold to the most vulnerable homebuyers. Predatory lending, with unclear and unfavorable terms for borrowers and substantially higher interest rates, was one result; these loan products often included payments or fees that stripped any gains in equity homeowners were able to realize.

Tax policies also contributed to the overinvestment in housing. The Mortgage Interest Deduction (MID), enacted to encourage ownership, also had the perverse effect of subsidizing overinvestment in housing and providing incentives to buy larger homes for the tax deduction. While the tax rate on housing investment was near zero, other forms of business investment were taxed at a rate of 22% (Ventry, 2010). By promoting overinvestment in housing and encouraging owners to take on more mortgage debt in exchange for lower taxes, ‘the deduction began effectively subsidizing gambles on fluctuations in housing prices’ (Ventry, 2010: 278).

As long as housing prices continued to rise, the risk associated with these mortgage products was concealed, and homeowners had the option of selling the home in the event that they could not continue the payments. As housing prices began to fall at the end of 2006, owners with risky mortgages predominated among the first wave of foreclosures. Communities that had been the target of discrimination and had been unable to access credit in the past, in particular communities of color and low- to moderate-income communities, were more vulnerable to mortgage default.

Even before the current foreclosure crisis, homeownership was far riskier for low- to moderate-income owners than for their wealthier peers. While homeownership has long been available to the wealthy and upper-middle classes, even when access to ownership has been extended, the investment potential and stability were often unattainable for low- to moderate-income buyers. Assessing homeownership as a financial investment, Shlay (2006) found that lower-income buyers were less able to realize the returns on homeownership because they were less likely to control the timing and conditions of the sale of the home. Goetzmann and Spiegel (2002) suggest that ownership among lower-income buyers may actually increase the wealth gap rather than shrink it. Yet a deep ideological commitment to ownership, combined with research that documents the benefits of ownership for children (Green and White, 1997; Haurin et al., 2000) and communities (Rossi and Weber, 1996), fueled the continued push to expand homeownership.

Unequal Access, Unequal Risk

The efforts to increase homeownership among low-income and minority populations were an attempt to respond to the limited access that many ethnic and racial minority groups, immigrants, and women have had to the housing market. By 2004, ownership rates in the US reached a peak of 69%. Yet this figure masks deep disparities: in this same year, while nearly 76% of non-Hispanic whites owned a home, only 49% of Blacks, and just under 59% of ‘other races’ owned homes. Only 43.2% of single parents owned their own home by 2001. There was a slight move toward the democratization of homeownership and risk; while change in white ownership rose 6 percentage points from 1994 to 2004, ownership among Black Americans rose just under 7 percentage points. Additionally, homeownership by Hispanic Americans continued to increase slowly through the mid-2000s when ownership rates began to fall slightly for whites and Blacks (US Census Bureau, 2011). Homeownership rates among single parents also grew during the 1990s, from 38.5% in 1991 to 43.2% in 2001 (Center for Housing Policy, 2004).

Even though ownership began to increase slowly for racial and ethnic minority groups, mortgage discrimination and predatory lending practices appear to have been concentrated in regions and neighborhoods with high concentrations of low-income and minority households (Calem et al., 2004). Latino borrowers have been about 30% more likely to receive subprime loans than whites with similar incomes (Becerra, 2012). These subprime loans are heavily represented among defaulted and foreclosed mortgages. In Massachusetts, subprime loan purchases totaled less than 15% of all purchases by 2008, yet accounted for about 30% of foreclosures (Foote et al., 2008).

Despite the commitment to expand lending and access to homeownership, efforts to ensure fair treatment in housing have been modest. Federal efforts to ensure fair treatment by landlords, realtors, and lenders center around the Fair Housing Act of 1968, designed to end housing discrimination on the basis of race, color, national origin, religion, and sex. Protection for familial status and disability were added to the Act in 1998. Silverman and Patterson (2011) document the consistent underfunding and inconsistent implementation of fair housing initiatives, which explain how less than 1% of estimated instances of housing discrimination were investigated by agencies responsible for enforcing the Act, and only one-third of these complaints resulted in a legal remedy. In addition, between 2004 and 2008, when predatory lending was rampant, funding for agencies responsible for enforcing fair housing policies declined.

The other key federal policy of the past half century designed to address unequal and discriminatory access to housing and mortgage lending was the Community Reinvestment Act of 1977, enacted to encourage federally regulated banks and savings and loans to address the needs of communities that had been denied credit due to discrimination. Regulated banks and lenders used subprime loans, and even predatory lending, to demonstrate compliance with the Act, simultaneously creating far riskier loan products for underserved communities. The Act also did not regulate all lenders, particularly smaller lenders, and Beeman et al. (2010) found that unregulated lenders were more likely to serve African American communities.

It is difficult to know exactly how unequal the rates of home loss have been. Bocian et al. (2010) estimate that through the end of 2009, nearly 8% of African American and Latino recent borrowers had lost homes to foreclosure compared with 4.5% of whites. Bocian et al. (2008) found that African American and Latino borrowers were more likely to receive the highest cost subprime loans when compared with white subprime borrowers, even when risk profiles were held constant. No national-level data exist comparing the rates of foreclosure for immigrant owners with the native-born, but investigators (Kochhar et al., 2009) found that counties with higher shares of immigrants had higher rates of foreclosure, even though homeownership rates did not decrease for immigrants as quickly as they did for native-born Latinos. Allen’s (2011) study of foreclosures in Minneapolis, Minnesota found that, using non-English speaking households as a proxy for foreign-born households, immigrant homeowners were overrepresented among those who had experienced foreclosure. He attributes this to the fact that foreign-born households are more likely to have low to moderate income or experience discrimination as racial minorities, and may lack English fluency and financial literacy.

The unequal outcomes of this national economic collapse are an example of institutional discrimination, practices and policies that appear race or gender neutral yet create greater harm for racial and ethnic minorities and/or women. Research on public policy and race has identified a set of practices that unintentionally reproduce and exacerbate racial inequality (Feagin and McKinney, 2003; Shapiro, 2005). In housing, practices of redlining and denial of credit to minority applicants have led to a lack of opportunities for wealth accumulation (Oliver and Shapiro, 1996), and have created barriers to opportunities to increase human capital, such as higher education. These processes of institutional or systemic racism highlight structured processes rather than an individual ‘taste for discrimination’ (Becker, 1957). These processes lead to higher rates of poverty among African Americans and Latinos, residential segregation (Massey and Denton, 1993), and wage and employment inequality. Immigrants to the US also face additional obstacles in their quest for fair treatment in housing, including discrimination by landlords, real estate professionals, and others on the basis of national origin and perceived immigrant status in addition to discrimination on the basis of race and ethnicity. Language barriers also can impede access to information about housing opportunities and to knowledge about fair housing legislation (Del Rio, n.d.). All of these factors intertwine to constrain opportunities for housing for people of color in the United States who, along with families and people with disabilities, encounter over 4 million instances of discrimination when purchasing or renting homes each year (Silverman and Patterson, 2011). McConnell and Akresh (2010) found that these structural barriers that constrain the opportunities of racial minorities and non-whites encourage minorities to turn toward higher-cost subprime lending, leading minorities to pay a premium for being non-white.

While research on unintentional and systemic gender discrimination shares some similarities with studies on race, analyses of institutional gender discrimination more often focus on a different set of causal mechanisms primarily located in the realm of family and family structure. While some discrimination against women reflects statistical discrimination, much inequality results from unequal family roles and responsibilities. Responsibility for the care of children and the elderly, and unequal pay, have combined to leave women, especially single mothers, more vulnerable. Divorce and separation exacerbate these risks, making women more vulnerable than their former spouses. Peterson (1996) found that women’s standards of living decline on average by 27% following a divorce, and other investigators (Smock et al., 1999) found that all married women risk a substantial decrease in their standards of living if they were to divorce, calling women’s economic vulnerability outside of marriage ubiquitous. These inequities create the conditions in which homogeneous policies for housing and mortgage lending can have drastically different outcomes for differently situated populations.

The Fair Housing Act of 1968, intended to address the inequities in housing described above, and the move toward subprime loans under both the Clinton and Bush administrations were efforts to create opportunities for previously underserved communities to purchase houses. However, the implementation of these policies – the underfunding of public and rental housing programs, the lack of enforcement of key provisions of the Fair Housing Act, the lack of oversight over lenders, the failure of regulators to anticipate problems with complex financial instruments that covered up the risk of subprime mortgages, and the failure to stop predatory lending – left those individuals and families at greater risk.

While unequal lending and institutional discrimination are well documented, the effects of these practices on the way that race, gender, and social class are lived remains unexplained, as do the impacts of ethnicity and nationality on these processes. Neoliberal approaches in public policy and ideology discount the importance of differential resources and subjective considerations that shape the ability to respond to foreclosure risk. The remainder of this paper addresses how these differences matter in understanding the pathways through which owners become at risk of home loss and explores why these accounts matter as we try to revitalize the housing market. While there is generally some recognition that the risk of foreclosure is greater for people of color and single women, this is often figured as a function of income differences and unequal lending. Are these the primary mechanisms accounting for differential risk of home insecurity? Are there additional burdens faced by immigrants and single parents that thwart their attempts to participate in and benefit from homeownership?

Methodology

To explore the impact of social location on the experience of ownership and risk, we conducted 30 intensive interviews with 36 at-risk homeowners in New England from July 2009 to August 2010 and continued to follow up with interviewees at 3-month intervals through the following year. At each subsequent interval, we lost a substantial number of respondents; at the 3-month mark, only half of the respondents were still available and willing to talk with us. By the one-year marker, only 6 families were available and willing to be interviewed. While we requested a second phone number or e-mail address from each interviewee for the follow-ups, none responded to these numbers or e-mail addresses if their home phones were disconnected.

Participants were recruited through foreclosure prevention workshops offered by community-based organizations in Boston and Lawrence, Massachusetts. Most participants in these workshops were referred to the organizations through the HOPE hotline, a toll-free number operated by the nonprofit Homeownership Preservation Foundation, given out by lending institutions and advertised widely on the radio, television, and internet. At the end of each orientation session, workshop leaders introduced us and allowed us to present the study and recruit volunteers. We also recruited participants from a large regional foreclosure event in Worcester, Massachusetts. This one-time event, organized by the state government, included representatives from lending institutions available for on-site conversations about refinance. This event was advertised online and in local papers, but lenders also sent personal invitations to owners who were delinquent on their mortgages. The samples from the three sites are similar for age, income, and nativity (native born/immigrant). The only substantive difference is that the samples from Boston and Lawrence (n = 25) have a substantial representation of Latinos (55%) whereas those individuals recruited from Worcester and by referral all identified as non-Hispanic white, Black, or Asian.

In some cases, interviews were conducted in person following the meeting while the client waited for a counselor. Other organizations made follow-up appointments for attendees, and in these situations most interviewees talked briefly with us at the session and we conducted thorough interviews at a later date, in person or by telephone. Snowball sampling also drew two respondents referred by others. We asked the respondents open-ended questions covering four areas: the purchase of the house; the series of events that led to trouble with the mortgage; their attempts to find help and negotiate with lenders; and the consequences of their financial trouble on their health and family. In addition to the interview, we asked each respondent to fill in a brief survey of demographic information including age, income, level of education, and race and ethnicity. Table 1 provides an overview of the participants.

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Table 1.

Overview of Interview Participants.

Pseudonym	Marital status	Gender	Nativity	Age	Income	Race/ethnicity
Lisa	divorced	female	US born	45–54	40–49K	White
Cathy	married	female	US born	35–44	80k+	White
Elizabeth	single	female	US born	45–54	20–29K	White
Sherry	single	female	immigrant	35–44	20–29K	Black
Camilla	single	female	US born	26–34	10–19K	Latino
Samuel	married	male	immigrant	45–54	30–39K	Asian
Stan	widowed	male	US born	55–64	20–29K	White
Ana	divorced	female	immigrant	26–34	< 20K	Latino
Antonio	married	male	immigrant	35–44	40–49K	Latino
Jorge	married	male	immigrant	35–44	40–49K	Latino
Javier	married	male	immigrant	35–44	60–69K	Latino
Deanne	divorced	female	US born	55–64	30–39K	White
Alicia	married	female	US born	45–54	varies	Latino
Juan	married	male	immigrant	45–54	varies	Latino
Sylvia	divorced	female	immigrant	45–54	20–39K	Latino
Hernando	married	male	immigrant	35–44	50–59K	Latino
Barbara	widowed	female	US born	65+	80K+	White
Julianna	married	female	US born	45–54	80K+	White
Teresa	married	female	immigrant	45–54	20–29K	Latino
Carlos	married	male	immigrant	45–54	60–69K	Latino
Lucia	married	female	immigrant	45–54	60–69K	Latino
Pedro	married	male	immigrant	35–44	70–79K	Latino
Isabelle	married	female	immigrant	35–44	70–79K	Latino
Maria	married	female	immigrant	35–44	40–49K	Latino
Lisette	separated	female	immigrant	45–54	30–39K	Latino
Debra	separated	female	immigrant	26–34	50–59K	Black
Michelle	single	female	immigrant	45–54	20–29K	Black
Aleah	single	female	immigrant	45–54	20–29K	Black
Nikhil	married	male	immigrant	35–44	50–59K	Indian
Samara	married	female	immigrant	35–44	50–59K	Indian
Chris	married	male	US born	45–54	varies	White
Joseph	single	male	immigrant	26–34	20–29K	Black
Jack	married	male	immigrant	35–44	60–69K	Black
Eric	divorced	male	US born	55–64	50–59K	White
David	married	male	US born	35–44	30–39K	Black
Emily	widowed	female	US born	45–54	60–60K	White

A total of 36 participants agreed to be interviewed between July of 2009 and August of 2010. Most of the respondents were interviewed individually, but four were interviewed with their partners, and two sisters and one mother–daughter pair participated together. More women attended the workshops than did men, and the sample reflects that, as nearly two-thirds of the respondents were female. Libman et al. (2012) had a similar gender imbalance in their focus groups examining the health consequences of foreclosure. Half of the respondents were currently married at the time of the interview, seven were divorced or separated (sometimes the cause of their housing troubles), six were single, and three were widowed.

All of the respondents defined themselves as at risk of losing their homes. This self-definition reflects a very wide range of situations, from people who knew that their interest rates would adjust in a year and were trying to refinance before trouble began, to those who were already many months behind in their payments and had received initial foreclosure documents, to those whose foreclosure was imminent and were trying to do anything possible to avoid losing the house. Only one respondent had lost her house at the time of the interview.

Age and income were widely distributed in the sample, with two respondents in their late 20s and one over 70. Two-thirds of the respondents were between the ages of 35 and 54. We requested age and income data in grouped categories, in 9-year increments for age and in similarly grouped categories – under $25,000, $25,000–$34,999, and so on through the category of $80,000 and up – for income. These categories have been simplified in Table 1. As with age, there was a range in respondent income. While only one respondent reported an income of under $20,000, three had incomes of over $80,000, with the sample largely falling between those two points. Three respondents had household income related to self-employment and were unable to give an estimated annual income as it varied dramatically from year to year. The median household income for the sample fell in the category $45,000–$54,999, a figure comparable to the national median income.

Nationally, rates of foreclosure have been disproportionately high for people of color and immigrants to the United States. This sample represents this differential experience of risk. Sixteen respondents, nearly one-half of the sample, identified as Latino/a or Hispanic, ten as white or Caucasian, seven as Black or African American, and three as Asian. Twenty-three of the 36 respondents, or just over 60% of the sample, were immigrants to the United States, most of whom had lived in the US for a significant portion of their lives. Eleven of the interviews were conducted in Spanish by the one of the authors, a native Spanish speaker. All of the immigrant participants in our study were from Central and South America, Africa, and Asia and so are racially marked as minorities in the United States. The immigrant experience for them is compounded by racial discrimination.

Field notes from the foreclosure prevention workshops supplemented the interviews. With the help of one research assistant, we attended approximately 50 hours of workshops designed to orient homeowners with the foreclosure process and their options. Field notes from these workshops form the second data source for this discussion; in particular, field notes focused on discussion among participants and questions raised by attendees. The fieldwork added an important source as it allowed for discussion between at-risk homeowners.

Our small sample of homeowners has several limitations. First, with the exception of two interviewees who were referred to us by word of mouth, all of the remaining respondents were recruited from foreclosure prevention workshops and events. Each of these participants was therefore actively working to prevent foreclosure and had access to information about and transportation to these events. Isolated individuals, or those unable to seek help, were not included. The Federal Reserve Bank of Boston mapped attendance at a large foreclosure prevention event that they sponsored in 2008 and found that about half of participants came from ZIP codes with the lowest median household quartile in the region, and more than half came from ZIP codes with the highest concentration of racial and ethnic minorities (Federal Reserve, 2009). While some individuals are surely excluded from our sample due to isolation and lack of information, this large event (similar to the one we attended in Worcester) suggests that those most vulnerable to foreclosure were participating in similar events and even traveling some distance to do so. Second, since each of these events offered help free of charge, we also are likely to have missed those families with sufficient resources to hire a private attorney to address the foreclosure filing. However, these 36 individuals were not recruited to the workshops by friends and family, and with the exception of families coming together, did not know others at the workshops. In addition, the respondents came from a wide geographic region to each workshop, with over 15 different towns represented in the interviews.

Findings

Throughout the interviews, several themes emerged that highlight the unequal risks and burdens on immigrants and single women with children. For immigrant homeowners, the meaning and process of ownership in the US often differed substantially from that of their home country, creating confusion that could be exacerbated by lack of English language fluency. Remittances home represent a second burden that is often shared by immigrant families, though often goes unrecognized as lenders, banks, or counselors account for monthly budgets. Poor rental experiences operated as a push factor into the housing market for single parents, immigrants, racial minorities, and the elderly in ways that they did not for married young to middle-aged white families. And lastly, the significance of family structure changes, particularly divorce and separation, on the financial futures of women were centrally important in these narratives of risk. We will begin with a narrative from a middle-aged woman from the Dominican Republic, Angela Martinez, whose experience highlights several of these factors.

We first met Ms Martinez, a 52-year old woman with an adult son, in August 2009. Her recent separation from her husband marked the beginning of her difficulties in making her mortgage payments. When they bought the home in 2007, after having immigrated to the United States in 1977, they saw it as an investment, as a way to avoid future moves and paying rent with no return. Things were going well for the couple until Angela’s husband, a construction worker, began to experience reduced hours at work, severely limiting his income. Their mortgage troubles increased tension in the relationship, and the couple separated in March.

Angela initially attempted to negotiate a modification on her loan on her own but her efforts were not successful. On the advice of a friend, Angela decided to seek help from a community based organization. At the time that we first met her, she was currently working with a counselor in an attempt to modify the loan. Even while Angela struggled to make her mortgage payments, she enjoyed the independence of owning a house, where she could make changes at her discretion and feel more comfortable. Yet the loss of her husband’s financial support, a recent car accident, and needed repairs to the house challenged her continued ownership. In Angela’s home country of the Dominican Republic, she recounts, ‘… you pay for it once and it’s yours until you die and your kids inherit it and your grandkids inherit it’. In the United States, on the other hand, Angela sees the home ‘is … never really yours. Even if you pay it for 30 years, it’s not really yours.’

Three months after our initial contact with Angela she was receiving help from her son and seeking tenants for the first floor of the house. Her attempts to communicate with the bank left her tense and ‘… in suspense, I’m not in either place, with the house or without it’. With the assistance of the foreclosure prevention counselors, she began the process of a trial modification. Yet trouble still loomed for Angela. When we spoke another three months later, her mortgage payments had been reduced by 200 dollars during the three-month trial period, yet she was still struggling, unable to work enough overtime hours at her job and still tenant-less, making her financial situation tighter than she liked. A leak in the roof from recent inclement weather meant more repairs, but Angela remained optimistic that she could find a way to make it work.

A full year after our first meeting with Angela, she was in the process of confirming a permanent modification to her loan. These efforts had initially been thwarted because her ex-husband’s name remained on the mortgage and he was nowhere to be found. Angela recalled praying constantly as she contacted his family members, finally learning that he had agreed to sign the paperwork. Though optimistic, Angela noted that the payments were still not low enough to ensure her ability to pay, especially with her son now out of work and unable to contribute to the mortgage. Angela was working 11-hour days, six days a week, much more overtime than she had ever worked when her husband was still living at home, all in an effort to avoid foreclosure. Despite the damages to her home still needing repair and a first floor unit still vacant, Angela remained adamant that owning a home is a worthwhile endeavor.

As an immigrant and as a woman, Angela Martinez faced a number of compounding factors that made her experience of mortgage trouble somewhat different from her peers born in the United States. These differences affect the causes of foreclosure trouble, the process of negotiating with banks, and the meaning attributed to house, home, and homeownership. Through her story, we will examine the particularities of her predicament and the patterns that her story reveals, including the relevance of her immigrant background but also of her marital status and economic class.

Multiple Causes

Most respondents did not have a single event trigger their inability to pay their mortgage. Rather, as with Angela, falling house prices, fewer work hours, illness, and separation often combined in various ways to lead to trouble. In their focus group sessions with families at risk of foreclosure, Saegert et al. (2009) similarly found a confluence of factors leading to trouble. In our study, we found that immigrant homeowners faced multiple events that compounded, leaving them unable to sustain their mortgage payments, yet they faced some additional problems and bore some shared troubles disproportionately. In addition to unfair lending practices, immigrant homeowners were disproportionately likely to have poor rental experiences, to lack information about the costs associated with homeownership in the US, and to have additional financial burdens, such as remittances sent to family in their country of origin. Female respondents, both immigrant and native born, were more likely to point to family disruption as increasing their vulnerability. These factors combine to exacerbate the financial difficulties faced by all at-risk families, rendering many immigrant families and single mothers more vulnerable to foreclosure.

Understanding US Homeownership

As potential homebuyers, some immigrants face language and cultural barriers in dealing with realtors and lenders. Information may be lost in the process of translation and lenders eager to close loans may exploit language barriers. The risk of homeownership in the United States is not widely understood even among native-born Americans, and neoliberal policies further obfuscate this central fact. Saegert and Evans (2009: 306) learned that owners:

… brought into their ownership the legacy of pre-neoliberal policies and practices related to homeownership. They did not understand homeownership to be a ‘risk posture’ taken by a rational individual but rather the act of a family member, a citizen and member of a culture pursuing goals that were beneficial to families, societies, and cultures. They usually harbored a belief that housing and mortgage markets were and should be regulated. Therefore, if they were being offered a mortgage product or encouraged to buy ‘more house’, they expected that the institutions involved believed this would work out and were obligated to share the risk involved.

Homeownership and its consequent responsibilities vary by region and country, so many immigrants do not anticipate all of the costs that will accrue once they have purchased the home. When realtors and lenders tell them that they will own ‘for less than the cost of their rent’, their calculations of affordability are often far too optimistic, underestimating taxes and fees and the costs of repair to the home. This is certainly not a problem that is unique to immigrant Americans; Santiago et al. (2011) found in their sample of low- to moderate-income homebuyers who had participated in long-term programs to prepare them for ownership that unanticipated, costly home repairs were frequently cited as challenges of homeownership. Rohe and Quercia (2003) similarly found that nearly half of their sample, all of whom had gone through homeownership training, had major and unexpected home-related costs. Immigrants are even more vulnerable to unexpected costs since they are less likely to have experience with the mortgage system in the US or to have close relatives whose ownership experience they can learn from.

Isabelle and Carlos Domingo, who emigrated from El Salvador, experienced deliberate misleading by their lender and realtor as they prepared to purchase their home. Isabelle explained what they didn’t know and weren’t told, with Carlos frequently interrupting to add to her explanation: ‘… we were explained one thing and the truth was very different. If we really had known the truth, we would not have bought the home.’ Carlos adds, ‘If we had known the issue with the taxes, for example. I didn’t know you paid that out of your own pocket.’ Isabelle echoes, ‘they tell you no, you’re only going to pay this a month and you’re still going to have so much left over!’ And Carlos concludes the thought: ‘they don’t make you aware of everything.’ In their efforts to sell houses and close deals, realtors and lenders frequently failed to explain the costs associated with ownership and often clearly misled buyers by claiming that their monthly payment would cover taxes and insurance when in fact it did not.

Ana Alvarez, from the Dominican Republic, expressed similar thoughts as she explained that,

… because you get excited, you can buy for the same price as renting! But it’s not like that, once you’re in it, you get a water bill, the taxes, the insurance, you don’t pay all these things when you rent. You’ve got to have that in mind.

The issue is twofold it seems, from being told that buying and renting are ‘the same’ which many homeowners experienced during the process, to being misled about the condition of the home or future financial burdens it would bring. The Domingos experienced both of these in their realtor’s effort to close the deal. They recounted: ‘They told me there was parking, there’s no parking; they told me the basement won’t flood, it floods. There were a lot of things they told me.’ While many immigrant owners in our sample lauded the US for offering financing that enabled people to buy homes, they simultaneously failed to anticipate the costs of ownership.

Discussion

Each of these four themes, conflicting expectations about ownership, poor rental experiences, remittances, and separation, highlight and help to explain the different experiences of immigrant Americans and single parents and the greater risk that they encounter with homeownership. Clearly these do not operate separately from one another, but are intertwined not only with one another but also with socioeconomic class, rendering low- to moderate-income immigrants, particularly women, extremely vulnerable.

In their exploration of the links between foreclosure and poor health, Libman et al. (2012) use the social ecological model to help explain why both poor health and housing troubles disproportionately affect minorities, lower-income households, and other vulnerable groups. This approach draws our attention away from the proximal causes of foreclosure (and ill health) to the ‘upstream’ factors that disproportionately disadvantage some groups over others. These upstream causes focus on many of the neoliberal policies on housing and health that disadvantage moderate-and low-income families, immigrants, and single mothers. Just as social processes like racism and class segregation channel buyers into specific housing markets and locations (Saegart and Evans, 2003), processes that assign greater risk to minorities are used to justify poorer loan products offered to minority buyers, increasing their risk and decreasing their ability to benefit from their financial investments.

Neoliberal policies that shift responsibility to individuals and away from collectives and governments help us to make sense of the greater risk faced by immigrants and single mothers. Libman et al. (2012) found that first generation homeowners frequently had greater resources than others in their social network and were thus expected to offer rather than receive help. This is very similar to our findings here about the immigrant experience. For immigrants, particularly those who have achieved some success and have managed to purchase homes, this success seems, from the experiences of our sample, to be accompanied by an expectation that the individual will not need the help of others but will instead offer help when needed. Remittances, discrimination in rental housing, lack of familiarity with the terms of homeownership, and family instability are often hidden factors that are not considered in housing policy or in efforts to respond to foreclosures. Yet public policies and programs must recognize these experiences if they are to reach immigrants and single mothers, two populations disproportionately harmed by the foreclosure crisis.

Conclusion

Neoliberal policies that emphasize market solutions to social problems and individualize responsibility for well being have increased risk for all, but especially for low- to moderate-income families, immigrants, single parents, people of color, and other historically disenfranchised groups. It is tempting to suggest that this increased risk is primarily a function of income differentials and unfair lending practices. While both of these factors are crucially important in understanding differential risks, we must also take into account the differences in the social location of the owners that compound those risks.

This paper points to four specific ways in which denial of equal access disadvantages immigrants and single mothers beyond unequal lending and wages. Saegert et al. (2009) call this layering of multiple risks on households and communities radical risk, a recognition that while we all experience risk, it is not borne equally. The consequences of recognizing these factors – knowledge of US homeownership, rental experiences, remittances, and family dissolution – are substantial, not only for developing a more complete understanding of the paths to foreclosure, but to inform public policies that are attempting to re-energize, reform, and reshape the housing market.

Given these findings, attention is needed in at least three areas to move toward a more equitable housing policy. First, implementation and funding for the provisions of the 1968 Fair Housing Act would allow HUD to respond to lending discrimination that is systematic and harmful. If enforced, these provisions might open up greater housing choices for immigrants, communities of color, and single parents. Second, a more fully developed program to support rental housing quality and affordability is needed, such that renters are not forced into the housing market because of poor living conditions. Greater rental options could ensure that homeownership becomes more of a choice. Lastly, greater regulation and oversight of lenders and banks could ensure that mortgage products provide benefit to borrowers without radical risk. Attention to these three areas would address unequal experiences in the rental market that push vulnerable families to purchase homes when it might not be in their best interest to do so.

Addressing the unequal burden of remittances and misunderstandings about homeownership in the United States will require more thorough education for first-time buyers. Many new homeowners seek out workshops on homeownership, and lower-income borrowers or those with little money to put down are often steered to homeowner education. Yet even with education programs, the additional costs of homeowners in the form of repairs, utilities, and taxes can come as a surprise (Santiago et al., 2011; Rohe and Quercia, 2003). Thorough homeowner education programs that address the costs of homeownership as well as the real budget items facing buyers (including remittances) would help potential homeowners avoid situations that will create radical risk for themselves and their families. Santiago et al. (2011) demonstrate that homeowner education and asset-building programs can reduce risk for low-income borrowers. Additional education programs available for families experiencing significant changes in family structure through abandonment, separation, and divorce could also help newly vulnerable single parents make sense of their budgets, renegotiate loans, or make alternative housing plans in the event that the dissolution of a relationship makes homeownership untenable.

These four factors that shape the lived experience of so many homeowners made immigrants and newly separated women more vulnerable to the collapse of the housing market and the risk of foreclosure. Yet these factors affect housing and homeownership under better market conditions as well. Implementation of fair housing policies, support for rental housing, regulation of lenders, and better homeowner education would move toward the goal of equal housing and away from the current approach, where the vulnerabilities of immigrants, women, communities of color, and other disenfranchised groups are exploited for profit under a neoliberal regime.