Wednesday, August 22, 2007

Illegal Immigrants, the Face of the Subprime Mortgage Crisis

We'd like to introduce you to Alberto and Rosa Ramirez. The Spanish speaking husband and wife team work as strawberry pickers and each bring home about $300 per week. They and their three children are close friends with Jesus Martinez, his wife, and their three children. Jesus and his wife work as mushroom farmers and bring in about $500 per week when there is work.

Together the two families purchased a $720,000 home using a subprime, no doc loan. When it became quickly apparent that a strawberry framer making $15,000 a year couldn't make the monthly mortgage payment of $5,378, not to mention the additional $750 per month for insurance and taxes, the couples were left with the only option. They stopped paying and became squatters until they were finally foreclosed on.[1]

José Manuel J., an illegal immigrant from Mexico, came to the U.S. eight years ago to sweep construction sites. Using a subprime, no doc loan he purchased a home in the U.S. He also purchased land in Mexico and built another home there.[2]

Barbara Ehrenreich writes, "Somewhere in the Hamptons a high-roller is cursing his cleaning lady and shaking his fists at the lawn guys... they stopped paying their mortgages... these were trick mortgages, 'NINJA' loans, for example, awarded to people with 'no income, no job or assets.'"

She goes on to write, "In its May 21st cover story on "The Poverty Business," BusinessWeek documented the stampede, in just the last few years, to lend money to the people who could least afford to pay the interest: Buy your dream home! Refinance your house! Take on a car loan even if your credit rating sucks! Financiamos a Todos! Somehow, no one bothered to figure out where the poor were going to get the money to pay for all the money they were being offered." Financiamos a Todos, "We finance to all!"

Summing up, she writes, "Who would have thought that foreclosures in Stockton and Cleveland would roil the markets of London and Shanghai?"[3]

Below are two statistical graphics. The first depicts illegal immigrant populations by state in the U.S. The second shows foreclosure rates by state in the U.S. It doesn't take much of a trained eye to find the commonalities between the two.

Illegal immigrant populations by state:

Source: Pew Hispanic Center

Home Mortgage Foreclosures by state:
Source: RealtyTrac

"Foreclosure filings rose 9 percent from June to July and surged 93 percent over the same period last year." [4] "Consumer comfort plummeted this week amid turbulence in the stock market and a seemingly infectious crisis in the home mortgage market." [5]

Despite the rising economic crisis, the mainstream media has still not begun to investigate the apparent link between illegal immigration and the mortgage crisis. Instead they hold out hopes that the Federal Reserve will bail us out by cutting interest rates.