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People of Hispanic American ethnicity are United States citizens with a cultural or ancestral connection to Spain or Spanish-speaking countries. Latino American is a broader term encompassing United States citizens with Latin American heritage, including all countries in Central and South America. While the terms aren’t interchangeable, a lot of U.S. legal terminology uses the Hispanic title as a catch-all phrase to mean all people who speak Spanish.
Millions of Americans dream of home ownership, and Hispanic Americans are no exception. Hispanic first-time homeowners are on the rise, but there are still many families who would be unlikely to afford a home without financial assistance. Even more daunting, Hispanic homebuyers are most likely to use risky financing, according to a study by the Pew Research Center.
The good news is that there are a variety of safe loan programs, grants and legal protections that can help Hispanic first-time homeowners secure a home of their own.
Hispanic Home Loan Programs
Hispanic first-time homebuyers are more likely to face income-based struggles. According to the most recent U.S. Census Bureau Survey of Income and Program Participation, 1 in 7 Hispanic households in the U.S. either had no wealth or were in debt in 2021.
Aside from a few private lenders, there aren’t any loan programs offered exclusively to Hispanic first-time homebuyers. But, there are several options among the types of government-backed loans that could be attractive to Hispanic Americans with lower income, including:
VA Loans: VA loans are available to eligible Veterans, active-duty and reserve service members, as well as surviving spouses. They provide many incentives, including no down payment requirement, competitive mortgage rates and no private mortgage insurance (PMI) requirement.
FHA Loans: FHA loans have more lenient credit requirements, lower down payment options compared to conventional mortgages and no income limits.
USDA Loans: USDA loans are designed for homebuyers in eligible rural areas. These loans offer no down payment requirement and low monthly mortgage insurance instead of PMI.
Grants for Hispanic First-Time Homebuyers
There are also a few grants for Hispanic first-time homebuyers offered by government and private agencies.
State and Local Homebuyer Assistance Programs
Many states and local governments offer grants, down payment assistance, and low-interest loans to first-time homebuyers, including Hispanic Americans. The Department of Housing and Urban Development (HUD) has a list of local homebuying programs by state.
Neighborhood Stabilization Program (NSP)
NSP is a federal program aimed at revitalizing neighborhoods by providing funding to purchase and rehabilitate foreclosed or abandoned properties. These homes are then sold to eligible first-time buyers at affordable prices.
Community Development Block Grants (CDBG)
Some communities receive CDBG funds to support affordable housing initiatives. These funds may be used to offer down payment assistance or grants to eligible first-time homebuyers.
Good Neighbor Next Door Program
This program offers a significant discount on the purchase of a home in revitalization areas to law enforcement officers, teachers, firefighters and emergency medical technicians. While not exclusive to Hispanic Americans, it can be an attractive option for those who meet the eligibility criteria.
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Legal Protections for Hispanic First-Time Homebuyers
Mortgage applicants with limited English proficiency (LEP) may feel like they need to seek out a specialized mortgage lender with Spanish-speaking capabilities to ensure that they receive adequate service. While such lenders certainly exist, the good thing is that there are laws that require all lenders to provide language assistance for applicants who struggle with or cannot speak English.
Regulation B of the Equal Credit Opportunity Act states that lenders must ensure that their lending processes are accessible to individuals with LEP. Lenders must notify applicants of their right to request language assistance. Additionally, they must provide certain disclosures and documents in languages other than English if they typically do business in areas where there is a substantial number of people who do not speak English.
During the application process, applicants have the right to request language translation services or interpreters. If an applicant requests assistance, the creditor must provide the necessary language assistance to help the applicant understand the terms and conditions of the credit being offered. Regulation B does not specify particular languages that must be accommodated, but it requires lenders to make reasonable efforts to accommodate the language needs of applicants based on the languages spoken in their service areas.
It’s important to note that while the law requires lenders to make reasonable efforts to provide language assistance, the specific implementation may vary from one lender to another. Some lenders may have multilingual staff or interpreters available, while others may provide translated documents.
What To Do If You Have Experienced Lending Discrimination
While there are several laws that legally protect the rights of applicants with LEP, it doesn’t always prevent discrimination from happening in the first place, unfortunately. If you feel like a lender has discriminated against you on the basis of your identity, there are several actions you should take to receive assistance.
Firstly, it’s important to document any possible instances of discrimination during the mortgage application process. This may include saving emails or written correspondence or taking notes of any discriminatory behaviors or comments.
Next, reach out to the lender directly to discuss the issue and seek a resolution. Explain the specific incidents of discrimination and provide any evidence you have gathered. Many lenders take such complaints seriously and may work to address the problem.
If contacting the lender doesn’t resolve the issue or if you believe the lender is not taking appropriate action, you can file a complaint with government agencies that oversee fair lending practices. Two key agencies for this purpose are:
- Consumer Financial Protection Bureau (CFPB): You can file a complaint with the CFPB online or by phone. The CFPB investigates complaints related to unfair lending practices.
- Department of Housing and Urban Development (HUD): HUD enforces the Fair Housing Act and investigates complaints related to housing discrimination, including mortgage lending. Complaints can be filed online or by contacting your local HUD office.
Depending on the severity of the discrimination and the response from the lender, you may explore mediation or legal action to seek redress for any harm suffered. An attorney can advise you on the appropriate legal steps to take.