Hispanics are often targets of predatory loans

Published 9:00 pm Sunday, September 10, 2006

SEATTLE – The Hispanic population’s size and rate of growth makes the group a particular target for predatory loan scams, according to a Federal Trade Commission survey that found Latino consumers are more than twice as likely to be victims of fraud.

Hispanics make up nearly 9 percent of the total state population, the largest and fastest-growing racial group in Washington. The commission’s 2004 survey found that Latinos may be especially vulnerable, in part because of language barriers and cultural differences.

“As that community is growing, they’re becoming bigger players in our economic markets,” said Scott Kinney, communications director for the state Department of Financial Institutions. “They’re traditionally ‘unbanked,’ so many mainstream financial-literacy efforts miss them.”

Teresa Belmont, a single mother of four in Puyallup, was car shopping in West Seattle when a salesman told her she was approved for a loan to buy a used Chevy van, but at 15 percent interest.

At the time some car buyers received loans for as low as 4 percent but the salesman said that because Belmont was a Mexican immigrant with little credit history, 15 percent would be her best offer.

Belmont, who moved to the U.S. from Mexico City in 2000, took the offer, and signed additional paperwork a week later when told the van would be repossessed if she didn’t.

A year after making timely payments, Belmont heard a Spanish-language radio program about credit-union outreach to Latinos, featuring the CEO of White River Credit Union in Enumclaw, Linda Kleppe-Olson.

Kleppe-Olson reviewed Belmont’s car loan and called the dealership, learning it had nearly doubled her interest rate in the second set of papers. Belmont was now paying 29 percent interest and her $9,000 van was going to cost her more than $16,000 over the life of the loan, despite a $2,500 down payment.

“It was unconscionable,” Kleppe-Olson said. “I was affronted by the injustice of it.”

Belmont now pays 8.2 percent interest and nearly has the van paid off after Kleppe-Olson helped her close out the predatory car loan and get a credit union loan.

“Lots of us have no idea the amount we’re paying in interest,” Belmont said. “Sometimes they know we don’t speak English very well, and they take advantage. It takes us a lot of effort to earn the money, but it’s so easy to lose it.”

Anna Landa, manager of the Immigrant Financial Justice Project at Columbia Legal Services, said lack of access to mainstream financial services is the key issue.

Language barriers or poor financial understanding also contributes to the problem. Some don’t know they have a right to complain. Still others are deterred by their immigration status.

“They worry about being identified if they call to complain,” said Norma Chavez, community outreach liaison with the state attorney general’s office in Kennewick. “Every consumer has the right to file a complaint. We don’t distinguish based on (citizenship status). They need to know we’re not going to inform Homeland Security.”

In an effort to help, the state attorney general’s office has called together service providers, community organizations, government agencies and others to find ways for Hispanic consumers to protect themselves. Meetings are scheduled next month in the Seattle area and Yakima.