Struggling Asian American Homeowners Hesitate to Seek Help

By Devika Koppikar

Gaithersburg, MD—Jisu Nelson, a Korean American hairdresser was making a modest income during the dot-com boom. So when her then-teenage son wanted to attend a special ROTC program in Rockville, she moved the family from Virginia to Maryland and became a homeowner. It took holding down two jobs, but the single mother was able to make her mortgage payments, take care of her children and live without significant debt.

Fast forward 12 years: Nelson now lives alone in a one-bedroom apartment in Gaithersburg, having sold her house last year in a short sale. (A short sale occurs when a homeowner falls behind on mortgage payments and gets an agreement from the bank to sell the house for less than is owed to avoid foreclosure.) Her children are grown and no longer live with her. With one job, she struggles to pay the credit card debt that built up when she lost her second job. She has very few assets.

“A lot of beauty shops are shutting down. I walked into work one day and was told the shop had shut down. It was a nightmare,” she said. “I couldn’t find another job, so I used my credit card to pay my mortgage for a whole year.”

Despite healthy average income levels for many AAPIs, the Asian American community has always had lower rates of home ownership and real estate equity than the general population, 61%, versus 69% before the 2007-2008 housing crash. The UCLA Asian American Studies Center reports the downturn wiped out a decade of gains in AAPI real estate wealth.

Jane Duong, Director of Programs and Advocacy at the National Coalition for Asian Pacific American Community Development (CAPACD), said that between 2004 and 2008, 6.6 percent of Asian homeowners lost homes to foreclosure compared to 5.1 percent of whites, 9.8 percent of African Americans and 11.9 percent of Latino homeowners. In the DC area, Asian homeowners represent 7.3 percent of loan originations, but 9.1 percent of foreclosures completed, said Duong quoting statistics from the Center for Responsible Lending.

Like Nelson, many Asian Americans carry their net worth in their home equity, according to the Asian Real Estate Association of America (AREAA) and the UCLA Asian American Studies Center.

“The loss of this asset can be devastating to their financial security,” said Grace Choi, president of the DC Metro chapter AREAA. Further, she added, Asian Americans tend to hesitate to seek help, especially in matters of finance.

One reason for hesitating, said Choi is “due to embarrassment, which is culturally based [don’t want to ask for help; don’t want to share details of their struggles with others]. Many Asian Americans will liquidate all their assets and wait until much later before getting help or looking at options. But they need to realize that if they don’t get help sooner, then the situation will get worse.”

For Rockville homeowners Luckmini and Janaka De Silva, seeking help at the right time kept them in their house. Yet, like Nelson, they too found themselves in credit card debt.

“We had never owned any property before, not even back in Sri Lanka,” said Ms. Da Silva, a daycare worker, who with her husband, bought a house in 2008. “But when my husband lost his (construction/remodeling) job, we didn’t know what to do.”

Da Silva then went to the bank and asked for a loan modification. For six months, there was no response. Then, they got a rejection letter.

“Our bank didn’t believe us when we told them we were struggling. Somehow, we paid our mortgage. We couldn’t lose our home. We have no relatives here,” said De Silva. “We had income – but it wasn’t steady. So we liquidated all our savings and got into debt, something we’d never done before.”

Da Silva then learned of the Asian-American Homeownership Counseling, Inc. (AAHC). Founded by banking/lending professional Song Hutchins, the non-profit organization provides counseling, education and resources to Asian Americans, many of whom might be first-time homebuyers

“Because of our cultural similarities, Song knew we were not lying about our situation. She knew what she was talking about. She didn’t promise the moon and she didn’t tell us lies,” said De Silva.

Song advised the Da Silvas of their options, and they chose a loan modification, which was approved. Today, the Da Silvas continue to live in their home and are able to manage their finances.

Reaching out for help is critical, Da Silva advises. “I would like people to know before you stop paying your mortgage—talk to people who know the industry. There are loopholes that the banks will get you on,” she said.

Like any business, real estate and banking are full of technical terminologies, said Choi. This, she said, could pose a language barrier, even if a customer understands English.

“An (Asian American) customer might walk into Wells Fargo, asking for help. But if the representative says, ‘call customer service’ or ‘apply for refinancing,’ the homeowner may not know what ‘refinancing’ means or might be hesitant to call customer service due to their limited understanding of English.” For that reason, AACH offers bi-lingual counselors who speak Asian languages.

Nelson said one of her main struggles was comprehending the lending representatives who did not speak or understand Korean. “I wanted to keep my house, but the bank kept pushing me to sell it,” she said. “I did not want to do that because the value had gone down and I could not sell it at a profit.”

When she received the paperwork to do a loan modification, Nelson was overwhelmed. “I don’t know much about paperwork. There was tons and tons of paper. I don’t know English that well. So the paperwork was a nightmare. I had no choice but to sell it in a short sale.”

Many Asian Americans own small businesses, and they combine their business and personal assets. When it comes time to show documentation to lenders, some get confused as to what to present, said Hutchins, possibly contributing to rejections for loan modifications or refinancing.

“We have a big problem with regards to the housing crisis, but it is not recognized by people in our community nor the mainstream populations,” said Hutchins. “There’s a perception that we know what we’re doing. So very few workshops are targeted toward Asians.”

To meet this need, both AAHC and AREAA are aiming to get the word out about resources available for struggling homeowners of Asian heritage. Choi said, “We want to try and keep people in their homes. There are resources out there, but many Asian Americans are not aware of them. We’re hoping to change this.”

Help for Strugging Homeowers

• Asian-American Homeownership Counseling, Inc.(AAHC):Call 301-760-7636 or visit www.aa-hc.org

• National Coalition for Asian Pacific American Community Development (CAPACD):Call 202-223-2442 or visit http://nationalcapacd.org/

• Asian Real Estate Association of America (AREAA): visit http://areaa.org/