Mortgage market hurting colonias, advocates say

July 31, 2008 - 3:53PM
Kyle Arnold

McALLEN — Problems in the housing and lending markets are making it harder for colonia residents to get loans.

So, community groups from across the nation met at the Border Community and Economic Development Summit in McAllen on Thursday to figure out how businesses can help colonias develop.

The National Association for Latino Community Asset Builders organized the event.

"One of the things that we've found is that the mortgage market has contracted a lot," said Bobby Calvillo, executive director of Affordable Homes of South Texas. "It has affected our ability to borrow money cheaply and that makes mortgages more expensive for borrowers."

More than 400,000 Texas residents live in about 2,300 colonias along the Texas-Mexico border. Colonias are small unincorporated communities that often lack basic resources such as sewage and potable water. Their residents usually don't have enough income to save money or buy a house, often because they are poorly educated, have no credit history or are not legally in the United States.

The tightened lending standards have been a double whammy since home building markets have crumbled and left thousands of workers without jobs.

Conference organizers hope they can improve colonias through philanthropy and capitalism instead of the traditional government welfare agencies.

"We have people that sell burritos to construction sites and people that buy leather jackets and go across the border to sell them," said Daniel Solis, co-founder of Alianza Para El Desarrollo Comunitario. "We don't have traditional banks that serve these communities."

Many of the community development groups were advocating alternative economic programs, such as microlending.

Microlending programs help low-income people invest in a small business. The concept has taken off in the last two years - particularly in third-world countries like Brazil and Mexico - after Mohammed Yunas, founder of Bangladesh's Grameen Bank, won the Nobel Peace Prize.

"This is a way to get low-income people to own their own business," said Carlos Salazar, a board member with the Hispanic Development Fund of Kansas City.

The conference included speakers from large companies such as Fannie Mae and Citibank who say they have an interest in attracting customers to further build the economy by helping the world's large low-income population.

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Kyle Arnold covers business, the economy and general assignments for The Monitor. You can reach him at (956) 683-4410.