Sharing in the dream

Children’s laughter, sizzling homemade tortillas and the savory aroma of chopped cilantro entice family and friends into the Gutierrezes’ Pasadena home most Friday nights.

A crowd of 30 sisters, brothers, in-laws and cousins gathered recently in the family’s living room, kitchen and backyard -- a weekly tradition since Ana and Eduardo Gutierrez and their two children moved into the two-bedroom home in September -- to shrug off the workweek and enjoy bountiful food, a movie on the big screen and swimming in the inflatable pool.

“It may be small, but for us this house is a castle,” Eduardo said of the 1,019-square-foot, white stucco house, which the couple bought on a tree-lined street for $360,000.

Whether newcomers to the United States or third-generation Americans, first-time Latino home buyers are overcoming cultural and institutional barriers, such as distrust of banks and lack of traditional credit, that for decades prevented many from buying homes. They are purchasing condos and single-family houses in Southern California, from the Inland Empire to the Antelope Valley, and helping to gentrify some neglected neighborhoods.

Spanish-language marketing campaigns are helping boost homeownership rates among Latinos, who, like other home buyers, are taking advantage of low interest rates and abundant mortgage options.

More significantly, lenders see opportunity in the growing Latino market and are loosening conventional home-loan credit rules, enabling more in the fastest-growing demographic in California to purchase homes.

Two-thirds of California’s Latino population is under 35 and entering its peak home-buying years, according to Pepperdine University’s Davenport Institute for Public Policy.

The percentage of Southern California home buyers with Spanish surnames nearly doubled in the last decade, from 17.6% in 1994 to 34.3% in 2004, according to DataQuick Information Systems, a La Jolla real estate research firm.

“It’s like a dam has broken open,” said David Toyama, head of a Coldwell Banker real estate business in Eagle Rock that focuses on Latino buyers. “The banks and real estate companies are finally tapping into the flood of buyers.”

Although strides have been notable, Latino home-buying still lags behind that of non-Latino whites in the state. Latinos made up about 23% of Californians who bought homes in the last two years, whereas non-Latino whites accounted for 59% for home buyers, according to the Public Policy Institute of California. Latinos made up 35% of the state’s population in 2003, and whites 45%, according to the U.S. Census Bureau.

In Southern California, many Latinos continue to be attracted to the enclaves of Pico Rivera, Compton and Lynwood, but a growing number of buyers now are heading to the northern parts of Los Angeles and San Diego counties.

The percentage of Latino home buyers in Littlerock, in the Antelope Valley, grew from about 15% in 1999 to 57% in 2004, according to DataQuick. In Vista, north of San Diego, the percentage of Latino buyers grew from 14% to 44%. Latinos are expanding their presence in Glassell Park, El Sereno, Covina, Azusa and Eagle Rock.

Many Latinos are moving far from the urban core into Fontana, Riverside and Ontario in the Inland Empire, according to census figures. Anaheim and Santa Ana in Orange County have long been magnets for Latino buyers, say agents and demographers.

Some longtime residents resent it when Latinos move to new areas and Spanish-language businesses spring up to serve the newcomers, said Henry Cisneros, the former Housing and Urban Development secretary who now heads Texas-based American CityVista, which has developments in Southern California urban communities. Gradually, though, as investment in the neighborhood improves home values, tensions ease, he added.

Latino communities are drawing investor interest. Boxer Oscar De La Hoya, who is also a businessman, last week announced a joint venture with real estate developer John Long that will invest $100 million in housing and business projects over the next three years in struggling Latino communities in California.

Cisnero said builders should be aware that Latinos are looking for specific amenities, which include extra bedrooms for extended family; neighborhoods near churches, schools and public transportation; extra outdoor space for gardening, barbecuing and entertaining; and workspace in or near garages for those who need to store tools associated with their occupations.

For existing homes and condominiums in Southern California, buyers with Spanish surnames paid a median price of $382,500 in February, compared with $425,000 for all buyers, according to DataQuick.

Monterrey, Mexico, native Jorge Perez and his California-born wife, Soraya, bought their three-bedroom fixer in La Mirada for $420,000 after realizing they were priced out of Fullerton and La Habra in Orange County, where they would have preferred to live.

Perez, a 27-year-old salesman, said they’re closer to his job and in an ethnically diverse neighborhood they’ve come to love.

“I’m happy where I’m living right now,” Perez said. “Even if we buy another house, I’ll keep this one.”

Getting into those homes often requires perseverance.

It took the Gutierrezes 14 years to buy a house. They were unfamiliar with U.S. banking and credit practices, not to mention concepts such as “escrow” and “mortgage” -- impediments that added to their search time.

Ana, a hotel worker, and Eduardo, a restaurant manager, managed the apartment complex in Pasadena where they lived for a decade. That lowered their monthly rent, but they still weren’t able to save quickly enough to keep up with rising home prices.

For 10 years, Ana socked away what money she could, and in 2000 the couple began looking at houses for sale. They didn’t understand the documents they were reading, however, nor did they understand their loan options. After working with agents who didn’t speak Spanish, they nearly resigned themselves to never buying a home, Ana said.

Finally, in February 2004, she took a home-buying class in Spanish and found a bilingual agent. After two months of shopping for a mortgage they could afford, they qualified for two loans that required no down payment. Their savings covered the closing costs and they moved into the house in September.

“After I got the keys, I couldn’t believe it,” Ana said in Spanish. “I wanted a home for my kids and husband. And we got it.”

For other Latinos, the road to homeownership is similarly arduous. The agents who help first-time buyers say it is not uncommon for the loan process to take a year or more.

“It’s a labor of love,” said Michelle Munera, the Gutierrezes’ agent. “We have to be creative to solve [some] Latinos’ loan-qualification issues.”

Those challenges can include all-cash incomes and lack of traditional established credit, said Munera, who works with Pasadena Dickson Podley Realtors. She is the director there of Servicios Hispanos, a Spanish-language program that offers workshops and other assistance to Latino home buyers.

Because of a deep distrust of banks, some potential Latino buyers have no accounts, said Glenn Hayes, executive director of Neighborhood Housing Services of Orange County, a private nonprofit organization that promotes homeownership in low- to moderate-income neighborhoods. Latinos may pay rent and utility bills with cash, so the first job of agencies that help prospective buyers is to set up bank accounts and get them to pay bills with checks.

Century 21 encourages their agents to accompany Latino clients, many of whom might otherwise attempt to pay closing costs with cash, to local banks to get cashier’s checks, said Tom Kunz, president and chief executive of Century 21.

Some buyers lack federal W-2 forms from their employers, but they qualify for mortgages because many of the country’s biggest lenders have adopted creative credit practices.

Countrywide’s Optimum Loan Program, launched in June, provides loans to qualified buyers with nontraditional credit, such as rent and utility bill receipts, and whose income is received in cash.

First American Corp. in Orange County, a title and escrow company, uses its own qualifying criteria rather than the usual FICO scores. The company also guarantees closing costs and in some cases offers low- to moderate-income customers a 25% discount on those expenditures, said Landon Taylor, a company vice president.

Immigrant households often have three or more workers, which helps the families qualify for loans. Some rely on relatives’ credit histories to help them get a home. It’s not uncommon to have two or three families’ names on one title document, said Mike Garcia, a Realty Masters agent in Montebello. But “it’s risky to use cosigners if they don’t occupy the house. They may not help the owners if they start struggling to make payments a year later.”

Agents encourage buyers who rely on friends and relatives to qualify for loans to make sure their names are added to the title after escrow closes, to avoid future problems.

Jose Anaya and his wife, Elia Martinez-Anaya, were turned down for loans when they began the home-buying process two years ago, even when they included the income of Martinez-Anaya’s brother. Jose, who works at a senior-housing development in Laguna Hills, said they were able to buy their three-bedroom, $225,000 condo in Santa Ana only after his nephew agreed to cosign the first mortgage. The couple also qualified for city down-payment assistance and other financial help.

“When I left [the bank] in the beginning of the process, I thought, ‘I’m not going to make it.’ It felt impossible,” Jose said. “My credit was fine, but the bank wants people to have a lot of money. At that time they didn’t see our credit potential to pay for the loan.”

Nonprofit organizations, such as Neighborhood Housing Services and NeighborWorks, help Latino buyers and others overcome such obstacles and, in some cases, attain down-payment assistance.

But federal legislation under consideration could stymie efforts to help Latinos and other underserved minorities, said Gary Acosta, founder of the National Assn. of Hispanic Real Estate Professionals, a trade group.

Proposed changes in government-sponsored enterprises -- financial-services corporations created by Congress to reduce interest rates for specific borrowers -- could limit available credit for affordable mortgages and eliminate Freddie Mac- and Fannie Mae-sponsored education and financial literacy programs lenders and nonprofit groups rely on.

If that happens, lenders and agents say, they will have to rely more on Spanish-language marketing via the Internet and radio spots to reach buyers such as Eduardo Gutierrez, for whom owning his own home was a turning point in his life.

“When I go to work now, I’m happy, because the money I make pays for something I own,” he said. “I’ve given my kids something for the future.”