Olga Alvarez purchased a $115,000, four-bedroom house in Dalton, Ga., five years ago with a $1,000 down payment and without receiving any credit counseling or homeowner education.

“I was so excited about the possibility of becoming a homeowner that I just contacted a real estate company,” said the native of El Salvador.

When the bottom fell out of the economy, her work hours were reduced, making it difficult for her to make her mortgage payments, and she fell behind. Now, she’s trying to negotiate with her lenders through a credit counseling agency.

At the time she bought her house, she “didn’t know (counseling) agencies existed,” she said.

Although minorities benefited the most from the surge in home buying after 1994, they also lost more in the post-2005 slump, according to a report released by the Pew Hispanic Center.

The surge in home buying after 1994 was fueled by the combination of an economic expansion from 1991 to 2000, low interest rates and the growth of subprime lending, said Rakesh Kochhar, author of the report, “Through Boom and Bust: Minorities, Immigrants and Homeownership.”

However, a climate particularly beneficial for minority households, especially subprime loans, had a downside. Subprime loans generally are intended for applicants with poorer credit histories and less net worth than other borrowers, so they tend to carry higher interest rates than standard mortgage loans.

All of those factors combined into a surge in mortgage delinquency rates and foreclosures starting in 2005, Mr. Kochhar said. Delinquency rates rose among all subprime mortgage holders, he said, but minorities especially were hard hit.

At the time that Ms. Alvarez got her home, she was working overtime and didn’t have any difficulty making the home payments, but last year she started falling behind because her work hours significantly were reduced, she said.

Ms. Alvarez is back to working regular hours and trying to negotiate with her lenders with the help of the Dalton-Whitfield Community Development Corp., she said.

For anyone purchasing a home for the first time and unfamiliar with the ins and outs of the procedures, the key is home purchasing education and counseling, say those who work at local credit counseling agencies.

“Particularly for Hispanics, you are talking a lot of times about people (who didn’t speak their language) selling them homes; all the forms were in English,” said Gaile Jennings, executive director of the Dalton-Whitfield Community Development Corp.

“I think there was a disproportionate amount amongst minorities that actually paid more than the real estate they were purchasing was worth,” she said.

“Minorities and immigrant households have been affected more simply because of the lack of information,” said David Johnson, president and CEO of Chattanooga Neighborhood Enterprise.

The national foreclosure rate tripled from 2006 to 2008, increasing from 0.6 percent to 1.8 percent.

In Hamilton County, the foreclosure rate was 1.6 percent in 2008, while in Whitfield County it was 1.4 percent and 1.3 percent in Bradley County.

From November through March, 356 homes were lost to foreclosure in Chattanooga, Mr. Johnson said.

Higher foreclosure rates usually are associated with several factors, including higher unemployment levels and home prices that depreciate or rise very slowly, according to the study. Also, there are issues with home prices that are high relative to the owner’s income and larger proportions of higher-interest mortgage loans to Hispanic and black homeowners, the study says.

Forestine Watson Haynes, 28th Community Development Corp. executive director, said she has seen a few more minority households receiving foreclosure counseling services, but not a significant difference.

“From our experience, we are getting a few more, but it’s pretty close ... because a lot of people are being hurt as far as the housing situation is concerned,” she said.

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