Concerned at the possibility of being priced out of the American Dream, lower-income minority families are increasingly getting swept up in L.A. County's housing mania.


During the last year, sales and price appreciation in predominantly Latino and African-American communities have greatly outpaced countywide figures.


The sales activity is largely being fueled by lenders offering interest-only and no-down payment sub-prime mortgages loans made to higher-risk borrowers that carry above-market interest rates.


While market-rate loans with similar structures have fueled the overall housing market, some fear poorer families could have a harder time withstanding a sudden drop in home prices or even a slowdown in appreciation.


Lenders are convincing poorer borrowers to buy homes using low-payment adjustable-rate loans with promises that prices will continue to appreciate rapidly, said Christopher Thornberg, a senior economist with the UCLA Anderson Forecast.


If interest rates rise past 7 percent and California home appreciation rates return to their traditional range of about 4 percent annually, borrowers may find they owe more than their property is worth, Thornberg said.


"These people are being encouraged to take on debt they can't possibly afford," Thornberg said. "They are going to lose their home and what little life savings they have when this whole thing collapses and that's just ridiculous."


Last week, the Federal Reserve released data that supported research by the Greenlining Institute, a Berkley-based advocacy group for poor and minority communities. They found that blacks and Latinos are three times more likely to receive a high-cost sub-prime loan than white borrowers, with interest rates sometimes topping 15 percent.


In L.A. County last year, Latinos received 1,940 sub-prime loans more than any other racial group, according to the Greenlining study. Of the 56,263 mortgages made to Latinos and blacks last year, 4.7 percent were sub-prime 1.5 points above the county average.


Several of the areas that have seen the sharpest rise in sales activity and price appreciation are also some of L.A. County's poorest neighborhoods.


In South L.A.'s 90248 ZIP code, which is about 36 percent Latino, there was a 77.8 percent jump in the number of homes sold in August, when the area's median home price shot up to $504,000 a 26 percent premium from a year earlier, according to data from HomeData Corp.


Also in South L.A.'s 90001, 50 homes sold in August for a median price of $372,000 a 72.4 percent increase in sales volume and a 56.3 percent rise in home prices from a year ago. The district is 84.5 percent Latino, according to the 2000 Census.

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