Research Counts

By Lucas Belury

Along a South Texas highway near San Antonio, large advertisements for mobile homes dot the landscape. The signs, often in Spanish, promote financing using an individual taxpayer identification number (ITIN), a common form of tax identification for immigrants. I see similar signs in the Rio Grande Valley for payday and auto title loans.

Such products are often predatory, targeting immigrants and others with limited financial resources. These types of loans can involve interest rates between 200% to 500%. They’re especially prevalent in colonias in the Rio Grande Valley, where I research how flooding, social vulnerability, and finance are interwoven.

Worsening floods and other climate-related threats there have driven many people to turn to title and payday loans to assist in their disaster recovery. These lending practices can trap borrowers in perpetual debt and compound disaster impacts. Yet, with limited access to federal aid or traditional lending, these borrowers often have no choice. This is especially true for colonia residents.

Flood Recovery in Colonias

Colonias were first defined by the Cranston-Gonzalez National Affordable Housing Act of 1990 and include unincorporated communities within 150 miles of the United States-Mexico border. Often these neighborhoods lack critical infrastructure, such as drainage, and are generally characterized by substandard housing and high poverty rates. Those who live in colonias are largely Hispanic. Roughly one- third of colonia residents were born outside the United States, including those with dual citizenship and various immigration statuses.

Since 2019, I’ve researched flooding as a racialized disaster in the Rio Grande Valley. This includes an ongoing participatory research project I’ve worked on with a coalition of five community-based organizations since 2023. After speaking with more than 100 flood-exposed, socially vulnerable residents, I’ve heard repeatedly how they often lack checking or savings accounts, have limited incomes, and have either been denied traditional loans, or simply don’t trust banking institutions.

Additionally, there is a lack of disaster aid for colonias. When flooding or other disasters strike, residents are often excluded from Federal Emergency Management Agency assistance due to their flood risk, property values, and other factors, which puts them at further disadvantage. While these racialized disparities have long been recognized and documented, it doesn’t change the fact that residents must find some other way to pay to fix their homes.

Forced to Turn to Financieras

Many disaster victims turn to predatory lenders, known locally known as financieras. These lenders provide residents access to needed liquidity, but at high interest rates.

“I have taken out a loan from a financiera and the interest rates are very high, but you have to pay because there aren’t other options,” stated a colonia resident I spoke to. “Sometimes I need to repair my house or my car, so for that I needed to ask for a loan because we don’t have savings.”

Institutional exclusion can also drive residents to a predatory lender following a disaster. Although I do not collect or request documentation status in my research, it’s an important factor in securing a traditional loan. As one participant told me, “Because we don’t have Social Security numbers, we don’t have other options to get a loan with a lower interest rate. So, we had to get our loan with a financiera.”

The Consequences of Limited Disaster Assistance

Without adequate post-disaster aid, colonia residents must turn to predatory, small-dollar loans to make their homes livable after a disaster—and after the disasters that follow, because these floods are significant, repetitive, and ongoing. For instance, on March 27, 2025, as much as 20 inches of rain fell on parts of the Rio Grande Valley and some residents were still trapped in their homes over a week later due to standing flood waters. The local response was robust, with philanthropic, religious, and non-profit organizations working tirelessly to support those affected by the floods. Even so, when these and other affected residents are unable to access post-disaster support, predatory lenders may be their only choice to fix their flooded cars, warped floorboards, and destroyed appliances.

There are alternatives to rampant predatory lending. For example, some residents I spoke with used micro-lending programs such as Communities Unlimited which support families with replacing destroyed appliances and housing materials. However, overall, the gap is simply too great for an individual nonprofit to fill. Some states, such as, Colorado and Arkansas, are working to limit the exorbitant interest rates of predatory lenders. While the federal government has undergone significant transformations in the last year, discussions about ways to make government flood aid policies more just are increasing in academic, policy, and local government circles.

These are important steps, but to truly serve the needs of flood exposed, economically and socially marginalized colonia residents, both robust federal disaster aid policies and improved limitations on high interest predatory loans must be implemented. Until then, these residents will likely continue to be exploited by predatory lenders.