This document discusses the disproportionate impact of the subprime mortgage crisis and foreclosures on African American communities in Baltimore. It notes that homeownership represents 80% of net worth for many African American and Hispanic families. Data shows that African American neighborhoods in Baltimore have higher rates of subprime and adjustable rate loans, leading to more foreclosures. This results in significant losses of wealth and assets for these communities. The document argues for using social networks and community organizations to provide financial education and prevent further foreclosures.

1. Breaking the Silence of Shame Stopping the leakage of wealth – using social network/social capital to move people to action especially in African American communities Associated Black Charities

2. The Facts Homeownership as an Asset for Wealth Housing wealth was and remains the largest single source of savings, exceeding other assets such as pensions and personal savings For African Americans and Hispanic homeowners, home equity represented more than 80% of net worth

3. The Facts If 80% of net worth for African Americans and Hispanics is based on home equity, what does this say for a community, a neighborhood, a city or region where the majority of their population is African American and/or Hispanic in terms loss of wealth given the current economic downturn related to real estate

4. Baltimore – The Facts 64% of its residents are African Americans and only 11% of the City’s residents are middle class ($35,000 to $75,000) 59% of the City’s households are African American 1% of African Americans and 5% of whites earn more than $75,000 2000 Census data

5. Baltimore – The Facts 50% of African Americans “owned” their own homes; 66% of African American middle class residents own their home and 73% of middle class whites own their home; The median value of a home owned by African American is $63,700 and the average value of a home owned by white residents is $78,300 2000 Census

6. Housing Facts - National 2 million sub prime mortgages were estimated to go into foreclosure – between 1 st quarter of 2007 and 4 th quarter of 2009 4 th quarter of 2008, Realty Trac reported a total of 736,061 property foreclosure filings including default, notices of foreclosure sales and lender purchases of foreclosed properties US Joint Economic Committee

7. National – The Sub prime Loans A national ACORN report documented the racial disparities associated with the sub prime loan markets regardless of the income of the borrower (new homeowner or refinancing) Nationally, African American home purchasers were 2.7 more likely to have a higher cost loan than white borrowers.

8. Maryland – Mortgage Foreclosures Between the 4 th quarter of 2006 and the 3 rd quarter of 2007, the growth in Maryland’s prime and sub prime foreclosure inventories was more than double the national average Same period, growth rate in the prime ARM foreclosure inventory was 211.1% - almost double the national rate.

9. Baltimore - Foreclosures Baltimore City, Baltimore County, Montgomery County and Prince Georges County have consistently had the highest concentration of foreclosures in the State; In Baltimore City, neighborhoods that are predominately African American have the highest rate of foreclosure; What does that say about the loss of wealth and assets for Baltimore and specifically for African Americans?

10. Baltimore - Foreclosures For 2007, compared to the distribution of owner-occupied housing units, there is a disproportionately large share of foreclosure filings in predominately African American neighborhoods; With approximately 4.5% of the state’s taxable real property in Baltimore, residents will lose approximately $122 million in property related wealth based on Congress’ Joint Economic Committee.

11. Deeper in Baltimore Higher percentage African American areas tend to have a lower percentage of fixed rate loans and higher percentage of adjustable rate loans; Higher percentage African American areas tend to have a higher percentage of sub prime loans; both ARM and fixed rate; and Higher percentage African American areas have higher rates of non-current loans

12. Deeper in Baltimore EZ assisted homeownership loans, less than 1% foreclosure rate; whereas 28 zip codes within the Zone have significant sub prime loans and these are significantly African American communities; Expanding into at one additional community based upon data on foreclosures and neighborhood preference based on market research

13. The costs of foreclosures What is the cost of foreclosure for communities? What is the cost of foreclosures for individual wealth for African Americans and Latinos when homeownership accounts for 80% of their net worth What is the cost of foreclosure to children’s well being? Children of AA middle class are the first generation – Are not likely to become middle class – a further lost of wealth (Pew Charitable Trust)

14. How do people access reliable information Access points for reliable and accurate information for citizens? Social networks What is the likely scope of social networks for whites vs. blacks of the same income? What are the likely social networks for African Americans in a city/communities that are racially segregated, racially and income polarized?

15. So what is the value of social networks in preventing foreclosure Social networks – the connections between people and between people and institutions (a set of relationships) Why – it provides valuable access to resources and information (economic, social, physical and spiritual) Social capital – the sum total of interactions within social networks resulting in trust Healthy/high functioning social networks result in reliability of information and productive relationships toward mutual goals

16. Use the social capital 4 community organizing and strong marketing tools Use community based groups to design marketing material Use existing housing/financial literacy champions for their input as well Target the outreach to EVERYONE and major community institutions Door to door – EVERY door – including vacant Drive the house occupant to existing organizations for reliable information and assistance Value of privacy – not having to admit “I” didn’t manage this well; I made a mistake, I do not understand, I care what other people will think of me, I FAILED, I am stupid BREAKING THE SILENCE OF SHAME

17. Connecting to Accurate Information Using the basics of community organizing Using existing resources of housing counselors Using existing resources of financial literacy/financial management experts Get accurate information, tools and answer questions before its too late BREAKING THE SILENCE OF SHAME

18. Limitations of the model Depends upon the capacity of community based organizations Depends upon those organizations having skill set and staff to organize and mobilize in a community In this economic downturn, these very same non profits, community based, are likely to experience financial challenges inhibiting their operation