Drive down any number of blocks in the Nehemiah community in West Baltimore's Sandtown-Winchester neighborhood and you will find something noticeably absent from the windows and front porches of the community's well-kept homes:
Despite the conventional wisdom, this neighborhood is living proof that it is possible for low-income homeowners to avoid foreclosure.
There's a reason why more than 500 residents in Sandtown-Winchester enjoy stable homeownership despite annual incomes of only $14,400 to $44,600.
From 1991 to 2005, the BUILD organization and Enterprise Homes partnered to build and rehabilitate blocks of houses, making homeownership a reality for low- and working-income individuals. We began by providing prospective buyers with the right pricing, right product and right financing.
All buyers were required to raise some or all of their down payment, so they would feel a tangible financial investment in their properties. They had to go through a thorough credit check conducted by the state or a lending institution. When necessary, credit counselors provided in-depth financial guidance to individuals whose bad credit prevented them from qualifying for a mortgage. Over the course of one year, those participants were able to safely pay down their debts, enabling them to later receive a home loan.
There were no no-down-payment, interest-only loans based solely on discretionary income levels. Residents purchased homes they could afford.
Once participants obtained mortgage approval, they were required to attend three homeownership classes where they learned how to take care of their homes and manage their finances. Today, those lessons, along with the continued support of BUILD and Enterprise, are evident in the well-maintained streets of the Nehemiah community.
As home foreclosures from the subprime mortgage crisis mount, some have argued that too many low-income working people made bad decisions to purchase rather than rent a home and their financial irresponsibility was supported through ill-advised government programs like the very one that has helped to transform the community of Sandtown-Winchester. They couldn't be more wrong.
When low-income and working-class people are put on a steady path of responsibility and investment, buying and keeping a home is highly achievable.
Arnie Graf is a consultant to BUILD, and Chickie Grayson is president and CEO of Enterprise Homes.