For sale signs are popping up all over Maryland these days. Many hide the fact your neighbors are going into foreclosure. Civil Justice Network estimates your home loses $150,000 in value each time there’s a foreclosure on your block. ABC2 News Investigator Tisha Thompson spent the last two months creating a map that will show you exactly which neighborhoods are “Foreclosure Hotspots.”
"How you doing?"
It’s the end of the road for Bill Jones and his neighbors in this little oasis near Pimlico Middle School in Northwest Baltimore. He points to a yellow house with a “For Sale” sign in its front yard. "This place went into foreclosure a few months ago.”
"The first 20 years or so, you see the same families here," Jones says. "In the last ten years or so, since the mortgage industry changed, people come and go, neighborhoods have changed very drastically."
Jones keeps walking down his street, pointing to ten different homes that have gone into foreclosure within the last few months. "We never used to have vacancies in this neighborhood," he says.
Now Jones is packing up.
"I'm not the same jolly person I used to be."
Because the home he’s lived in for 34 years…
"All my hair fell out in six months, turned grey."
is next.
"I've been married to the same girl 35 years,” he says as he moves boxes. "She just packed up and left. She got tired. It was one predatory lender after the next."
Jones says a mortgage broker called and offered a great refinancing deal. "They promised me a 30 year conventional loan at a fixed rate."
But he says what he and his neighbors ended up with was an exploding interest rate that doubled his payments.
"I think certain neighborhoods were targeted,” Jones says. “There's no question certain neighborhoods were targeted."
The Consumer Federation of America says Jones is right. Mortgage brokers “can buy information,” says CFA’s Allen Fishbein. "That tells them a lot of information about every home owner in the neighborhood, how much they owe, who holds their mortgage, and they use that to tailor a sales approach."
Fishbein says unscrupulous brokers pushed people like Jones into what’s called a subprime loan. You’ve probably hear the word repeated a bunch but few people really understand what it means.
Subprime loans are typically 3% higher than a standard loan and are supposed to go to people with a low credit score – typically 620 or less. It’s supposed to help people with bad credit buy a house.
But subprime loans are often tied to high-risk options, like interest-only, 100% financing, minimum-payment and adjustable rate loans. To make things worse, consumer advocates say many people who qualified for a cheaper loan were “pushed” into these more expensive loans.
The ABC2 News Investigators spent two months creating a map that not only lets you see if your neighborhood was targeted, but also if you now live in a foreclosure “hotspot.”
We teamed up with Investigative Reporters & Editors, Inc., a non-profit organization of reporters, to make a map that’s the first of its kind. When you look at it, you’ll see red spots – neighborhoods hit hardest by subprime loans.
"The problem is the tsunami is going to happen,” says Phillip Robinson, the Executive Director of Baltimore’s Civil Justice Network. “One in five subprime loans will go to go in foreclosure."
Which means places like:
The corner of Perring Parkway and E Northern Parkway in northeast Baltimore City, where subprime loans make up four out of five loans…
The neighborhood around Aberdeen Proving Ground in Harford County…
And the homes between I-795 and I-70 in western Baltimore County…
Will probably all end up becoming foreclosure hotspots.
But we found something even more startling. When you look at the map, you will see gray spots clustered in some areas. Those gray spots mean minorities make up more than 10% of that neighborhood.
The map shows the more minorities in your area, the higher the percentage of subprime loans…and the more likely your home will lose value because of foreclosures.
"You'll find regrettably they fit like a glove," says the man in charge of regulating Maryland’s mortgage industry, Maryland’s Department of Labor, Licensing and Regulation Secretary Thomas Perez.
In response, the Maryland Brokers Association says you can’t blame all the brokers. "Bad apples, we got them, can't deny that," says spokesman Thomas Shaner. But he also says it’s the homeowner who makes the final decision. "The broker is not in a position legally to say to you I'm not going to give it to you because I think you're going to fail this year."
When we pointed out the state is has a record number of foreclosures that only continue to grow, Shaner responded, "This is really just a market correction."
"To me, this is criminal," says Congressman Elijah Cummings (D-MD), who was appalled when we told him the hardest hit areas also happen to be those with the biggest minority populations. "Criminals target their victims. They try to figure out how they can get away with an act that is unlawful, get a profit on it and move on."
But neither the state nor the Federal government tracks how many foreclosures each broker racks up.
Something Cummings says must change.
"I tell you I'm not going to sit around and watch people who sacrifice so much and struggle to give their blood, sweat and tears and lose so much,” Cummings says. “I'm not."
And neither is Bill Jones. He may be packing up. But he says he’s never going to give up.
"I'm broke right now,” Jones says. “I'm poor right now. But I'm healthy and I'm not going anywhere. I'll see them all a little further down the road."
