The implosion of the nation's housing market and the resetting of sub-prime mortgage rates have hit Baltimore hard, resulting in 1,199 foreclosures so far for 2008, a number on track to exceed last year's figures of 3,090 and grow upwards of 4,000.
While current foreclosures numbers do not exceed those in the early part of the decade - in both 2000 and 2001 the there were over 5,000 in Baltimore - the recent increase in foreclosures comes after a period of several years, which saw these numbers decreasing.
Experts are confident that Baltimore will continue to weather the storm better than other mid-sized cities. Mathew Kachura, of University of Baltimore's Neighborhood Indicators Alliance, said that because Baltimore continues to undergo the painful transition from an industrial to primarily service-based economy - according to data compiled by the Baltimore Metropolitan Council.
Though the city saw a 20 percent decline in its manufacturing sector from 2002 to 2004, residents reliant on service jobs do not necessarily feel the bite of a retracting economy at the same rate that workers in manufacturing centers like Detroit and Cleveland do.
Kachura felt that this makes Baltimore's foreclosure rate "several years behind [the] national curve, which is also true for [the] economy."
More affluent neighborhoods, such as Charles Village, have thus far largely escaped high foreclosure rates. Kachura explained that this is mainly because the demographics of the community are not the same as those that were more likely to be given sub-prime loans.
"Thus far foreclosures have not hit emerging, gentrifying neighborhoods, where fewer properties are investor owned," Kahura said.
Anne Balcer-Norton, director of foreclosure prevention for St. Ambrose Housing Aid Center predicted that as those with traditional mortgages feel the pinch of a slowing economy, this could change.
"Communities that have never [been] affected are being affected [by foreclosure problems], communities like Canton. At this point, all demographics and income levels are being affected," she said.
The boom in the national economy, which has begun to deflate over the last two years, did enable many Baltimoreans to partake in the American dream of home ownership. Skyrocketing housing prices allowed others to borrow large sums of money based on the then market value of their homes. Lenders offered adjustable rate mortgage and refinancing to borrowers with so-called sub-prime credit rating.
"More in Baltimore were able to own a home and are now getting to a point were they can't afford it. The boom in the economy allowed people to purchase or refinance homes. The resetting of rates is forcing people out," Kachura said.
Kachura sees a statistical correlation in which older, less stable neighborhoods tend to be hit harder than neighborhoods with higher income levels.
Mary Warlow, director of Marketing for the Belair-Edison Neighborhoods Inc. agreed that in that community "minority and single female head of household lead filings in foreclosures."
Earlier this year the city filed suit against the bank Wells-Fargo claiming that it made discriminatory loans to minority borrowers.
"[The] case that the city is making [is] that there was racial targeting - African-Americans who could have gotten conventional mortgage were led into sub-prime loans, so there is clearly an indication that there was something wrong going on; whether illegal or not, that is for courts to decide," Director of the Baltimore Homeownership Preservation Coalition Sally Scott said.
Warlow stressed that foreclosures in Belair-Edison "haven't become an issue of blight yet. The numbers were stable from 2006 to 2007, which we considered kind of a victory."
She stated that for 2007 there were 155 fillings in the community. To date, there have been 130 this year.
Warlow estimated that one third of all foreclosures filings in Belair-Edison were against investor-owned properties, some of which had been unoccupied when they went into foreclosure. She estimated that one half of all other foreclosures in the community were against borrowers who were unable to keep up with monthly payments as rates went up.
There has been a concerted effort on the state, city and local community level to aid homeowners in or heading for foreclosure. In April Maryland adopted one of the most far-reaching mortgage laws in the nation by extending the period of foreclosure from 15 to 150 days.
Scott said that the Homeownership Preservation Coalition has "done well. We've pooled a diverse set of agencies and organizations together, but our main product has been information. This will not help somebody save their house."
Jennifer Jones, a housing counselor with the Belair-Edison Neighborhoods Inc., was optimistic that community education efforts had reached the targeted populations.
"Residents are very aware of [the] crisis. They know where to go. Our association does a lot of marketing and outreach. Residents tell friends and family members. Education is the main piece in preventing foreclosures," she said.
Jones approximated that half her clients were aware they signed on to a loan that was not fixed-rate, though it was not clear whether borrowers understood the full implications. Nevertheless, Jones said most of her clients feel regrets.
As Congress and the nation debate how to prevent a collapse in the credit market while rewarding neither irresponsible lending or borrowing, Scott is cautiously optimistic about the future.
"I don't think the number of foreclosures is going to go down. Foreclosures have spread beyond the sub-prime to conventional mortgage market. Numbers will keep rising into 2009, but with good outreach and federal support we will be able to help more homeowners stay in their homes," Scott said.
Jones, who sees four to six clients a day, felt that a sense of personal responsibility and concerted community effort to help keep residents in their homes stands out as particularly Baltimorean.
She had previously worked as housing counselor in a large Atlantic seaboard city "where most of the communities [are] not as strong as in Baltimore, where community has own association.Baltimore is unique in that way."
