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For Many, Mortgage Eats Almost Half Of PaycheckA Hand Up, Not A Handout'

For Many, Mortgage Eats Almost Half Of Paycheck

By Jeff Kunerth | Sentinel Staff Writer

September 22, 2002
Copyright © 2002 Orlando Sentinel. All rights reserved.


Dream home can wait.


In the apartment where she used to live, the next-door neighbor never stopped complaining. He complained of the noise when her grandchildren came to visit. He complained when she played her radio.

"Everything bothered him," said Evelyn Velez.

So she looked around and found a neighborhood of duplex homes where she could buy a 3-bedroom, 2-bathroom house for $59,000 in 1994, joining the growing number of minority homeowners during the 1990s.

Homeownership among Hispanics in metropolitan Orlando increased to 61 percent in 2000 from 59.5 percent in 1990, according to recently released 2000 Census figures. Black homeownership grew to 55.2 percent from 53.9 percent. Asian homeownership rose slightly to 61.3 percent from 61.1 percent.

Statewide, 60.7 percent of all Hispanics own instead of rent. Among blacks, 57.1 percent are homeowners. Homeownership among non-Hispanic whites is 73.4 percent.

Yet for many minorities, owning a home can become as much a burden as a blessing. Throughout metropolitan Orlando, blacks and Hispanics are twice as likely as non-Hispanic whites to be "house poor" -- homeowners who are one major expense away from risking foreclosure.

In Velez's neighborhood -- made up of restaurant workers, firefighters, corrections officers, salespeople and tradespeople -- nearly half of all homeowners spend 40 percent or more of their household incomes on mortgage payments.

'Don't have a dollar saved'

"I put all my money in this home. I don't have a dollar saved," said Velez, 54, who had to quit her job as a store manager because of a heart condition. "I've had to put in a new water heater, new air conditioning, cabinets in the kitchen. Now I have to do a septic tank. Sometimes I feel like running away."

In the Orlando metropolitan area of Orange, Seminole, Osceola and Lake counties, about one out of five black and Hispanic homeowners are house poor -- a near statistical mirror of the state as a whole.

Among the state's major metropolitan areas, Orlando trails only Miami-Fort Lauderdale in the percentage of black and Hispanic homeowners who are house poor.

In the Tierra Woods subdivision off Forsyth Road where Velez lives, 25.7 percent of all homeowners spend 40 percent to 49 percent of their income on mortgage payments -- the highest of any neighborhood in Central Florida. Another 19.9 percent spend 50 percent or more of their household income on house payments.

In Velez's neighborhood, where the median house price is $64,300 and the median household income is $31,169, both spouses work in 86 percent of the married-couple households.

Minority homeowners often end up spending a larger portion of their income on house payments than non-Hispanic whites because they have lower median incomes. The median household income for non-Hispanic whites in Florida is $43,984. For Hispanics, it's $39,627 and for blacks, $32,356. The median house value in Florida is $105,500.

"Part of it is that blacks and Hispanics have less to spend on housing, but are competing for housing in the same market as other groups," said Brian Stults, a University of Florida sociology professor.

For many blacks, Orlando offers their first opportunity to buy a house. Jacci Hoskins bought a home in the Meadow Woods development when she moved down from New York in 1992.

"The area was new and up-and-coming. And it was cost-effective. I could buy for the same price I could rent," said Hoskins, 47, who works as curriculum resource teacher at Meadow Woods Elementary School.

And the house was next door to her parents, who moved to the area two months ahead of Hoskins.

The Meadow Woods area, which is 11 percent black and 49 percent Hispanic, has the largest number of homeowners who spend 40 percent or more of their income on mortgage payments in Central Florida -- 647. Hispanics make up 46 percent of the homeowners in Meadow Woods, while blacks account for 12 percent.

The sizable number of Hispanic homeowners with large mortgage payments is a growing concern for Marytza Sanz, who heads Latino Leadership, an Orlando activist group. Prompted by a growing number of distress calls from Hispanic homeowners having problems making their house payments, Latino Leadership plans to start a class for first-time homeowners in October.

"Buying a house is something wonderful, but you have to be educated about all the things that come with a house," Sanz said. "A lot of people put all their money into the mortgage and don't have anything extra for emergencies, homeowner association dues, health insurance or life insurance."

Too much, too soon?

Too often, she said, first-time Hispanic homeowners buy more house than they can afford -- mistaking the American dream of owning a home for buying their dream home.

"You don't have to start with that dream home. You start with a starter home, and you grow little by little into that dream home," she said.

Ramonita Morales, 35, and her husband, Carlos Barreto, 40, bought a house in the Meadow Woods area within a year of moving to Orlando from Puerto Rico. It's a two-story home on a street of earth-toned carbon copies, all blending together in subdivision conformity. From a house across the street, the sounds of salsa music reverberate.

The houses here, most of them owned by Hispanics, sell for $130,000 or more. Morales and Barreto spend less than 20 percent of their income on the mortgage. They have plans to rent the 3-bedroom, 21/2-bathroom home eventually and move up the food chain of homeownership.

"We are looking for a bigger house than this," said Morales, a pharmacist. "And on one floor. And no radios playing high into the night."

Evelyn Velez, on the other hand, continues to struggle with the costs of homeownership. Although she shares her house with Jose Montanez, 44, Velez still needs to rent a room to make ends meet.


A Hand Up, Not A Handout'


October 7, 2002
Copyright © 2002 Duluth News-Tribune. All rights reserved.

Wanda Pacheco was pleasantly surprised at how quickly the bank account grew.

Each month, the Duluthian deposited $30 through a first-of-its-kind, antipoverty program called Family Assets for Independence in Minnesota. Like a 401(k) for the working poor, the statewide program matches Pacheco and other participants' money three to one, helping them save to buy a home, start or expand a business, or go to college.

Pacheco is among dozens from Duluth who have participated in the program and one of hundreds from across the state. Nationally, 10,000 low- and moderate-income Americans have begun to save through similar programs in at least 250 communities in 47 states.

Pacheco saved nearly two years with FAIM's help to buy a house -- a beauty: three bedrooms, new construction, breathtaking views of Lake Superior and even a ground-floor apartment she rents for a little extra income.

"The program helps you make your dreams come true," said Pacheco, a native of Puerto Rico who has worked for Women's Transitional Housing in Duluth since 1991. She's a women's advocate and property manager and lives in her Central Hillside home, just below Cascade Park, with her 14-year-old daughter. She rents the ground-floor apartment to her brother, an employee of Duluth Clinic.

"I wanted a house for such a long time. If it wasn't for the program, I wouldn't have had the chance," she said. "I've always just wanted the best for my daughter, a place to call home. We're very happy. It's a beautiful house. I love it all, but I like my bedroom the best because I have a view of the entire lake. And I have a big walk-in closet that even has a window."


The good news for FAIM is that it's filled with an abundance of success stories like Pacheco's. The potential bad news is that the pilot project is scheduled to conclude at the end of 2003.

However, efforts already have begun to renew funding.

In Duluth, FAIM's matching money comes from the federal government, the state and from the Northland Foundation. Each committed $500,000 to the program when it was created in 1998.

Like other foundations and corporations involved with FAIM, Northland will have to decide for itself whether to continue the relationship.

"It's a great program, but it's a tough program, too," said Mary Robillard, the foundation's manager of grant programs. The foundation doesn't fund it alone and has to count on continued commitments from the state and federal governments.

"The program fits very well with our focus of helping people become more self-reliant," Robillard said. "Whether we remain involved is a decision for our board."

At the federal level, legislation to fund FAIM was introduced and highlighted at a White House event in February. The legislation would expand FAIM and similar programs around the nation. The Senate Finance Committee passed the bill with $1.2 billion in funding, and it now awaits action by the full Senate.

"We have every reason to be optimistic," Minnesota's FAIM Coordinator Denise DeVaan said from her office in the Twin Cities.

There's reason to be optimistic about rumblings in St. Paul, too, she said. This summer, the state changed FAIM's status from "pilot" to "ongoing." And the Minnesota Department of Children, Families and Learning was able to find room for the project in the governor's upcoming proposed budget. If approved by the Legislature this session, FAIM will receive $500,000 from the state every two years.


"Based on its success, the program really should be continued and even expanded. What we've learned is that it works. It really works," said Jan Hogan, a professor in the University of Minnesota's Family Social Science Department who is conducting an independent study and analysis of FAIM.

She was intrigued by the program when she first heard about it two years ago and decided to check into it further.

"It was the first antipoverty strategy I had heard of in years that was new," Hogan said. "It involves asset-building. There's more than just transferring cash from the government to people in need. This is something that helps people to get themselves onto the road to upward financial mobility."

Hogan interviewed 25 participating FAIM families over the past two summers to analyze the initiative.

She found one woman who refused to turn on her air-conditioning despite stifling summer heat, a family that stopped eating out and a single mother who offered to vacuum her apartment building's hallways for reduced rent -- all so they could afford the $30 a month it took to participate.

"What I found is that most of the families in the program stay in the program," Hogan said. "And most of them reach their goals. They do it by some of the most extraordinary means. But that's the good thing.

"This is a hand up, not a handout," she said. "The program preserves dignity. People are saving their own money. And they're reaching goals they set."


Across Minnesota, 566 families participated, or are participating, in FAIM. Already, they have saved a total of $215,984. Most of the participants -- 83 percent -- are female. More than a third are members of minorities.

In Duluth, 31 individuals or families have saved money through the program, according to Pam Johnson of Community Action Duluth, which runs FAIM locally. Another 40 Duluth-area families are on a waiting list to participate, despite no efforts to recruit or to advertise. Only five of Duluth's participants have dropped out before reaching their goals.

"The people in the program get me so excited," Johnson said. "They work so hard and want so bad to make this work. That's infectious. It's neat. I get to see them succeed."

FAIM participants are required to meet income guidelines, which are set at twice the federal poverty level. Individuals can't earn more than $17,180 a year to participate. A family of four can't make more than $35,300.

In Duluth, 15 percent of the population -- or about 12,800 people -- earn incomes at or below the federal poverty level, according to census figures.

"We just hope with the success of the program, we'll be able to keep it going and help more and more people," Johnson said. "These are people who work hard but don't make enough to get ahead. It's so much better to help them gain assets than to give them a handout. People don't want to be on welfare."

In addition to meeting income requirements, Duluth's FAIM participants are required to attend classes on how to buy a home and on how to budget and manage money.

Half of the participants in Duluth used or are using their saved money to buy homes. Five have already closed on their new properties.

The other half of the participants, who range in age from 19 to their late 50s, used or are using their money to start or expand a business. Ventures include computer graphics, music, arts, writing, catering, a cleaning service, seamstress, and a hair and nail salon. Four of the businesses have already been created or expanded. The rest are being planned.

Tara Vatalaro used her money to expand the child care business she runs out of her East Hillside home. She bought a larger refrigerator for additional food and a new computer to help keep track of the children's needs and other information.

Now, she's saving through FAIM to go back to college. She dreams of a certification that will allow her to open and operate a larger child care program in a building that's not her home.

"I don't want to switch careers. I want to keep working with children," Vatalaro said. "This program is helping me so much to get to where I want to be. I am so grateful."

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