Behind the palatial facades and well-manicured, verdant lawns of Prince George’s County’s suburbia a secret was brewing. That is, until the fragile foundations of the U.S. housing market fell, exposing a festering sore that has since crippled the nation’s economy and undercut the county’s claim as the center of Black affluence.
Prince George’s County is the epicenter of Maryland’s foreclosure crisis, and the secret is out. Statistics show that in 2009, the county registered 13,412 of the state’s 43,248 housing units receiving a foreclosure filing. That’s 31 percent.
The effect on the socioeconomic dynamics of the country has been staggering, observers say.
“The foreclosure rate in Prince George’s County has seriously affected our families,” said James Dula, Ph.D., chairman of the Maryland branch of the Southern Christian Leadership Conference and former chairman of the Prince George’s County Chamber of Commerce. “Too many families have left our county due to foreclosure and high taxes which has affected our synergy as a county.”
There are many reasons why the crisis hit as hard as it did, but the subprime loan debacle was the primary culprit. According to the U.S. Department of Housing and Urban Development, subprime loans were given to people with limited or flawed credit histories. The loans would carry exorbitant rates to compensate for the increased credit risk.
Many unscrupulous lenders offered risky loans to people who were unable to afford homes they wanted. Adding to the mishap were dense, technical contracts and fraudulent lenders.
“When I served as Health and Human Services DCAO I questioned the practice of interest only loans and often encouraged borrowers to think wisely,” Dula said. “When I became CEO of the , I began to warn consumers that a recession was approaching and since then, I have counseled countless young professionals facing foreclosure which started with interest only loans and balloon payments.”
Dula’s words of wisdom were not as far reaching as needed. As the numbers show, Prince George’s County—which is primarily African-American—was a jurisdiction headed for trouble.
According to a 2006 report released by the Consumer Federation of America, 53 percent all African-American homebuyers received subprime mortgages in 2005. In comparison, only 21.6 percent of White borrowers and 13.5 percent of Asian borrowers received subprime mortgages during this time period.
For new home buyers, the number was even more staggering. Blacks were three times more likely to receive subprime mortgages for new home purchases compared to Whites. This type of predatory lending capitalized on many young Blacks looking to grab their piece of the American dream.
“The banks were not very cautious about how they were taking care of the assets they were backing with these loans,” said Michael Cerrito, president of the Prince George’s County Association of Realtors . “In many cases they’d shut off the utilities which would cause more damage to the property and it drove the price down. It made it harder for the average buyer to buy the house because the condition of the house was so bad.”
Cerrito also said the number of foreclosed homes reduced the value of non-foreclosed properties in the county’s neighborhoods.
In 2010, Prince George’s County still leads Maryland with 6,264 foreclosed homes listed for sale in May. It’s still an issue for the county, but local and state officials are creating new initiatives to keep people in their homes.
The neighborhood stabilization program offers county residents up to $20,000 to for down payments on homes.
According to James Keary, spokesman for the Prince George’s County Department of Housing and Community Development, this has been an important program in turning the crisis around.
“It’s a program that’s actually putting people into homes,” he said. “It’s been a continual program even with the ending in April.
“Sales continue to go up and the program has been extended because of the success we’ve had putting people into those homes.”