Sacrificial poor

HOUSTON-Delores McGruder is a drop of success in an ocean of failure. The 61-year-old widow from one of Houston's poorest neighborhoods bought her own home on Dec. 6, 2002. On Feb. 12, 2009, she paid it off.

McGruder carries the dates in her head the same as she carries photos of her grandchildren in her pocket. They mark an accomplishment that's noteworthy not only in low-income areas but across America-as 1.5 million homeowners in low-, middle-, and high-income brackets have faced foreclosures in the last 11 months, and another 3 million are expected to this year.

McGruder bought her home by opening an Individual Development Account (IDA). IDAs match monthly family savings with public-private funds toward purchase of a home, a small business, or education-all asset-building pursuits typically reserved for those in wealthier tax brackets who typically receive thousands of dollars in tax benefits for such investments. IDAs are increasingly touted by groups such as the Poverty Forum as a way to build responsible home ownership-and at far less cost than the $75 billion housing bailout announced by President Barack Obama on Feb. 18.

In McGruder's case, two years of saving in an IDA under a program supervised by Houston's Covenant Community Capital Corporation (CCCC) led to a matching grant that allowed her to put a $7,000 down payment on a $40,000 used home in the city's Fifth Ward. McGruder, who's held jobs like Medicaid and public health counselor, herself spent years as a homeless child in this enclave of 40,000 residents northeast of downtown-raised by family friends and getting along by washing dishes and doing other odd jobs.

Covenant requires IDA participants to attend classes on financial planning where they learn how to pay an electric bill, to budget income, and to request a credit rating. Six years later, by making monthly payments plus continuing to save via her IDA, McGruder paid off the home loan balance of $21,000 last month.

"All my adult life I have lived in apartments. When you live in an apartment you have no say-so, not even about who walks onto the porch," said McGruder. "And renters aren't always counted properly in the census. Now I can be counted. And I have something to leave my children."

In Houston over 700 low-income residents are actively enrolled with IDAs through Covenant, and the average home purchase price for IDA "graduates" is $97,105. Since Covenant began the program in 2001, a dozen Fifth Ward residents have purchased homes and 33 more are currently saving money. Three Fifth Ward participants qualified for matching funds just last week.

"No one is so poor that they cannot save," is the radical premise of Stephan Fairfield, who started CCCC in 1998 as a faith-based organization combating urban decline with "long-term solutions." In addition to the IDA program, Fairfield also has developed two senior housing communities as well as new housing for low-income families. In 2000 his organization opened a call center that has grown to employ over 700 people from the community and is now run by the for-profit outsourcing customer service firm Interactive Response Technologies (IRT). This year Covenant is launching Bank on Houston, a cooperative effort with the FDIC, the Dallas Federal Reserve Bank, and 19 local banks and credit unions, to help "the unbanked" open starter checking accounts.

The IDA program in many ways remains the flagship of the revitalization fleet because the philosophy behind it is transforming the community. Residents who once were "working all week for money already spent, living on city blocks in box homes, eating plastic meal deals," as resident Joe Icet puts it, are being turned into planners and savers who value their stake in the community and want to reduce crime and increase opportunities. Nearly 60 percent of those who've ever opened accounts through Covenant are still saving, compared to a national success rate of 42 percent for IDAs.

"Once you can see that you can save, you want to," said Chantel Vital, a single mother of four who successfully used her IDA to buy a home last year and is now putting it toward her own education. McGruder agrees: "I value every penny I got."

Another key to revitalization is Fairfield himself. The 48-year-old son of a successful real estate developer grew up in Houston's "toniest neighborhoods," he said, and graduated from Harvard. Joining a solid church in the city and an encounter in 1987 with community development leader John Perkins, pastor and founder of Mississippi-based Voice of Calvary, were "turning points," he said: "I'm just doing in poor neighborhoods what I grew up knowing from rich ones."

Fairfield went to work in the Fifth Ward as part of a Habitat for Humanity project. When Habitat moved on, he stayed, forming a Community Develop-ment Corporation and moving into the neighborhood, where he started CCCC and now lives with his wife and three daughters, ages 3, 6, and 8.

"The earth is not like the Titanic where our mission is simply to get everybody off. We are not building the kingdom of God on earth, but our work is an expression of the power of the gospel renewing creation in feeble way," he told me.

For Fairfield that means overcoming the same challenges to development in crime-ridden poverty pockets that exist elsewhere: buying land, bringing in utilities, and offering feasible mortgage instruments. It also means keeping his ID badge for City Hall handy at all times in the cupholder of his car. He values good relationships with local officials and has his own offices just a few doors away from the office of the Fifth Ward's congresswoman, Democratic Rep. Sheila Jackson Lee. To support IDA matching funds and other programs, he has investors from Wells Fargo and other major banks, from United Way, the Ford Foundation and other philanthropies, the city of Houston, and U.S. government grants. Fairfield believes that churches too could support the IDA matching fund.

Now in his third decade living in the Fifth Ward, one of four historic African-American sectors of Houston settled in 1865, Fairfield has seen the community gradually become more Hispanic, and more recently to become home to refugees from Congo, the Middle East, and elsewhere.

Sam Houston built a home on a commanding corner of the Fifth Ward for one of his freed slaves, a white frame house that recently burned. In the 1940s the Fifth Ward was launchpad to blues and gospel greats whose careers took off under Peacock Records label owner, Fifth Ward native Don Robey. Boxer George Foreman was born here, as was longtime congresswoman Barbara Jordan. Crime novelist Walter Mosley grew up here, as did former Los Angeles mayor Tom Bradley and former San Francisco mayor Willie Brown.

"It's an oxygen-poor environment for nonprofits," notes Fairfield, who's been around long enough to watch federal housing projects take over only to become high-crime areas and welfare dependency sap a sense of community. He's watched employment in the Fifth Ward rise and fall along with Houston's oil, shipping, and rice industries. Greater Houston considered itself somewhat recession-proof until the Houston brokerage firm of Alan Stanford went into receivership in February, with the SEC filing charges against the Texas businessman over $8 billion in alleged fraud.

With Houston's wealthiest losing their fortunes in the downtown office towers plainly visible to the south, Fairfield is more convinced than ever that escaping the cycle of poverty happens when locals help locals build personal financial skills and acquire assets like homes or businesses that can grow into the future. Evidence of that is in a local tax preparation service started with resources from Covenant, a co-op garden called The Last Organic Outpost that's thriving atop an abandoned Comet Rice site, a new office complex, library, and transit bus hub. As IDAs and other mortgage instruments make home ownership attractive, Fairfield also sees a new enterprising community spirit among people like Delores McGruder-people who he says "know what it is to be poor and so they are both generous and frugal."

Ask McGruder what's the most important thing she's learned and "sacrifice" is her emphatic reply: "You have to give up something to get something." It's a valuable lesson not only for impoverished urban dwellers but homeowners everywhere-empowerment through sacrifice.