Latina Economic Development Organization

MISSION Reduce Poverty by Creating Wealth Opportunities for Women and Children Guiding Initiatives: Build quality housing designed by single parents Help single parents develop strategies and resources for success – building assets Help communities transform by developing strategies and resources to eliminate poverty

Comprehensive Approach to Wealth Creation 1. Affordable housing- 30% to 60% AMI 2. Case Management focused on economic outcomes after extensive assessment and goal setting session based on resident dreams and aspirations 3. Requirement of all residents to complete basic financial literacy workshop complete Smart Consumer class, maintain a budget and savings plan that is reviewed by Case Management on quarterly basis. 4. Family Self Sufficiency Contract tied to lease obligations 5. Family Development Network- linkages/referrals to social services- counseling, legal, health, parenting, classes employment training 6. Asset Creation & Development Programs

Asset Development Definitions Tangible Accumulation and protection of physical assets – What you can grow- bank accounts, investments, own your home/business, legal documents in place Intangible Extended family support system, access to and understanding of educational,social services and government programs

RESULTS 2006 Homeownership 27 clients purchased homes-38 community clients through Financial Literacy programs and 44 residents Of the 27 community clients, subsidy assistance was valued at $487,510 and first and second mortgages valued at $6,284,650 million Individual Development Accountants (IDA’s) 2 separate IDA programs assisted 83 participants with a total savings of $72,738 for the year (1 to 3 match and 1 to 2 match) Smart Consumer 18 Workshops offered in Spanish and English on Pay Yourself & Budgeting, Credit, Credit Cards and Loans, Bank On It, Check It Out 355 residents graduated creating a monthly budget with savings Overall Asset Increases of Families living at NEW’s Housing Income $445,054 Savings $478,967

RESULTS 2006 Overall… 95% of NEW’s resident families developed a budget and 50% opened a savings account for a total savings $500, of NEW’s families purchased homes with an average price of $360,00 -- $860,313 in buyers assistance, resulting in $9 million mortgage loans.

Typical homeownership program (Los Angeles) A family of four making $52,000 purchasing a property with a sales price of $250, $80,000 local gov. soft second 2. $15,000 Add’I local gov. soft second 3. $10,000 HiCap deferred loan 4. $ 7,500 ChDap deferred loan 5. $ 2,500 borrower’s 1% down payment 6. First Trust Deed (first loan) is $135,000 PITI (principal, interest, taxes, and insurance)/ No PMI required for a payment of $1176 a month (as opposed to $1,974 a month without any subsidy)

Asset Creation Initiatives for Families Asset Development includes 1. Smart Consumer Education banking basics credit card usage and budgeting 2. First time homebuyer program with workshop (12 hrs) and 1 on 1 counseling. 3. Access to subsidy programs for down payment assistance from $50k to $150K 4. Individual Development Accounts (IDA’s) on homeownership, micro- enterprise and postsecondary education (2 to 1; 3 to 1 and 4 to 1 Match) up to $15, Business Assistance workshops linked with IDA program 6. Business Connect Program

Asset Development Initiatives for Families Asset Protection 1. Credit counseling referrals 2. Foreclosure Prevention consisting of counseling and clinics 3. Immigrant Asset Initiative-Emergency Family Plan- power of attorney, guardianship, and will/living trust Asset Accumulation 1. Homeownership 2. Retirement Accounts 3. Investments

What does it take? Moving Families Up the Economic Ladder Assess Economic Levels (family of 4) Minimum wages = crisis and homelessness Sustainable wages = stability- meet your current family expenses Thriving wages = opportunities for asset and wealth creation leading to freedom of choice – homeownership, savings for retirement, business ownership

What does it take? Moving Families Up the Economic Ladder Moving from Minimum Wage -- $16,000 to a Sustainable Wage -- $40,000 to $60, Affordable rent (30-60% of income) 2. Subsidized child care, after school programs 3. Extensive case management focusing on economic outcomes not just crisis counseling (financial literacy, access to affordable health care (healthy families) 4. Long term transition career path and training for higher wage job (goal $20-$30 hr.)

What does it take? Moving Families up the Economic Ladder How do you get from a Sustainable Wage -- $ 40,000 – $60,000 to a Thriving Wage -- $ 75,000 Rent subsidy still provided (80% to 200% AMI) Child care subsidy - smaller to zero Case Management focused on Asset building opportunities- e.g. link homeownership purchase with 1 st time homebuyer subsidy program and IDA savings program, savings accounts Access to capital for starting a business Establish a retirement savings program, creating a college fund for children Linking career path to employment benefits (health, retirment, etc)

1. Must have Career Path leading to a triple increase in wages especially for working poor families with children 2. Affordable Housing- increase public/private partnerships to develop affordable housing stock for middle class families leading to homeownership (30 to 200 AMI) 3. Affordable and Quality Child Care – extend eligibility limits to higher income families 4. Safety Net of support is vital for sustainability and thriving wages (financial literacy, access to wealth creation opportunities, affordable health care, child care and housing) What does it take move from low- income to a middle class income ?

Proposal to Enhance Retirement Savings for Low- to Moderate- Income Automatic Individual Retirement Accounts The automatic IRA is an easy way for workers to: save through payroll deductions; Under the Automatic IRA, employers with more than 10 workers, that have been in business for at least two years. Workers could choose not to participate. Studies show that most people like to save through payroll deduction, In addition to saving for retirement, IRA assets may be used for 1st time home purchase and education

Our Successes……. Crisis = Minimum Wage: Single mother eight children Moved in Homeless with no income at move in. Current income is $16,896. Mother has attended: Parenting, Smart Consumer Education, Family and individual counseling, Nutrition Program, Parent Leadership Training. Children are attending After school programs and other recreational activities. She has managed to open a savings account and has $200. Sustaining Wage Single Father two Children Moved in 2005, income of $18,648. Current Income $32,640 Father has attended: Smart Consumer, Parent Leadership Training, Parenting Family and Individual Counseling. Both children attend after school programs. Current savings of $ 1, and is an IDA participant for the Homeownership Program. Thriving Wage Single Mother one child Moved in 2006, income at $17,960 Current Income $55,000 Mother has attended and completed Medical Biller/Health Examiners program and obtained a job in that field. Took parenting, smart consumer& homebuyers program. NEW assisted her in the purchasing of her first home to which she moved on September 2008.

Our Policy Recommendation It takes 8 to 10 years to move from poverty to middle class Wealth Indicator +Poverty Indicator Federal funding for child care in addition to job creation opportunities (for low income families) Cap on interest being charged on credit cards and pay day loans Auto Retirement Plans (Auto IRAS), for minimum wage earners Protection of retirement plans Stop predatory lending practices Affordable housing to include up to 120AMI

NEW ECONOMICS FOR WOMEN Maggie Cervantes, Executive Director Margarita Alvarez Gomez, Director-Family Development Network Phone: For more information visit: