Q: DEAR BOB: Which home mortgage fees are proper for a lender to charge borrowers? -- Stephen O.
A: DEAR STEPHEN: Some mortgage lenders are constantly working to create new names for unnecessary fees to impose on naive borrowers. Start shopping among at least a half-dozen mortgage lenders for a "no-cost, no-fee" home loan. In today's market, I recommend obtaining a fixed-rate mortgage.
However, if you are certain you won't keep your home more than five years, then an adjustable-rate mortgage fixed for five years can save you a few interest dollars. Be certain that it does not contain a prepayment penalty or negative amortization, whereby the interest rate adjusts monthly or semiannually and unpaid interest is added to your loan balance.
If you are dealing with a direct lender, such as Wells Fargo, Bank of America or Countrywide, the lender's good-faith estimate must reveal all loan charges. But you might be asked to pay legitimate fees to third parties, such as for the appraisal, credit report and lender's title insurance. That's fine. Those are not junk fees.
However, if you are dealing with a mortgage broker, his or her written good-faith estimate might be less reliable.
Watch out for previously undisclosed fees with such creative names as underwriting fee, document preparation fee, loan review fee, warehousing fee and loan origination fee.
If the lender asks you to pay a loan fee of 1 or 2 percent of the amount borrowed, usually called points, ask how much reduction you will receive in the interest rate. For each point paid, you should receive at least a one-eighth percentage-point reduction in your loan's interest rate for the life of the mortgage. Pay a loan fee only if you expect to stay in the house at least 10 years. Otherwise, take the no-cost, no-fee loan with all lender charges included in the interest rate.
DEAR BOB: Our condo homeowners association was assessed $6,000 each for replacement of roofs, which we have to pay even if we sell the condo. My roof was replaced last year, but they still want me to pay $6,000. What can I do? -- Rita S.
DEAR RITA: Your homeowners association was not assessed. Instead, the association has assessed condominium owners $6,000 each to replace the roofs. That's the way a homeowners association works. Even when your individual condo unit won't directly benefit, you are subject to special assessments, approved by the board of directors, that benefit the entire condo complex.
DEAR BOB: My widowed mother died recently, and the lawyer who prepared her trust wants to charge an outlandish fee to fill out the court papers for her small estate. Is it possible that I could file the papers myself with the court? Where do I obtain them? -- Eugene B.
DEAR EUGENE: If your mother left her major assets in a revocable living trust, no probate court proceedings are required. However, if she left a will with a testamentary or irrevocable trust, probate court proceedings are probably required. This is not a do-it-yourself project.
Shop around among probate lawyers. Although state law sets a maximum for probate legal fees based on the gross value of the estate, most probate lawyers will adjust their fees downward if you ask unless there are complications or a will contest involving the heirs.
DEAR BOB: Several days after we phoned our neighbor to ask him to quiet his barking dog, and to stop running his tractor and spewing carbon monoxide near my disabled daughter's room, he built a "spite fence." I live on a lake and had a nice view from my kitchen window for 28 years. What chance do I have to either remove part of the fence that blocks my lake view or cut it down by two feet? What recourse do I have? -- Elly W.
Use Local Explorer to learn about Washington, D.C., Maryland and Virginia communities.
DEAR ELLY: Unless your city or county has a view-protection ordinance, you have no legal right to a view. However, if the neighbor's tall fence is defined by local ordinance as a spite fence, usually 6 feet or taller and built without a required building permit, you may have a legal right to have the fence removed. Consult a lawyer for details.
DEAR BOB: In 1988, my husband and I bought a house together. In 1994, we got divorced, and I removed his name from the title. We remarried in May 2006. I added his name back to the title. If we sell our home within a year and file our income tax returns jointly for 2006, can we claim the $500,000 home-sale tax deduction? -- Rita R.
DEAR RITA: Not yet. For your husband to qualify for an additional $250,000 principal-residence-sale tax exemption, Internal Revenue Code 121 says he must occupy the principal residence at least 24 of the 60 months before its sale.
However, he does not have to be on the title if he meets the 24-month principal-residence-occupancy test and you file a joint income tax return in the year of principal residence sale. Consult a tax adviser for details.
DEAR BOB: I am interested in finding out who is buying the house next door to mine. The sale is pending. Is there any way to learn other than asking the buyers or realty agents directly? -- Carole B.
DEAR CAROLE: No. Until a home sale closes and the title transfer is recorded, the real estate agents and the other parties handling the transfer cannot legally disclose who is buying the home. That is confidential information.
Nor can they reveal the purchase price without breaching their fiduciary duty to the seller and buyer. The only way to find out the buyer's name now is to ask the seller. But that individual doesn't have to disclose the buyer's name.
DEAR BOB: I feel the sellers from whom I bought my home did not disclose a material and expensive problem with the house. The neighbors tell me the previous owners tried extensive repairs over the years to remedy the problem but did not succeed. Is there any way I can learn the disclosures the sellers of my house were given when they bought? -- Diane S.
DEAR DIANE: No. You have no legal right to obtain the written disclosures made to your seller unless they are public information, such as local building permits, pest control inspection report, etc.
Of course, if there are any warranties, such as a 10-year roof warranty, you are entitled to the balance of the covered period. Consult a lawyer for details.
DEAR BOB: I gave my tenant notice to move, confirmed with a receipt of notice. She agreed to move out, but the unit is now locked and no one is there, though her car is parked in the driveway. I phoned several times, but no reply. What options do I have? I have already hired a contractor to update the unit, based on the tenant's promise to move out on schedule. -- Paras R.
DEAR PARAS: Consult a lawyer whose specialty is evictions. I'm sure you have thought of the possibilities: The tenant moved out but left the car, abandoned the apartment and the car, died either in the apartment or elsewhere, is in a hospital, is in jail, is avoiding you because she refuses to move out, or wants to drag out the eviction procedure to obtain as much free rent from you as possible.
All these situations have happened to me with my rentals. Ask the neighbors if they have seen your tenant or any activity at the rental. Then contact the local police to learn if they have any record of activity at the property or if they can trace your missing tenant. After that, follow your attorney's advice to regain possession of your rental unit.
DEAR BOB: Several years ago, my mother gifted her house to me because she was moving into her new husband's home in Florida. Now I want to sell that house, but my tax adviser says I am stuck with my mother's cost basis of only $23,000, while the house is worth about $375,000 today. At the time of the gift, the house was worth about $225,000. Will I have to pay tax on all that capital gain? -- Alan P.
DEAR ALAN: Your tax adviser is correct. The general rule for gifts is that the donee takes over the donor's basis for a property.
Unless the property is your principal residence and you have owned and occupied it at least 24 of the 60 months before its sale so that you can qualify for the $250,000 tax exemption of Internal Revenue Code 121 (up to $500,000 for a qualified married couple filing jointly), your capital gain will be taxable. The good news is the federal capital gain tax rate is only 15 percent.
DEAR BOB: Last year, my husband bought a house with his name on the title and mortgage. I help him pay the mortgage and property taxes. What is the best way for him to transfer 5 percent of the property to my name? How much will it cost? -- Patricia S.
DEAR PATRICIA: If you will be receiving only a 5 percent interest in the property, that means you probably want to hold title as a tenant in common with your husband, who will retain a 95 percent interest. Each of you needs valid written wills to pass your interests upon the death of either of you to whomever you each designate.
Your husband can convey a 5 percent interest in the house to you by a recorded quitclaim deed. The deed should include a legal description of the property, the percent interest transferred to you, the official parcel number, the method of holding title and his notarized signature so the deed can be recorded.
DEAR BOB: My parents divorced in 1995. The judge gave the house to my mom, but she had to either sell it or refinance the mortgage. She wanted to keep the house, but she couldn't refinance because her debt-to-income ratio was too high. My mother gave me a quitclaim deed, signing the house over to me, and I helped her refinance with a new mortgage. Now I want to get my name off the title and put my mother back as sole owner, as she desires. If I do that and my mother dies, am I responsible for the mortgage payments even though I don't hold title? What do I need to do to quitclaim the house title back to my mom? Do I need to go through a title company? -- David P.
DEAR DAVID: If you are now on the title alone, you can sign a quitclaim deed to your mother. However, you will still remain liable to make sure the mortgage payments are made even when you don't hold title to the property.
After your mother dies, the title to the house goes to whomever she names in her will or revocable living trust.
You don't need to go through a title company to quitclaim your title to your mother. The deed must include a legal description of the property, usually with its parcel number, and your signature must be notarized so the deed can then be recorded to transfer title to your mother.
DEAR BOB: Our next-door neighbor, Charlie, is about 65 and retired. He is divorced and lives alone. In 1995, he and his then-wife bought the house for $220,000. Today, it is worth about $650,000. His ex-wife is asking that he sell the house so she can receive her half of the profit. Charlie doesn't want to sell the house and move. My wife and I trust him completely and are willing to use our liquid assets to help him stay in his house. We are thinking of buying the house from him for cash and then selling the house back to him. Or perhaps we can lend him the money to pay off the mortgage and buy out his wife's share, with him getting a home-equity line of credit to pay us back. What should we do? -- Ashley S.
DEAR ASHLEY: If Charlie can qualify to get a home-equity line of credit for the amount needed to buy out his ex-wife and pay off the existing mortgage, let him do it on his own. No sense in you getting involved in a potentially messy situation.
If he can't qualify for a new mortgage, perhaps you can buy the house and rent it back to him. That would give you the rental-property tax benefits, and Charlie and his ex-wife could each claim their principal-residence-sale tax exemption, up to $500,000 total. Consult a tax adviser for details.
DEAR BOB: I have heard that some people can have a custom home constructed by a builder and after construction is complete wind up with 50 to 60 percent equity in their new homes. Is this true, and how can I go about doing this? -- Greg H.
DEAR GREG: Hire a quality custom home builder who charges low construction prices. If you already own a building lot, that gives you a head start. There is no guaranteed way to turn a fast profit on new custom homes unless you can lock in a low construction price and market values rise during construction. (washingtonpost.com)
Saturday, May 26, 2007
Friday, May 25, 2007
Baltimore City: Fire highlights lack of shelter for poor
The rowhouse fire in East Baltimore that claimed the lives of six people and left seven injured highlighted a hidden problem of Baltimore housing: poor families who are unable to find or afford decent shelter banding together under one roof.
Advocates said yesterday that the problem is the result of an acute shortage of adequate housing for the city's neediest residents.
They pointed out that the Housing Authority of Baltimore City's inventory has declined by more than 5,000 units in the past 15 years, and that as many as 3,000 other federally subsidized units have been lost during that time. They also said that the loss of permanent subsidized units is not being made up by increases in housing vouchers that allow low-income families to rent in the private market.
"The question I've always tossed out is, 'What happens to all these folks? Where are they?'" said Gregory Countess, assistant director of advocacy for housing and community economic development for the Legal Aid Bureau of Maryland. "The fact that you've got thousands of units of housing lost means that you've lost opportunities for people to live in places that are safe and decent and affordable."
Barbara Samuels, an American Civil Liberties Union lawyer who specializes in housing issues, said about 29,000 Baltimore families are on the waiting list for public housing - a number that is double the number of units available in the city's portfolio of properties.
"Certainly, it symbolizes the desperate need and demand for affordable housing and the diminishing supply of opportunities," she said of the number of people who were living in the Cecil Avenue rowhouse near Green Mount Cemetery. "You see that in the families that have doubled up, tripled up, in this case maybe even quadrupled up."
The loss of low-income units is not restricted to Baltimore. In recent years, Baltimore County has demolished or plans to demolish about 1,500 units in projects such as Kingsley Park, Samuels said. Because the housing market is regional, the loss of those units can also affect the demand for low-income housing in the city, she says.
"Was some of that housing bad?" she said. "Sure. But nothing is being done to replace it."
Nationally, the National Low Income Housing Coalition wants to create 1.5 million new rental units for needy families, a goal that carries a price tag of about $5 billion, said Nicole Letourneau, a spokeswoman for the advocacy group.
A first step toward reaching that goal was taken Tuesday, when the House of Representatives included $600 million over five years for a national housing trust fund as part of reform legislation for federally chartered private lenders, Letourneau said.
"From the standpoint of the NLIHC, doubling up and tripling up in housing is one of the effects of having a lack of housing that's affordable to people with the lowest incomes," she said.
In Baltimore, the practice - which appears to have been the case in the Cecil Avenue rowhouse - is nothing new.
"It's always been a problem," said Stanley Sugarman, a longtime property owner and manager who recently got out of the business. "I used to go around and see the tenants and you'd see people in the basement or my plumber would tell me there are people sleeping next to the hot water heater. They'd say, 'The people are just visiting.'"
The problem is partly a lack of money in a city where the poverty rate for individuals is nearly 23 percent and for families is nearly 19 percent, figures that are nearly double the national average, according the Census Bureau's most recent American Community Survey.
"A lot of people don't have the ability to pay for decent housing," Sugarman said. "They have to double up. They rent rooms."
The phenomenon is also reflective of broader problems in the city's low-income rental market.
In a 2005 study funded by the Abell Foundation and published by the Urban Institute entitled "Low-End Rental Housing: The Forgotten Story in Baltimore's Housing Boom," Sandra Newman found that the low-income rental market was in "poor shape."
Newman, the director of the Johns Hopkins Institute for Policy Studies, found that as of 2000, half of the rental units in the city were costing less than $400 a month.
"But because so many renters are poor, even these low rents are unaffordable to many," Newman wrote. "There are about two poor renters for every affordable housing unit in the city."
Advocates say the situation may be getting worse, as the gentrification of some city neighborhoods and the redevelopment of others have led to the loss of private low-end rental units.
In addition, the waiting list for the city's housing voucher program has been closed for four years. Exceptions, according to the Housing Authority's Web site, are made for families who fall into several categories, including being victims of natural disasters, being intimidated victims or witnesses to crimes, being displaced by public action or having a member with a disability.
Presumably, at least one of the families in the Cecil Avenue rowhouse would have qualified under these circumstances, because one of the children used a wheelchair.
But Lauren Young, of the Maryland Disability Law Center, said being on the waiting list is no guarantee of immediate housing.
"It's a long waiting list," she said.
The Housing Authority did not respond to a request for comment.
But in a March draft of its plans for the next two years, the authority said that its "fundamental problem" was "inadequate and unpredictable funding."
Over the past several years, the draft said, the agency's federal operating funds have been cut by $26.2 million and its housing voucher monies have been cut by $18.9 million.
"Maximizing the number of households served will be extremely difficult in light of the inflationary nature of the rental market," the report said.
But Samuels, of the ACLU, said the Housing Authority lost funding for 2,000 vouchers that it failed to use during a six-year period from 1997 to 2003, and that it was diverting millions of dollars worth of vouchers from 2006 through 2008 to other uses.
She charged that the authority is using federal regulatory flexibility to "downsize" its low-income housing assets and calculated that the agency is serving 750 fewer families with vouchers and public housing units than it did in 1992.
Samuels said the authority should be serving more families because of additional vouchers it received to compensate for the loss of demolished public housing and federally subsidized rental units.
"The need is always there," she said. (baltimoresun.com)
Advocates said yesterday that the problem is the result of an acute shortage of adequate housing for the city's neediest residents.
They pointed out that the Housing Authority of Baltimore City's inventory has declined by more than 5,000 units in the past 15 years, and that as many as 3,000 other federally subsidized units have been lost during that time. They also said that the loss of permanent subsidized units is not being made up by increases in housing vouchers that allow low-income families to rent in the private market.
"The question I've always tossed out is, 'What happens to all these folks? Where are they?'" said Gregory Countess, assistant director of advocacy for housing and community economic development for the Legal Aid Bureau of Maryland. "The fact that you've got thousands of units of housing lost means that you've lost opportunities for people to live in places that are safe and decent and affordable."
Barbara Samuels, an American Civil Liberties Union lawyer who specializes in housing issues, said about 29,000 Baltimore families are on the waiting list for public housing - a number that is double the number of units available in the city's portfolio of properties.
"Certainly, it symbolizes the desperate need and demand for affordable housing and the diminishing supply of opportunities," she said of the number of people who were living in the Cecil Avenue rowhouse near Green Mount Cemetery. "You see that in the families that have doubled up, tripled up, in this case maybe even quadrupled up."
The loss of low-income units is not restricted to Baltimore. In recent years, Baltimore County has demolished or plans to demolish about 1,500 units in projects such as Kingsley Park, Samuels said. Because the housing market is regional, the loss of those units can also affect the demand for low-income housing in the city, she says.
"Was some of that housing bad?" she said. "Sure. But nothing is being done to replace it."
Nationally, the National Low Income Housing Coalition wants to create 1.5 million new rental units for needy families, a goal that carries a price tag of about $5 billion, said Nicole Letourneau, a spokeswoman for the advocacy group.
A first step toward reaching that goal was taken Tuesday, when the House of Representatives included $600 million over five years for a national housing trust fund as part of reform legislation for federally chartered private lenders, Letourneau said.
"From the standpoint of the NLIHC, doubling up and tripling up in housing is one of the effects of having a lack of housing that's affordable to people with the lowest incomes," she said.
In Baltimore, the practice - which appears to have been the case in the Cecil Avenue rowhouse - is nothing new.
"It's always been a problem," said Stanley Sugarman, a longtime property owner and manager who recently got out of the business. "I used to go around and see the tenants and you'd see people in the basement or my plumber would tell me there are people sleeping next to the hot water heater. They'd say, 'The people are just visiting.'"
The problem is partly a lack of money in a city where the poverty rate for individuals is nearly 23 percent and for families is nearly 19 percent, figures that are nearly double the national average, according the Census Bureau's most recent American Community Survey.
"A lot of people don't have the ability to pay for decent housing," Sugarman said. "They have to double up. They rent rooms."
The phenomenon is also reflective of broader problems in the city's low-income rental market.
In a 2005 study funded by the Abell Foundation and published by the Urban Institute entitled "Low-End Rental Housing: The Forgotten Story in Baltimore's Housing Boom," Sandra Newman found that the low-income rental market was in "poor shape."
Newman, the director of the Johns Hopkins Institute for Policy Studies, found that as of 2000, half of the rental units in the city were costing less than $400 a month.
"But because so many renters are poor, even these low rents are unaffordable to many," Newman wrote. "There are about two poor renters for every affordable housing unit in the city."
Advocates say the situation may be getting worse, as the gentrification of some city neighborhoods and the redevelopment of others have led to the loss of private low-end rental units.
In addition, the waiting list for the city's housing voucher program has been closed for four years. Exceptions, according to the Housing Authority's Web site, are made for families who fall into several categories, including being victims of natural disasters, being intimidated victims or witnesses to crimes, being displaced by public action or having a member with a disability.
Presumably, at least one of the families in the Cecil Avenue rowhouse would have qualified under these circumstances, because one of the children used a wheelchair.
But Lauren Young, of the Maryland Disability Law Center, said being on the waiting list is no guarantee of immediate housing.
"It's a long waiting list," she said.
The Housing Authority did not respond to a request for comment.
But in a March draft of its plans for the next two years, the authority said that its "fundamental problem" was "inadequate and unpredictable funding."
Over the past several years, the draft said, the agency's federal operating funds have been cut by $26.2 million and its housing voucher monies have been cut by $18.9 million.
"Maximizing the number of households served will be extremely difficult in light of the inflationary nature of the rental market," the report said.
But Samuels, of the ACLU, said the Housing Authority lost funding for 2,000 vouchers that it failed to use during a six-year period from 1997 to 2003, and that it was diverting millions of dollars worth of vouchers from 2006 through 2008 to other uses.
She charged that the authority is using federal regulatory flexibility to "downsize" its low-income housing assets and calculated that the agency is serving 750 fewer families with vouchers and public housing units than it did in 1992.
Samuels said the authority should be serving more families because of additional vouchers it received to compensate for the loss of demolished public housing and federally subsidized rental units.
"The need is always there," she said. (baltimoresun.com)
Wednesday, May 23, 2007
Baltimore: Tax sale proceeds amid fairness concerns
Baltimore's annual sale of rights to collect back property taxes proceeded as usual Monday despite pending city legislation that would keep homes from being included in the process over unpaid water bills and Mayor Sheila Dixon's suggestion of amnesty for such debts.
Stanley Milesky, chief of the city's Bureau of Treasury Management, said he didn't yet have information on how many of the 7,699 liens sold to investors involved water bills or other small municipal liens. About 750 such liens changed hands in last year's tax sale.
Rather than trying to collect back taxes themselves, many Maryland jurisdictions sell the collection rights to investors in annual auctions. Those investors buy the right to charge interest and fees that often amount to thousands of dollars, and the right to sue to seize the homes through foreclosure if the debts aren't paid. Some jurisdictions include debts other than taxes in the lien sale process, though that is rare outside of Baltimore.
The Sun reported in March that 400 city homes have been lost to foreclosure over debts other than property taxes in the past three years. Most stemmed from unpaid water and sewer bills, though some also included alley repaving charges, sidewalk repairs and even fees to register rental property. About half involved unpaid charges of $500 or less.
Milesky said city officials have been meeting weekly to discuss tax sales and are expected to make recommendations to Dixon within the month on possible improvements to the system.
"All the other issues with tax sales notwithstanding, it still remains a really effective means for the city to collect the amounts due," Milesky said.
The status of the mayor's amnesty idea, which she brought up during an interview with The Sun for the March story, is unclear.
"That wasn't necessarily the course of action that she charged the work group with," said Demaune Millard, a spokesman for the mayor's office. "The mayor is looking for more than a short-term fix. She's looking at a long-term solution."
City Councilman Bernard C. "Jack" Young, the 12th District councilman who has twice proposed a bill to end tax sales stemming from water bills, is frustrated by the slow pace of reform. City officials have contended that many people would not pay their water bills without the threat of a tax sale and potential foreclosure.
"Working with the Finance Department to get a remedy is just not moving fast enough," he said yesterday. "They're talking about it hurting the bond rating, but I just don't buy that. I'm still concerned about people losing their homes over water bills and especially such low water bills."
Young said he also is considering proposing bills to reduce the amount of interest that can be charged by people purchasing tax liens.
City Councilwoman Mary Pat Clarke, of the 14th District, has introduced a bill to keep liens of less than $1,000 out of tax sales. She also has said that she does not think that water bills, alley pavings and other small bills belong in tax sales.
Yesterday, Circuit Court Clerk Frank M. Conaway Sr., an announced candidate for mayor, sent a letter to the attorney general's office asking him to look into what "seems to be a consumer rights problem." Conaway said that people whose homes are put into tax sale might not realize that they can receive the difference between taxes owed and the bid price minus interest and expenses.
"I think there are millions of dollars that have been taken away from people," Conaway said in an interview yesterday. "It bothers me that people might be getting ripped off - that they aren't getting proceeds they should be getting."
State Sen. George W. Della Jr., who has introduced legislation to reform tax sale law, said he does not know of any summer study planned. But he intends to introduce legislation next session.
"I don't get disappointed nor do I get discouraged," he said. "It's not a fair way for local government to do business. I understand they want to get paid, but let's do it in a fair and equitable way."
Della, too, is concerned about the inclusion of water bill liens in tax sale.
"I think it's ludicrous for residential properties," he said. "It shouldn't be. Is that going to break the back of the city of Baltimore, if they don't get paid their water bill? I don't think so." (baltimoresun.com)
Stanley Milesky, chief of the city's Bureau of Treasury Management, said he didn't yet have information on how many of the 7,699 liens sold to investors involved water bills or other small municipal liens. About 750 such liens changed hands in last year's tax sale.
Rather than trying to collect back taxes themselves, many Maryland jurisdictions sell the collection rights to investors in annual auctions. Those investors buy the right to charge interest and fees that often amount to thousands of dollars, and the right to sue to seize the homes through foreclosure if the debts aren't paid. Some jurisdictions include debts other than taxes in the lien sale process, though that is rare outside of Baltimore.
The Sun reported in March that 400 city homes have been lost to foreclosure over debts other than property taxes in the past three years. Most stemmed from unpaid water and sewer bills, though some also included alley repaving charges, sidewalk repairs and even fees to register rental property. About half involved unpaid charges of $500 or less.
Milesky said city officials have been meeting weekly to discuss tax sales and are expected to make recommendations to Dixon within the month on possible improvements to the system.
"All the other issues with tax sales notwithstanding, it still remains a really effective means for the city to collect the amounts due," Milesky said.
The status of the mayor's amnesty idea, which she brought up during an interview with The Sun for the March story, is unclear.
"That wasn't necessarily the course of action that she charged the work group with," said Demaune Millard, a spokesman for the mayor's office. "The mayor is looking for more than a short-term fix. She's looking at a long-term solution."
City Councilman Bernard C. "Jack" Young, the 12th District councilman who has twice proposed a bill to end tax sales stemming from water bills, is frustrated by the slow pace of reform. City officials have contended that many people would not pay their water bills without the threat of a tax sale and potential foreclosure.
"Working with the Finance Department to get a remedy is just not moving fast enough," he said yesterday. "They're talking about it hurting the bond rating, but I just don't buy that. I'm still concerned about people losing their homes over water bills and especially such low water bills."
Young said he also is considering proposing bills to reduce the amount of interest that can be charged by people purchasing tax liens.
City Councilwoman Mary Pat Clarke, of the 14th District, has introduced a bill to keep liens of less than $1,000 out of tax sales. She also has said that she does not think that water bills, alley pavings and other small bills belong in tax sales.
Yesterday, Circuit Court Clerk Frank M. Conaway Sr., an announced candidate for mayor, sent a letter to the attorney general's office asking him to look into what "seems to be a consumer rights problem." Conaway said that people whose homes are put into tax sale might not realize that they can receive the difference between taxes owed and the bid price minus interest and expenses.
"I think there are millions of dollars that have been taken away from people," Conaway said in an interview yesterday. "It bothers me that people might be getting ripped off - that they aren't getting proceeds they should be getting."
State Sen. George W. Della Jr., who has introduced legislation to reform tax sale law, said he does not know of any summer study planned. But he intends to introduce legislation next session.
"I don't get disappointed nor do I get discouraged," he said. "It's not a fair way for local government to do business. I understand they want to get paid, but let's do it in a fair and equitable way."
Della, too, is concerned about the inclusion of water bill liens in tax sale.
"I think it's ludicrous for residential properties," he said. "It shouldn't be. Is that going to break the back of the city of Baltimore, if they don't get paid their water bill? I don't think so." (baltimoresun.com)
Tuesday, May 22, 2007
O'Malley heads to Las Vegas for shopping convention
BALTIMORE - Governor Martin O'Malley doesn't have much time to rest after the Preakness Stakes. He's headed to Las Vegas tomorrow for a shopping center convention, where he'll pitch Maryland for retail real estate deals.
The governor will be joined by Baltimore's mayor and county executives from Baltimore, Harford, Howard and Prince George's counties.
The International Council of Shopping Centers is a can't-miss event for local officials looking for economic development deals. Organizers say one out of every three retail real estate deals are either conceived at this meeting or completed there.
Maryland will spend 160-thousand dollars on the convention, including airfare, hotels, a large reception and building a booth that includes three meeting rooms. (abc2news.com)
The governor will be joined by Baltimore's mayor and county executives from Baltimore, Harford, Howard and Prince George's counties.
The International Council of Shopping Centers is a can't-miss event for local officials looking for economic development deals. Organizers say one out of every three retail real estate deals are either conceived at this meeting or completed there.
Maryland will spend 160-thousand dollars on the convention, including airfare, hotels, a large reception and building a booth that includes three meeting rooms. (abc2news.com)
Maryland: area home prices still rising
Region holding its value, while U.S. overall loses 1.8%
Baltimore's housing market is holding up better than the nation's as a whole, with the price of an existing single-family home rising nearly 5 percent in the first quarter over a year earlier. The gain in median price put the region among the top quarter of 145 metro areas surveyed by the National Association of Realtors and contrasted sharply with a 1.8 percent nationwide decline.
And the Cumberland area in Western Maryland, which has become one of the last markets in the country to experience a housing boom, registered the biggest increase in the nation, with the median price of a single-family home soaring 17 percent in the first three months of the year.
The Baltimore area's relative affordability in the pricey region surrounding the nation's capital helped drive demand, real estate experts said, fueling the association's reported 4.9 percent increase in median price to $278,900.
By contrast, the median price - or midpoint - of an existing single-family home in the United States slid 1.8 percent, to $212,300, the association said. Half of homes sold for more and half for less.
The Baltimore area ranked 34th among the 145 statistical areas in home value appreciation, NAR statistics showed. Eighty-two of those areas saw prices increase over a year ago, including 11 areas with double-digit gains, while 62 experienced price declines; one was unchanged.
In the Cumberland region, prices jumped by the biggest percentage increase, to a median of $100,000 from $85,400 in the first quarter of 2006.
"What this comes down to is affordability," said Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors. "When you look at [the Baltimore-area]market, ... it is largely affordable when you compare [it] to most of the rest of the state and Washington and Virginia. And interest rates have stayed relatively low, helping to fuel demand."
Areas that are benefiting now experienced less speculative buying, and in turn less of a huge spike in prices over the four-year housing boom, experts said. .
"The focus has turned to value," said Anirban Basu, chief executive officer of Baltimore-based Sage Policy Group Inc.
"Many prospective home buyers sought to place as large a bet as possible on the housing market. Today, that speculative aspect of the housing market has effectively been extinguished and now the buyer is focused on ... making a good deal and buying as much house as possible for their money," Basu said.
Buyers perceive value in Baltimore's market, Basu said. "That explains why Baltimore-area prices have held their own, even as Washington-area price changes have in many instances turned negative,"
Cumberland, too, benefited from the perception of value and is just now seeing the effects of a housing boom that had previously swept through the Baltimore market, economists said. As prices have risen in adjoining Washington and Garrett counties, buyers have been attracted to lower prices in Allegany County, Basu said.
"Cumberland is, from a Western Maryland perspective, the oasis of affordability," he said.
Prices have held up despite slowing sales. In Maryland, the report said, sales, including single-family homes and condos, dropped 10 percent in the first quarter, to 115,000 from 128,400 in the year-earlier period.
Nationwide sales dipped to 6.41 million, down 6.6 percent from 6.86 million sold in the first three months of 2006, the NAR report said. But an NAR economist said the market has likely bottomed.
Fourteen states and Washington showed an improvement in sales in the first quarter, said Lawrence Yun, NAR senior economist, compared to six states posting increases in the fourth quarter. On a quarter-to-quarter basis, sales rose in the United States by 2.4 percent, the NAR said.
The numbers suggest the market is stabilizing, thanks to job growth and relatively low mortgage interest rates that have hovered at just above 6 percent.
"We are encouraged by the fact that there is modest improvement in our quarterly figures, less of a decline in prices and a modest uptick in sales," Yun said. "This is positive compared to what we had experienced before."
He said he would not be surprised to see sales volume increase, on a year-over-year basis, by either the fourth quarter or the first quarter of 2008. (baltimoresun.com)
Baltimore's housing market is holding up better than the nation's as a whole, with the price of an existing single-family home rising nearly 5 percent in the first quarter over a year earlier. The gain in median price put the region among the top quarter of 145 metro areas surveyed by the National Association of Realtors and contrasted sharply with a 1.8 percent nationwide decline.
And the Cumberland area in Western Maryland, which has become one of the last markets in the country to experience a housing boom, registered the biggest increase in the nation, with the median price of a single-family home soaring 17 percent in the first three months of the year.
The Baltimore area's relative affordability in the pricey region surrounding the nation's capital helped drive demand, real estate experts said, fueling the association's reported 4.9 percent increase in median price to $278,900.
By contrast, the median price - or midpoint - of an existing single-family home in the United States slid 1.8 percent, to $212,300, the association said. Half of homes sold for more and half for less.
The Baltimore area ranked 34th among the 145 statistical areas in home value appreciation, NAR statistics showed. Eighty-two of those areas saw prices increase over a year ago, including 11 areas with double-digit gains, while 62 experienced price declines; one was unchanged.
In the Cumberland region, prices jumped by the biggest percentage increase, to a median of $100,000 from $85,400 in the first quarter of 2006.
"What this comes down to is affordability," said Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors. "When you look at [the Baltimore-area]market, ... it is largely affordable when you compare [it] to most of the rest of the state and Washington and Virginia. And interest rates have stayed relatively low, helping to fuel demand."
Areas that are benefiting now experienced less speculative buying, and in turn less of a huge spike in prices over the four-year housing boom, experts said. .
"The focus has turned to value," said Anirban Basu, chief executive officer of Baltimore-based Sage Policy Group Inc.
"Many prospective home buyers sought to place as large a bet as possible on the housing market. Today, that speculative aspect of the housing market has effectively been extinguished and now the buyer is focused on ... making a good deal and buying as much house as possible for their money," Basu said.
Buyers perceive value in Baltimore's market, Basu said. "That explains why Baltimore-area prices have held their own, even as Washington-area price changes have in many instances turned negative,"
Cumberland, too, benefited from the perception of value and is just now seeing the effects of a housing boom that had previously swept through the Baltimore market, economists said. As prices have risen in adjoining Washington and Garrett counties, buyers have been attracted to lower prices in Allegany County, Basu said.
"Cumberland is, from a Western Maryland perspective, the oasis of affordability," he said.
Prices have held up despite slowing sales. In Maryland, the report said, sales, including single-family homes and condos, dropped 10 percent in the first quarter, to 115,000 from 128,400 in the year-earlier period.
Nationwide sales dipped to 6.41 million, down 6.6 percent from 6.86 million sold in the first three months of 2006, the NAR report said. But an NAR economist said the market has likely bottomed.
Fourteen states and Washington showed an improvement in sales in the first quarter, said Lawrence Yun, NAR senior economist, compared to six states posting increases in the fourth quarter. On a quarter-to-quarter basis, sales rose in the United States by 2.4 percent, the NAR said.
The numbers suggest the market is stabilizing, thanks to job growth and relatively low mortgage interest rates that have hovered at just above 6 percent.
"We are encouraged by the fact that there is modest improvement in our quarterly figures, less of a decline in prices and a modest uptick in sales," Yun said. "This is positive compared to what we had experienced before."
He said he would not be surprised to see sales volume increase, on a year-over-year basis, by either the fourth quarter or the first quarter of 2008. (baltimoresun.com)
Monday, May 21, 2007
Foreclosure Fiasco
For years, you’ve been told owning your own home was the “American Dream.” But ABC2 News Investigator Tisha Thompson discovered, some one can literally “steal” your home. Meet Dana Pryor, a mother in North Baltimore who thought she had done everything right. The right education, the right job, she even got what she thought was the right loan. Only to find out how very wrong it can all become.
"How do you not know where your uniform is or your books?” Like single mothers everywhere --
"Could you just find...where is your...ugh." Dana Pryor’s morning ritual can be a bit of a struggle. "Come on and get in the car."
Yet, despite the seeming chaos --
"Everybody in!"
Pryor has managed to do everything right for years. "Come on, come one, come on. Where's your brother?" She went to college.
"I'm about to leave this kid and let him walk to school." Got a master’s degree.
"Ok, we're ready to go."
And a very good job.
"I am a six-figure, degree-having mom who feels very much like I have failed miserably."
Because Pryor’s dream house --
"It was $180,000, six bedrooms, three bathrooms."
Became the money pit --
"Probably $35,000."
That swallowed her 401-K.
"I'm either going to feed my kids or I'm going to pay the person I owe,” Pryor says. “Oftentimes you're robbing Peter to pay Paul and Peter has to wait until later."
Peter being her $1,300 mortgage payment, which escalated to more than $28,000 even after she paid back a few missing installments. Now her home will be sold on the courthouse steps because, despite making more than $100,000 a year, Pryor’s gone into foreclosure.
"The tsunami is coming,” says Allen Fishbein of the Center for Responsible Lending. “It has already engulfed some but unfortunately it appears its going to engulf many more."
The Center for Responsible Lending predicts as many as 22% of Maryland’s subprime loans will go into foreclosure next year.
Maryland has the fastest foreclosure process in the nation. If you miss a payment, your lender can sell your home in just 15 days.
"Maryland's 'Rocket Docket' of going into foreclosure sale in 15 days doesn't have to be,” says Phillip Robinson for the legal-aid group Civil Justice Network. “Most states have a much slower process."
To make matters worse, Robinson says the banks don’t even have to tell you they’re selling your house. "It’s the only legal proceeding in Maryland that doesn't require notice, which to me is mind-boggling,” he says. “If you want to sue me for $20 in District Court, the judge can't sign the order until you can prove through an affidavit that I got served. But if you want to sue me and take away my home and foreclose on my home, you don't have to prove to the judge that I got notice of the lawsuit."
"This is everyone's problem and we need to get them to get outraged," says Congressman Elijah Cummings (D-MD). He says he’s going to fix the problem, but needs you to write him a letter complaining about Maryland mortgage meltdown first. "I need people to be fiery about it.”
But foreclosure is embarrassing for many people.
"Pride is the biggest stumbling block," says Pryor. "The biggest mistake I made, the one everyone makes, is putting your head in the sand. It’s very hard to admit you need help with your mortgage."
Pryor says she hasn’t told anyone she’s about to move out and only agreed to go on camera because she doesn’t want what happened to her to ever happen to you.
"You can't buy a home in 15 days, but you amazingly enough you can lose one in 15 days.” (abc2news.com)
"How do you not know where your uniform is or your books?” Like single mothers everywhere --
"Could you just find...where is your...ugh." Dana Pryor’s morning ritual can be a bit of a struggle. "Come on and get in the car."
Yet, despite the seeming chaos --
"Everybody in!"
Pryor has managed to do everything right for years. "Come on, come one, come on. Where's your brother?" She went to college.
"I'm about to leave this kid and let him walk to school." Got a master’s degree.
"Ok, we're ready to go."
And a very good job.
"I am a six-figure, degree-having mom who feels very much like I have failed miserably."
Because Pryor’s dream house --
"It was $180,000, six bedrooms, three bathrooms."
Became the money pit --
"Probably $35,000."
That swallowed her 401-K.
"I'm either going to feed my kids or I'm going to pay the person I owe,” Pryor says. “Oftentimes you're robbing Peter to pay Paul and Peter has to wait until later."
Peter being her $1,300 mortgage payment, which escalated to more than $28,000 even after she paid back a few missing installments. Now her home will be sold on the courthouse steps because, despite making more than $100,000 a year, Pryor’s gone into foreclosure.
"The tsunami is coming,” says Allen Fishbein of the Center for Responsible Lending. “It has already engulfed some but unfortunately it appears its going to engulf many more."
The Center for Responsible Lending predicts as many as 22% of Maryland’s subprime loans will go into foreclosure next year.
Maryland has the fastest foreclosure process in the nation. If you miss a payment, your lender can sell your home in just 15 days.
"Maryland's 'Rocket Docket' of going into foreclosure sale in 15 days doesn't have to be,” says Phillip Robinson for the legal-aid group Civil Justice Network. “Most states have a much slower process."
To make matters worse, Robinson says the banks don’t even have to tell you they’re selling your house. "It’s the only legal proceeding in Maryland that doesn't require notice, which to me is mind-boggling,” he says. “If you want to sue me for $20 in District Court, the judge can't sign the order until you can prove through an affidavit that I got served. But if you want to sue me and take away my home and foreclose on my home, you don't have to prove to the judge that I got notice of the lawsuit."
"This is everyone's problem and we need to get them to get outraged," says Congressman Elijah Cummings (D-MD). He says he’s going to fix the problem, but needs you to write him a letter complaining about Maryland mortgage meltdown first. "I need people to be fiery about it.”
But foreclosure is embarrassing for many people.
"Pride is the biggest stumbling block," says Pryor. "The biggest mistake I made, the one everyone makes, is putting your head in the sand. It’s very hard to admit you need help with your mortgage."
Pryor says she hasn’t told anyone she’s about to move out and only agreed to go on camera because she doesn’t want what happened to her to ever happen to you.
"You can't buy a home in 15 days, but you amazingly enough you can lose one in 15 days.” (abc2news.com)
Friday, May 18, 2007
A better balance
If you are a tenant down on your luck and unable to pay your rent, Baltimore is not a great place to be. You may or may not receive notice that you are about to be evicted, and the landlord can toss all your belongings onto the street. City Council member Kenneth N. Harris Sr. and Mayor Sheila Dixon have done a service by bringing landlords and tenants together and pushing legislation - introduced in the City Council yesterday - that strikes a better balance.
The changes are welcome and long overdue.
About 50 percent of Baltimore families were renters in 2006, and many use so much of their monthly income to keep a roof over their heads that any crisis or emergency leaves them behind in rent payments. The result: about 7,000 evictions a year, with no formal requirement for notice to the tenant of when the eviction will take place.
Sometimes a tenant leaves things in the dwelling while trying desperately to scrounge up back rent money, and sometimes the tenant intentionally abandons unwanted items. In either case, the landlord may be left to dispose of the items. And while many landlords are responsible enough to take them to a storage facility or to the dump, many others simply junk them on city streets.
For a tenant who is trying to comply, it's a slap in the face and an affront to basic dignity. The 2,900 tons of furniture, clothing and other belongings tossed outside are also major eyesores that blight many neighborhoods. In addition, it costs the city's Department of Public Works more than $800,000 a year for proper pick-up and disposal - money that could be used more productively to achieve Mayor Dixon's goal of a "cleaner, greener" city. Those are among the reasons the mayor's office worked with Mr. Harris to come up with the new bill.
The bill would give tenants more formal notice of when the eviction would take effect and would prohibit landlords from dumping the evicted tenants' possessions on city streets. Tenants would also have three days in which to reclaim their belongings.
Many other major cities provide storage for seven to 60 days; Baltimore would better serve all its residents by following those examples.
In a city where the median income for renters is less than $25,000 and a two-bedroom unit typically rents for more than $1,000 a month, the larger solution is more affordable housing. But offering a little more protection for tenants' belongings while keeping city streets cleaner is at least one step in the right direction.(baltimoresun.com)
The changes are welcome and long overdue.
About 50 percent of Baltimore families were renters in 2006, and many use so much of their monthly income to keep a roof over their heads that any crisis or emergency leaves them behind in rent payments. The result: about 7,000 evictions a year, with no formal requirement for notice to the tenant of when the eviction will take place.
Sometimes a tenant leaves things in the dwelling while trying desperately to scrounge up back rent money, and sometimes the tenant intentionally abandons unwanted items. In either case, the landlord may be left to dispose of the items. And while many landlords are responsible enough to take them to a storage facility or to the dump, many others simply junk them on city streets.
For a tenant who is trying to comply, it's a slap in the face and an affront to basic dignity. The 2,900 tons of furniture, clothing and other belongings tossed outside are also major eyesores that blight many neighborhoods. In addition, it costs the city's Department of Public Works more than $800,000 a year for proper pick-up and disposal - money that could be used more productively to achieve Mayor Dixon's goal of a "cleaner, greener" city. Those are among the reasons the mayor's office worked with Mr. Harris to come up with the new bill.
The bill would give tenants more formal notice of when the eviction would take effect and would prohibit landlords from dumping the evicted tenants' possessions on city streets. Tenants would also have three days in which to reclaim their belongings.
Many other major cities provide storage for seven to 60 days; Baltimore would better serve all its residents by following those examples.
In a city where the median income for renters is less than $25,000 and a two-bedroom unit typically rents for more than $1,000 a month, the larger solution is more affordable housing. But offering a little more protection for tenants' belongings while keeping city streets cleaner is at least one step in the right direction.(baltimoresun.com)
All Bets Are Off for Housing Sector Recovery
Housing Slide Continues in April as Inventory Remains High and Demand Soft
The U.S. housing market continues to search for a bottom. The latest housing figures for April show prices, sales, building permits, housing completions and industry confidence all continuing to deteriorate. The continued weakening also has analysts and economists adjusting their forecasts for the rest of the year downward - again.
The national median existing single-family home price fell to $212,300 in the first quarter, down 1.8% from a year ago when the median price was $216,100, according to the National Association of Realtors.
Total existing-home sales were down 6.6% in the first quarter compared to a year ago.
Privately-owned housing units authorized by building permits in April were down 8.9% from March and 28.1% from a year ago.
Privately-owned housing completions in April were down 5.8% from March and 26% a year ago.
While the NAR points out that 82 of 145 metros showed price increases from a year ago, the organization also notes that the largest single-family home price increase were in out of the way areas or severely depressed markets. For example in the Cumberland area of Maryland and West Virginia, the median price of $100,000 was 17.1% higher than a year earlier. Next was Beaumont-Port Arthur, TX, at $115,800, up 16.5% from the first quarter of 2006, followed by the Gulfport-Biloxi area of Mississippi, where the first quarter median price increased 15.7% to $153,700.
More typical of the major housing markets is what has been occurring in Florida.
Statewide, sales of single-family existing homes totaled 33,748 during the three-month period, a decrease of 26% compared to the same time a year earlier, according to the Florida Association of Realtors.
The statewide existing-home median sales price was $237,000 in the first quarter; a year ago, it was $243,500 for a decrease of 3%.
"The bottom line for housing is that it has had a significant depressing effect on real GDP growth over the past six months or so," said Janet L. Yellen, president and CEO of the Federal Reserve Bank of San Francisco. "While I wouldn't be surprised to see it begin to turn around in the latter half of this year, I also wouldn't want to bet on it. In other words, housing remains a significant drag on the economy."
Residential investment contracted at a 17% annual rate in the first quarter, knocking off about 1 percentage point from annualized real GDP growth, according to the San Francisco Fed. In the fourth quarter of last year, residential construction fell at a rate of more than 19%, trimming overall growth by about 1.25 percentage points.
There is still the risk that residential investment will slip further given the sizeable overhang of inventories of unsold new single-family homes, the rise in the homeowner vacancy rate, the still weak demand for single-family houses, and the tightening of credit conditions for home mortgage borrowers, the San Francisco Fed said.
As a consequence this week, the National Association of Realtors revised its housing forecast for the year, saying it expected it to be "somewhat lower," due in part to stricter lending standards and the evaporation of subprime mortgage origination.
Existing-home sales are now projected to total 6.29 million this year and 6.49 million in 2008, compared with 6.48 million last year. New-home sales are projected at 864,000 in 2007 and 936,000 next year, lower than the 1.05 million in 2006. Housing starts should total 1.46 million units this year and 1.52 million in 2008, down from 1.8 million last year.
The 30-year fixed-rate mortgage should rise slowly to 6.5% by the fourth quarter. Last week, Freddie Mac reported the 30-year rate was 6.16%.
Ongoing concerns about subprime-related problems in the mortgage market have also caused builder confidence about the state of housing demand to erode, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The index is at its lowest level in its current cycle, which was previously hit in September of 2006.
"Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead," said Brian Catalde, NAHB president and a homebuilder from El Segundo, CA.
"The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated," added David Seiders, NAHB chief economist. "We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market."
More telling perhaps are the adjustments homebuilders are making to their original forecasts.
"Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets, said Robert I. Toll, chairman and CEO of Toll Brothers Inc. "Although there is variation among markets, our traffic this quarter on average has been flat on a gross basis and down approximately 20% on a per community, same-store basis, compared to last year's second quarter."
"Given the current state of the market, we no longer expect to achieve the most recent guidance we provided when we announced first quarter earnings," Toll added.
Going into the year, Toll Brothers estimated it would take about $60 million in impairment charges this year. It will blow way through that before midyear.
"While we have not yet finalized our analysis, we estimate that write-downs pretax in the second quarter will be between $90 million and $130 million, nearly all of which are impairments on communities we already own," Toll said. (costar.com)
The U.S. housing market continues to search for a bottom. The latest housing figures for April show prices, sales, building permits, housing completions and industry confidence all continuing to deteriorate. The continued weakening also has analysts and economists adjusting their forecasts for the rest of the year downward - again.
The national median existing single-family home price fell to $212,300 in the first quarter, down 1.8% from a year ago when the median price was $216,100, according to the National Association of Realtors.
Total existing-home sales were down 6.6% in the first quarter compared to a year ago.
Privately-owned housing units authorized by building permits in April were down 8.9% from March and 28.1% from a year ago.
Privately-owned housing completions in April were down 5.8% from March and 26% a year ago.
While the NAR points out that 82 of 145 metros showed price increases from a year ago, the organization also notes that the largest single-family home price increase were in out of the way areas or severely depressed markets. For example in the Cumberland area of Maryland and West Virginia, the median price of $100,000 was 17.1% higher than a year earlier. Next was Beaumont-Port Arthur, TX, at $115,800, up 16.5% from the first quarter of 2006, followed by the Gulfport-Biloxi area of Mississippi, where the first quarter median price increased 15.7% to $153,700.
More typical of the major housing markets is what has been occurring in Florida.
Statewide, sales of single-family existing homes totaled 33,748 during the three-month period, a decrease of 26% compared to the same time a year earlier, according to the Florida Association of Realtors.
The statewide existing-home median sales price was $237,000 in the first quarter; a year ago, it was $243,500 for a decrease of 3%.
"The bottom line for housing is that it has had a significant depressing effect on real GDP growth over the past six months or so," said Janet L. Yellen, president and CEO of the Federal Reserve Bank of San Francisco. "While I wouldn't be surprised to see it begin to turn around in the latter half of this year, I also wouldn't want to bet on it. In other words, housing remains a significant drag on the economy."
Residential investment contracted at a 17% annual rate in the first quarter, knocking off about 1 percentage point from annualized real GDP growth, according to the San Francisco Fed. In the fourth quarter of last year, residential construction fell at a rate of more than 19%, trimming overall growth by about 1.25 percentage points.
There is still the risk that residential investment will slip further given the sizeable overhang of inventories of unsold new single-family homes, the rise in the homeowner vacancy rate, the still weak demand for single-family houses, and the tightening of credit conditions for home mortgage borrowers, the San Francisco Fed said.
As a consequence this week, the National Association of Realtors revised its housing forecast for the year, saying it expected it to be "somewhat lower," due in part to stricter lending standards and the evaporation of subprime mortgage origination.
Existing-home sales are now projected to total 6.29 million this year and 6.49 million in 2008, compared with 6.48 million last year. New-home sales are projected at 864,000 in 2007 and 936,000 next year, lower than the 1.05 million in 2006. Housing starts should total 1.46 million units this year and 1.52 million in 2008, down from 1.8 million last year.
The 30-year fixed-rate mortgage should rise slowly to 6.5% by the fourth quarter. Last week, Freddie Mac reported the 30-year rate was 6.16%.
Ongoing concerns about subprime-related problems in the mortgage market have also caused builder confidence about the state of housing demand to erode, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The index is at its lowest level in its current cycle, which was previously hit in September of 2006.
"Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead," said Brian Catalde, NAHB president and a homebuilder from El Segundo, CA.
"The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated," added David Seiders, NAHB chief economist. "We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market."
More telling perhaps are the adjustments homebuilders are making to their original forecasts.
"Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets, said Robert I. Toll, chairman and CEO of Toll Brothers Inc. "Although there is variation among markets, our traffic this quarter on average has been flat on a gross basis and down approximately 20% on a per community, same-store basis, compared to last year's second quarter."
"Given the current state of the market, we no longer expect to achieve the most recent guidance we provided when we announced first quarter earnings," Toll added.
Going into the year, Toll Brothers estimated it would take about $60 million in impairment charges this year. It will blow way through that before midyear.
"While we have not yet finalized our analysis, we estimate that write-downs pretax in the second quarter will be between $90 million and $130 million, nearly all of which are impairments on communities we already own," Toll said. (costar.com)
Thursday, May 17, 2007
Subprime bailouts: How they work
There's some state-sponsored help on the way for subprime borrowers.
"They got themselves into this mess and I don't want my tax dollars used to get them out of it." That's the attitude of many when it comes to bailing out subprime borrowers from bad loans.
Still, many programs to help those facing foreclosure are being launched, with the aim of moving borrowers out of high-interest, variable-rate loans and into lower-rate, fixed ones.
Say you're a homeowner with a 2/28 hybrid ARM due to reset next month from the initial two-year 5.25 percent "teaser rate" to 8.25 percent. It will reset again every six months up to as much as 12 percent.
The difference in monthly payments between the initial rate on your $200,000 mortgage and the first reset is nearly $400 ($1,502 versus $1,104). That's bad enough but after another year or two, your mortgage payment could come to $2,057. You can't afford it.
You can go to one of the approved lenders on the Web site of Maryland's Department of Housing and Community Development and ask to refinance into a fixed rate loan with a permanent low rate. Your payments will not only be lower than the reset rates, they will stay the same the entire length of the loan.
Without Lifeline, many borrowers would not have been able to secure a new loan, at least not with attractive terms. In many cases their credit scores would not qualify them for the rates the state-backed program offers.
In addition, their old lenders may have insisted on enforcing the onerous terms of their original agreements, such as prepayment penalties. The state has more leverage with lenders to compel them to co-operate with the program.
After the approved private lender puts together the new loan, it bundles it with others and sells them to the agency, which uses cash from a bond issue to buy the bundled loans.
The goal is that state coffers would not be used - the state hopes to pay off those bonds with the interest it collects from borrowers. But if too many borrowers default on their loans, it could be hard for the state to break even on the program.
Even if there aren't a lot of defaults, raising money to fund the program isn't free because it diverts resources from other projects, such as construction of bridges or highways. "There's always an opportunity cost for the taxpayer," said Joseph Gyourko, an economics professor with the Samuel Zell and Robert H. Lurie Real Estate Center at The Wharton School.
Not every Maryland borrower is eligible for the program. You can't have household income of more than $126,420 and you can't borrow more than $525,000. These limits vary from county to county, with high-cost areas near Washington, D.C. having the highest maximums.
The loans have interest rates of 6.25 percent for a 40-year fixed and 6.5 percent for a 30-year. There are also interest-only loans available that carry a rate of 6.5 percent. Borrowers pay 2 points at closing for any of these products, which may be folded into the loan.
Maryland also requires that the home be a primary residence and that the loan not exceed 85 percent of the value of the property.
So far, just a handful of borrowers have signed up for the program, fewer than 10 but many more are expected as numerous hybrid ARMs taken out in 2005 and 2006 start to hit their first resets.
To avoid future crises, Maryland is also trying to discourage irresponsible or unscrupulous lending, according to Thomas Perez, secretary for the Maryland Department of Labor, Licensing and Regulation.
"I want to track loan originators who have disproportionate numbers of loans that go into foreclosure," said Perez. Too many dings on a mortgage broker's record, for example, could bring suspension or revocation of the broker's license.
Price forecasts for 100 biggest markets
Ohio, which is suffering from a great many job layoffs as manufacturing plants shut down, has a similar program it calls Opportunity Loan.
Mark Wiseman, who runs a foreclosure prevention program for Cuyahoga County (which includes Cleveland), said the state had the highest foreclosure rate in the nation by the end of 2006. There are 1,200 foreclosures a month in his area and forecasts are for 75,000 statewide this year.
On April 2, Ohio announced it would sell $100 million worth of bonds, which could go to $500 million eventually, to fund Opportunity Loan. Rita Parisi, of the Ohio Housing Finance Agency, emphasizes that no taxpayer money is involved in the bailout. "We're selling taxable bonds to make new mortgage loans to homeowners," she says.
As in Maryland's Lifeline program, the bonds are paid off using interest paid by the borrowers.
The subprime mess will be no easy fix
Parisi says her agency works with Fannie Mae to obtain underwriting waivers, approvals for homeowners who are unable to refinance under traditional products, but who qualify for the Opportunity Loans.
Homeowners can go to the agency's Web site for a roster of approved lenders and start the process.
Other states, including Rhode Island, Massachusetts and Virginia, have started or are planning similar programs, according to the National Council of State Housing Agencies. More states are mulling over these and other options, such as interest rate buy down plans and rescue funds.
Nationally, relief for troubled subprime borrowers is coming from Freddie Mac. It has earmarked $20 billion to buy refinanced loans targeting holders of exotic mortgages.
But it will not bailout every borrower. Borrowers must meet tightened credit standards and must be judged to be able to afford the new loan at its highest reset rate. Freddie Mac will limit use of low documented loans, so-called "liar loans," in which borrowers do not have to prove assets or income.
Lenders also must take into account (as they also must do in the state bailout programs) property taxes and insurance in judging the qualifications of an applicant and the agency recommends that taxes be collected in an escrow account.
The program is due to launch mid-summer. Information will come available on the Freddie Mac's Website. (CNNMoney.com)
"They got themselves into this mess and I don't want my tax dollars used to get them out of it." That's the attitude of many when it comes to bailing out subprime borrowers from bad loans.
Still, many programs to help those facing foreclosure are being launched, with the aim of moving borrowers out of high-interest, variable-rate loans and into lower-rate, fixed ones.
Say you're a homeowner with a 2/28 hybrid ARM due to reset next month from the initial two-year 5.25 percent "teaser rate" to 8.25 percent. It will reset again every six months up to as much as 12 percent.
The difference in monthly payments between the initial rate on your $200,000 mortgage and the first reset is nearly $400 ($1,502 versus $1,104). That's bad enough but after another year or two, your mortgage payment could come to $2,057. You can't afford it.
You can go to one of the approved lenders on the Web site of Maryland's Department of Housing and Community Development and ask to refinance into a fixed rate loan with a permanent low rate. Your payments will not only be lower than the reset rates, they will stay the same the entire length of the loan.
Without Lifeline, many borrowers would not have been able to secure a new loan, at least not with attractive terms. In many cases their credit scores would not qualify them for the rates the state-backed program offers.
In addition, their old lenders may have insisted on enforcing the onerous terms of their original agreements, such as prepayment penalties. The state has more leverage with lenders to compel them to co-operate with the program.
After the approved private lender puts together the new loan, it bundles it with others and sells them to the agency, which uses cash from a bond issue to buy the bundled loans.
The goal is that state coffers would not be used - the state hopes to pay off those bonds with the interest it collects from borrowers. But if too many borrowers default on their loans, it could be hard for the state to break even on the program.
Even if there aren't a lot of defaults, raising money to fund the program isn't free because it diverts resources from other projects, such as construction of bridges or highways. "There's always an opportunity cost for the taxpayer," said Joseph Gyourko, an economics professor with the Samuel Zell and Robert H. Lurie Real Estate Center at The Wharton School.
Not every Maryland borrower is eligible for the program. You can't have household income of more than $126,420 and you can't borrow more than $525,000. These limits vary from county to county, with high-cost areas near Washington, D.C. having the highest maximums.
The loans have interest rates of 6.25 percent for a 40-year fixed and 6.5 percent for a 30-year. There are also interest-only loans available that carry a rate of 6.5 percent. Borrowers pay 2 points at closing for any of these products, which may be folded into the loan.
Maryland also requires that the home be a primary residence and that the loan not exceed 85 percent of the value of the property.
So far, just a handful of borrowers have signed up for the program, fewer than 10 but many more are expected as numerous hybrid ARMs taken out in 2005 and 2006 start to hit their first resets.
To avoid future crises, Maryland is also trying to discourage irresponsible or unscrupulous lending, according to Thomas Perez, secretary for the Maryland Department of Labor, Licensing and Regulation.
"I want to track loan originators who have disproportionate numbers of loans that go into foreclosure," said Perez. Too many dings on a mortgage broker's record, for example, could bring suspension or revocation of the broker's license.
Price forecasts for 100 biggest markets
Ohio, which is suffering from a great many job layoffs as manufacturing plants shut down, has a similar program it calls Opportunity Loan.
Mark Wiseman, who runs a foreclosure prevention program for Cuyahoga County (which includes Cleveland), said the state had the highest foreclosure rate in the nation by the end of 2006. There are 1,200 foreclosures a month in his area and forecasts are for 75,000 statewide this year.
On April 2, Ohio announced it would sell $100 million worth of bonds, which could go to $500 million eventually, to fund Opportunity Loan. Rita Parisi, of the Ohio Housing Finance Agency, emphasizes that no taxpayer money is involved in the bailout. "We're selling taxable bonds to make new mortgage loans to homeowners," she says.
As in Maryland's Lifeline program, the bonds are paid off using interest paid by the borrowers.
The subprime mess will be no easy fix
Parisi says her agency works with Fannie Mae to obtain underwriting waivers, approvals for homeowners who are unable to refinance under traditional products, but who qualify for the Opportunity Loans.
Homeowners can go to the agency's Web site for a roster of approved lenders and start the process.
Other states, including Rhode Island, Massachusetts and Virginia, have started or are planning similar programs, according to the National Council of State Housing Agencies. More states are mulling over these and other options, such as interest rate buy down plans and rescue funds.
Nationally, relief for troubled subprime borrowers is coming from Freddie Mac. It has earmarked $20 billion to buy refinanced loans targeting holders of exotic mortgages.
But it will not bailout every borrower. Borrowers must meet tightened credit standards and must be judged to be able to afford the new loan at its highest reset rate. Freddie Mac will limit use of low documented loans, so-called "liar loans," in which borrowers do not have to prove assets or income.
Lenders also must take into account (as they also must do in the state bailout programs) property taxes and insurance in judging the qualifications of an applicant and the agency recommends that taxes be collected in an escrow account.
The program is due to launch mid-summer. Information will come available on the Freddie Mac's Website. (CNNMoney.com)
The Color Of Credit
Just a few years ago, there were only two ways to get a home loan: a fixed rate or a basic adjustable rate mortgage. Now consumer groups estimate there are more than 200 different types of loans out there and ABC2 News Investigator Tisha Thompson discovered too many people in Maryland may end up with high-risk loans not because of how much money they make, but because of what they look like.
For Chenea Carter, foreclosure was something she never thought would happen to her. “Utter panic,” she says went through her when she received her foreclosure notice. “Utter, utter panic.”
It started when Carter refinanced the mortgage on the home her family had owned for 50 years. “The furnace went up,” she says. “The heater went up, things that just required attention and money.”
But, a few years into her new loan, the interest rate on her mortgage exploded. “I didn’t know that after the first three years it would happen like that,” Carter says. She didn’t know it when she signed her paperwork, but Carter’s broker signed her up for what’s called a “subprime loan.” It’s a loan that’s more than 3% higher than the typical loan. It’s supposed to help people with a low credit score to buy a house. The problem is we’ve found that too many people in Maryland got a subprime loan not because of how much money they make, but because of what they look like.
Our ABC2 News investigation found that one out of six Maryland homes used a subprime loan in the last few years. "A lot of them qualify for conventional loans,” Congressman Elijah Cummings (D-MD) says. “That's the part that eats away at my heart."
Phillip Robinson of Civil Justice Network says brokers push people into these loans because that’s how they make their money.
“Subprime loans are not necessarily predatory loans,” he says. “What makes it predatory are the extra fees that are charged.” He explains that the bigger the loan, the bigger the commission. So, to get people qualified, Robinson says some brokers combine subprime loans with high-risk options like 100% financing, an adjustable rate, paying only the interest or paying just a minimum payment similar to a credit card, and all of the debt that comes with it.
"Few of these borrowers can afford to make monthly payments that in year three skyrocket 30 to 50 percent higher than the first two years," says Allen Fishbein, Director of Housing and Credit Policy at the Consumer Federation of America.
Some consumer groups say some brokers decide if they’re going to push you into a subprime loan based on what you look like.
When we went through the more than 1.7 million loans made in Maryland in 2004 and 2005, the ABC2 News Investigators found minorities ended up with a subprime loan two to three times more often than their white non-Hispanic neighbors, even if they made the same amount of money. The hardest hit? The elderly, Latinos and African-Americans, including those who had a family income of more than $100,000.
"I find it offensive that 'oh, upper income African-Americans must have credit problems,’” says Secretary Thomas Perez, the head of the Maryland Department of Labor, Licensing and Regulation. “That's an offensive notion to me."
Perez is in charge of regulating Maryland’s mortgage industry. “One of the things we can't currently do that I would like to see changed,” he says, “is to be able to develop the capacity to identify mortgage brokers who have a disproportionate number of loans that go into foreclosure.”
"I said you couldn't have bought my home!"
Carter says she barely managed to pay off her ballooning mortgage, but her mortgage company still sold her house at a foreclosure auction anyway. She sued the company in court.
"The judge said, I rule in your favor, the foreclosure is cancelled, the selling of the home is canceled,” Carter says. “I won."
(abc2 news.com)
For Chenea Carter, foreclosure was something she never thought would happen to her. “Utter panic,” she says went through her when she received her foreclosure notice. “Utter, utter panic.”
It started when Carter refinanced the mortgage on the home her family had owned for 50 years. “The furnace went up,” she says. “The heater went up, things that just required attention and money.”
But, a few years into her new loan, the interest rate on her mortgage exploded. “I didn’t know that after the first three years it would happen like that,” Carter says. She didn’t know it when she signed her paperwork, but Carter’s broker signed her up for what’s called a “subprime loan.” It’s a loan that’s more than 3% higher than the typical loan. It’s supposed to help people with a low credit score to buy a house. The problem is we’ve found that too many people in Maryland got a subprime loan not because of how much money they make, but because of what they look like.
Our ABC2 News investigation found that one out of six Maryland homes used a subprime loan in the last few years. "A lot of them qualify for conventional loans,” Congressman Elijah Cummings (D-MD) says. “That's the part that eats away at my heart."
Phillip Robinson of Civil Justice Network says brokers push people into these loans because that’s how they make their money.
“Subprime loans are not necessarily predatory loans,” he says. “What makes it predatory are the extra fees that are charged.” He explains that the bigger the loan, the bigger the commission. So, to get people qualified, Robinson says some brokers combine subprime loans with high-risk options like 100% financing, an adjustable rate, paying only the interest or paying just a minimum payment similar to a credit card, and all of the debt that comes with it.
"Few of these borrowers can afford to make monthly payments that in year three skyrocket 30 to 50 percent higher than the first two years," says Allen Fishbein, Director of Housing and Credit Policy at the Consumer Federation of America.
Some consumer groups say some brokers decide if they’re going to push you into a subprime loan based on what you look like.
When we went through the more than 1.7 million loans made in Maryland in 2004 and 2005, the ABC2 News Investigators found minorities ended up with a subprime loan two to three times more often than their white non-Hispanic neighbors, even if they made the same amount of money. The hardest hit? The elderly, Latinos and African-Americans, including those who had a family income of more than $100,000.
"I find it offensive that 'oh, upper income African-Americans must have credit problems,’” says Secretary Thomas Perez, the head of the Maryland Department of Labor, Licensing and Regulation. “That's an offensive notion to me."
Perez is in charge of regulating Maryland’s mortgage industry. “One of the things we can't currently do that I would like to see changed,” he says, “is to be able to develop the capacity to identify mortgage brokers who have a disproportionate number of loans that go into foreclosure.”
"I said you couldn't have bought my home!"
Carter says she barely managed to pay off her ballooning mortgage, but her mortgage company still sold her house at a foreclosure auction anyway. She sued the company in court.
"The judge said, I rule in your favor, the foreclosure is cancelled, the selling of the home is canceled,” Carter says. “I won."
(abc2 news.com)
HUD to seek ban on mortgage 'aid'
WASHINGTON // The Department of Housing and Urban Development plans to seek a ban on a certain type of down payment assistance that has grown sevenfold this decade and contributed to a surge in foreclosures of government-backed mortgages.
Nonprofit groups, such as Nehemiah Corp. of America and AmeriDream Inc. of Gaithersburg, Md., provide the down payment help and are then reimbursed by the seller. The programs are "a contributing factor of increased risk in our portfolio" of loans, HUD spokesman Lemar Wooley said in an e-mail.
HUD plans to propose the ban this month for public comment, possibly as early as this week, Wooley said. More than 100,000 low- and moderate-income consumers bought homes using such programs last year.
The percentage of foreclosures on these homes is more than double that on other loans sponsored by the Federal Housing Administration, according to agency audits.
Once HUD issues its rule proposal, industry and consumer groups will have 60 days to submit comments.
In 1999, HUD proposed a similar ban and withdrew it in 2001 after industry opposition.
Foreclosures rose last year in the Baltimore metropolitan area - particularly the suburbs - as problematic loans and a housing market slowdown buffeted new owners with little equity.
But FHA loans weren't part of the problem. HUD records show a significant drop in FHA foreclosures, the result of aggressive efforts to stem the fallout from illegal flipping in the late 1990s.
Vincent P. Quayle, executive director of the St. Ambrose Housing Aid Center, a Baltimore nonprofit that does not offer seller-financed assistance, believes fewer local homebuyers have turned to such programs in the past few years because they can obtain assistance through the city and the state.
But he's still pleased to hear HUD is trying for a ban on seller-financed help. He said buyers paid for that help, literally: "The seller would just raise the price."
Under the program, groups including Sacramento, Calif., Nehemiah and AmeriDream give buyers an average of about $3,400 for a down payment.
They are then reimbursed by sellers of the house, who also pay a service fee. The arrangement was designed to circumvent U.S. rules that bar sellers from giving direct assistance.
Sellers have tried to recover the cost of the fee they pay nonprofits by raising the price of the house an average of 3 percent, a 2005 study by Congress' nonpartisan Government Accountability Office found.
The number of FHA-backed homes purchased with nonprofit assistance has risen to 102,921 in 2006 from 14,603 in 2000, HUD data show. While these payments accounted for just 2 percent of all FHA loans in 2000, they soared to 33 percent of the loans last year.
The Internal Revenue Service held last year that groups providing down payment assistance did not quality for tax exemptions and said it was examining the practices of 185 nonprofits. AmeriDream and Nehemiah said they are in talks with the IRS.
(Bloomberg News, baltimoresun.com)
Nonprofit groups, such as Nehemiah Corp. of America and AmeriDream Inc. of Gaithersburg, Md., provide the down payment help and are then reimbursed by the seller. The programs are "a contributing factor of increased risk in our portfolio" of loans, HUD spokesman Lemar Wooley said in an e-mail.
HUD plans to propose the ban this month for public comment, possibly as early as this week, Wooley said. More than 100,000 low- and moderate-income consumers bought homes using such programs last year.
The percentage of foreclosures on these homes is more than double that on other loans sponsored by the Federal Housing Administration, according to agency audits.
Once HUD issues its rule proposal, industry and consumer groups will have 60 days to submit comments.
In 1999, HUD proposed a similar ban and withdrew it in 2001 after industry opposition.
Foreclosures rose last year in the Baltimore metropolitan area - particularly the suburbs - as problematic loans and a housing market slowdown buffeted new owners with little equity.
But FHA loans weren't part of the problem. HUD records show a significant drop in FHA foreclosures, the result of aggressive efforts to stem the fallout from illegal flipping in the late 1990s.
Vincent P. Quayle, executive director of the St. Ambrose Housing Aid Center, a Baltimore nonprofit that does not offer seller-financed assistance, believes fewer local homebuyers have turned to such programs in the past few years because they can obtain assistance through the city and the state.
But he's still pleased to hear HUD is trying for a ban on seller-financed help. He said buyers paid for that help, literally: "The seller would just raise the price."
Under the program, groups including Sacramento, Calif., Nehemiah and AmeriDream give buyers an average of about $3,400 for a down payment.
They are then reimbursed by sellers of the house, who also pay a service fee. The arrangement was designed to circumvent U.S. rules that bar sellers from giving direct assistance.
Sellers have tried to recover the cost of the fee they pay nonprofits by raising the price of the house an average of 3 percent, a 2005 study by Congress' nonpartisan Government Accountability Office found.
The number of FHA-backed homes purchased with nonprofit assistance has risen to 102,921 in 2006 from 14,603 in 2000, HUD data show. While these payments accounted for just 2 percent of all FHA loans in 2000, they soared to 33 percent of the loans last year.
The Internal Revenue Service held last year that groups providing down payment assistance did not quality for tax exemptions and said it was examining the practices of 185 nonprofits. AmeriDream and Nehemiah said they are in talks with the IRS.
(Bloomberg News, baltimoresun.com)
Wednesday, May 16, 2007
Baltimore City: Affordable housing at a premium
The Baltimore region lacks a supply of affordable housing, a local housing official said. BALTIMORE (Map, News) - Work force housing is a key to the future of Baltimore-area real estate. For the housing market to be successful, it must create a system to support people moving from low-income housing to moderate- and then high-income homes, Ilene Kessler, president of the Maryland Association of Realtors, told The Examiner.
Work force housing is at the core of that cycle, creating stable, affordable options for local hardworking residents, she said.
With an influx of middle-class and blue-collar workers coming to the area as a result of the Base Realignment and Closure initiative, finding and identifying housing to meet their needs will be key, Kessler said.
“This is something [everyone working together] has to address and can’t say another community will handle it,” Kessler said. “It affects all of us and is a pressing issue.”
People who read this also read:
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Housing Slump Continues in April
Richardson holds stock in oil refinery firm
In the Baltimore region, March statistics by Metropolitan Regional Information Systems have houses selling for an average of $306,588. Locally, Anne Arundel County, where Fort Meade is, has homes going for an average of $395,037, while nearby Baltimore City remains more affordable at $178,019. In Harford County, where the Aberdeen Proving Ground is, homes are selling for an average of $296,432.
“The region lacks an adequate supply of housing in decent condition that is available to a wide range of low- and moderate-income households,” said Tania Baker, acting director of communications for Baltimore Housing.
About 28,000 new households will soon move to the area, with about 24,000 of these being homebuyers, the Maryland BRAC study conducted by the Maryland Department of Business and Economic Development found.
With the Mortgage Bankers Association reporting that Maryland had a 12.39 percent increase in subprime loans for the last quarter, Kessler said it was important that people in the housing market work together to keep these potential buyers in their homes.
(examiner.com)
Work force housing is at the core of that cycle, creating stable, affordable options for local hardworking residents, she said.
With an influx of middle-class and blue-collar workers coming to the area as a result of the Base Realignment and Closure initiative, finding and identifying housing to meet their needs will be key, Kessler said.
“This is something [everyone working together] has to address and can’t say another community will handle it,” Kessler said. “It affects all of us and is a pressing issue.”
People who read this also read:
Kettler buys Pentagon City parcel for $220M
Potential neighbors to relocated clubs to get $3.6M in road improvements
Tanker driver in fiery crash was carrying ethanol
Housing Slump Continues in April
Richardson holds stock in oil refinery firm
In the Baltimore region, March statistics by Metropolitan Regional Information Systems have houses selling for an average of $306,588. Locally, Anne Arundel County, where Fort Meade is, has homes going for an average of $395,037, while nearby Baltimore City remains more affordable at $178,019. In Harford County, where the Aberdeen Proving Ground is, homes are selling for an average of $296,432.
“The region lacks an adequate supply of housing in decent condition that is available to a wide range of low- and moderate-income households,” said Tania Baker, acting director of communications for Baltimore Housing.
About 28,000 new households will soon move to the area, with about 24,000 of these being homebuyers, the Maryland BRAC study conducted by the Maryland Department of Business and Economic Development found.
With the Mortgage Bankers Association reporting that Maryland had a 12.39 percent increase in subprime loans for the last quarter, Kessler said it was important that people in the housing market work together to keep these potential buyers in their homes.
(examiner.com)
NovaStar accused of redlining Baltimore row houses
Subprime lender NovaStar Financial Inc. has been hit with a Fair Housing Act lawsuit charging that it refused to make mortgage loans for purchases of row houses in Baltimore.
The lawsuit, filed Wednesday by the National Community Reinvestment Coalition (NCRC), also alleges that NovaStar had a written policy instructing loan officers to reject mortgage applications involving property on American Indian reservations or homes used for adult foster care.
A NovaStar spokesman did not immediately return a call from Inman News, but reportedly called the claims without merit and said NovaStar will fight them.
In its complaint, NCRC said that on two occasions in 2006 it used a "tester" to call NovaStar about obtaining a loan on a row house in Baltimore.
In the first call in January 2006, "After the tester stated that the house was a row house, the agent stated that the company had stopped financing row houses a few months before the tester's call," the complaint alleged. "The agent asked where the house was located, and ... after looking up the address, the agent informed the tester that 'we don't do row houses in Baltimore.' "
A call the following month produced similar results, and the complaint alleges that "NovaStar has continued to enforce this policy up to the present time."
The policy is discriminatory because of the high concentration of African Americans and Latinos in Baltimore, the suit alleges.
"A loan applicant in Baltimore with a row house, despite having substantial assets, a strong FICO score, a low LTV (loan-to-value) and or/DTI (debt-to-income) ratio, and steady income, would not qualify for a loan of any size," NCRC alleged.
The suit said NCRC filed a complaint with the U.S. Department of Housing and Urban Development on March 16, 2006, alleging that NovaStar's no-row-house policy violated the Fair Housing Act, which HUD has not acted on.
NCRC -- a coalition of 640 nonprofit organizations that promotes the investment of private capital in underserved communities -- was awarded $500,000 in September after filing a similar complaint with HUD about the lending practices of SouthStar Funding LLC. HUD negotiated a settlement in which SouthStar agreed to fund NCRC programs over a four-year period, including training seminars for housing counselors.
As part of its lawsuit against NovaStar, NCRC cited as evidence a manual issued to company employees that listed "unacceptable property types" for loans, including "properties located on Indian reservations" and "properties used for adult foster care."
NCRC said the alleged "no Indian reservation policy" has "the purpose and effect of limiting access to capital for Native Americans," noting that Native Americans make up more than half the population of reservations nationwide. The alleged policy against financing properties used for adult foster care "excludes homes typically licensed for people with disabilities" resulting in an "adverse impact on loan applicants associated with, or living with, persons with disabilities."
The lawsuit seeks an injunction against NovaStar forcing it to halt its alleged discriminatory practices, and also seeks compensatory and punitive damages
The lawsuit, filed Wednesday by the National Community Reinvestment Coalition (NCRC), also alleges that NovaStar had a written policy instructing loan officers to reject mortgage applications involving property on American Indian reservations or homes used for adult foster care.
A NovaStar spokesman did not immediately return a call from Inman News, but reportedly called the claims without merit and said NovaStar will fight them.
In its complaint, NCRC said that on two occasions in 2006 it used a "tester" to call NovaStar about obtaining a loan on a row house in Baltimore.
In the first call in January 2006, "After the tester stated that the house was a row house, the agent stated that the company had stopped financing row houses a few months before the tester's call," the complaint alleged. "The agent asked where the house was located, and ... after looking up the address, the agent informed the tester that 'we don't do row houses in Baltimore.' "
A call the following month produced similar results, and the complaint alleges that "NovaStar has continued to enforce this policy up to the present time."
The policy is discriminatory because of the high concentration of African Americans and Latinos in Baltimore, the suit alleges.
"A loan applicant in Baltimore with a row house, despite having substantial assets, a strong FICO score, a low LTV (loan-to-value) and or/DTI (debt-to-income) ratio, and steady income, would not qualify for a loan of any size," NCRC alleged.
The suit said NCRC filed a complaint with the U.S. Department of Housing and Urban Development on March 16, 2006, alleging that NovaStar's no-row-house policy violated the Fair Housing Act, which HUD has not acted on.
NCRC -- a coalition of 640 nonprofit organizations that promotes the investment of private capital in underserved communities -- was awarded $500,000 in September after filing a similar complaint with HUD about the lending practices of SouthStar Funding LLC. HUD negotiated a settlement in which SouthStar agreed to fund NCRC programs over a four-year period, including training seminars for housing counselors.
As part of its lawsuit against NovaStar, NCRC cited as evidence a manual issued to company employees that listed "unacceptable property types" for loans, including "properties located on Indian reservations" and "properties used for adult foster care."
NCRC said the alleged "no Indian reservation policy" has "the purpose and effect of limiting access to capital for Native Americans," noting that Native Americans make up more than half the population of reservations nationwide. The alleged policy against financing properties used for adult foster care "excludes homes typically licensed for people with disabilities" resulting in an "adverse impact on loan applicants associated with, or living with, persons with disabilities."
The lawsuit seeks an injunction against NovaStar forcing it to halt its alleged discriminatory practices, and also seeks compensatory and punitive damages
Monday, May 14, 2007
Maryland: Forestalling foreclosures
For homeowners floundering under burdensomely high subprime mortgage payments, help is on the way - but it's unlikely to meet the demand or head off the 2.2 million more foreclosures expected in the coming two years.
Since Congress began looking into skyrocketing foreclosures tied to the subprime lending industry, federally chartered financiers Freddie Mac and Fannie Mae have pledged to provide loans with more reasonable terms, and at least two national banks, Citigroup Inc. and Bank of America Corp., have promised $1 billion in mortgage refinancing to help borrowers in trouble. But what look to be big bailout plans may not be enough to keep houses lost in foreclosures from blighting neighborhoods. States need to step up as well, and some are.
Advertisement
Maryland, with one of the lowest foreclosure rates in the country, was out in front of the problem last June when it established its Lifeline Refinance, a program that will provide $20 million in relief for borrowers falling behind on loans with adjustable rates and balloon payments. Trouble is, no one is taking advantage of it; fewer than a dozen people have applied, even though the program can serve 100. The state must get the word out and be ready to meet the need.
Ohio, which is leading the nation in home foreclosures, has put together a $100 million package to refinance loans. Massachusetts Gov. Deval Patrick was shamed into assisting homeowners who were facing foreclosure after they protested outside his office - Mr. Patrick once served as a director of one of the nation's biggest subprime lenders. He is talking about criminal prosecutions of predatory lenders and making certain misleading tactics a crime.
A faster way to forestall foreclosures is for homeowners at risk to call their lenders directly. A 2005 survey by Freddie Mac and Roper Public Affairs found then - before the subprime crisis hit - that 50 percent of homeowners in foreclosure never even bothered to contact their lender. Housing counseling groups also can intervene, but homeowners have to first make that call.
Until now, Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate banking committee, has used persuasion to get some lenders to voluntarily lower interest rates for homeowners in trouble. But others are ready to introduce legislation that would require changes in the industry to ensure that borrowers can repay their loans.
More rigorous standards should be the norm, and the mortgage industry needs to better police itself and act more responsibly - because as foreclosures rise, calls for tougher regulations are sure to follow.
(Baltimore sun)
Since Congress began looking into skyrocketing foreclosures tied to the subprime lending industry, federally chartered financiers Freddie Mac and Fannie Mae have pledged to provide loans with more reasonable terms, and at least two national banks, Citigroup Inc. and Bank of America Corp., have promised $1 billion in mortgage refinancing to help borrowers in trouble. But what look to be big bailout plans may not be enough to keep houses lost in foreclosures from blighting neighborhoods. States need to step up as well, and some are.
Advertisement
Maryland, with one of the lowest foreclosure rates in the country, was out in front of the problem last June when it established its Lifeline Refinance, a program that will provide $20 million in relief for borrowers falling behind on loans with adjustable rates and balloon payments. Trouble is, no one is taking advantage of it; fewer than a dozen people have applied, even though the program can serve 100. The state must get the word out and be ready to meet the need.
Ohio, which is leading the nation in home foreclosures, has put together a $100 million package to refinance loans. Massachusetts Gov. Deval Patrick was shamed into assisting homeowners who were facing foreclosure after they protested outside his office - Mr. Patrick once served as a director of one of the nation's biggest subprime lenders. He is talking about criminal prosecutions of predatory lenders and making certain misleading tactics a crime.
A faster way to forestall foreclosures is for homeowners at risk to call their lenders directly. A 2005 survey by Freddie Mac and Roper Public Affairs found then - before the subprime crisis hit - that 50 percent of homeowners in foreclosure never even bothered to contact their lender. Housing counseling groups also can intervene, but homeowners have to first make that call.
Until now, Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate banking committee, has used persuasion to get some lenders to voluntarily lower interest rates for homeowners in trouble. But others are ready to introduce legislation that would require changes in the industry to ensure that borrowers can repay their loans.
More rigorous standards should be the norm, and the mortgage industry needs to better police itself and act more responsibly - because as foreclosures rise, calls for tougher regulations are sure to follow.
(Baltimore sun)
Fall in Maryland home sales reflects trend across nation
Houses sitting longer on market.
The insider jargon is little consolation to apprehensive homeowners who are tired of seeing ‘‘For Sale” signs languish in their front yards.
Average time on the market for a Montgomery County home was 93 days in March, compared with just 50 days in March 2006. In Prince George’s County, time on the market increased from 40 to 76 days and in Frederick County from 65 to 110 days, according to data from Metropolitan Regional Information Systems Inc.
And the U.S. Commerce Department last week reported that new home sales in March declined by 23.5 percent from March 2006. The news mirrors a similar picture in existing home sales, also released this week by the National Association of Realtors. The group reported an 11.3 percent drop from last March.
Still, housing experts who worked through the 1980s housing slump remain optimistic.
‘‘The drop in existing home sales in Maryland in the first quarter this year from a year ago was a ‘correction’ to a more normal homebuying market,” said Ilene Kessler, president of the Maryland Association of Realtors.
‘‘In 2005 and 2006, there was a lot of interest in buying,” Kessler said. ‘‘It’s now a more balanced market. A lot of people have already bought.”
The market is finding equilibrium, said Frank Armantea, vice president for mortgage lending at Mid-Atlantic Federal Credit Union in Germantown.
‘‘You have to look at it as situational,” Armantea said. ‘‘There are some areas of [Montgomery County] that are quite robust. Some are drawing multiple contracts in the more moderate price ranges.”
Mortgage lender Glen Lazovick with Mid-Atlantic said there are pockets of the county with a shortage of inventory in the $500,000 range, particularly in ‘‘down county Potomac and Bethesda.”
The housing boom that ended last year was unprecedented, in that lending rates did not change much, Armantea said.
Another unusual sign was that traditional pricing trends, such as proximity to Washington, D.C., did not hold, he said. For example, in 2005 some 2,800- to 3,800-square-foot homes in Frederick were selling for the same prices as similar houses in lower Montgomery County, he said.
Last month’s slowdown in Maryland was strange, said Kenneth Wenhold, regional director of Metrostudy of Fairfax, Va., a nationwide housing market survey service.
Sales in January and February were ‘‘considerably stronger” than a year ago, he said. But the last two weeks in March were much slower than expected, possibly due to bad weather and Easter, he speculated.
By last week, though, the number of visitors to model homes and the number of signed contracts had picked up again to about 8 percent higher than the previous week, Wenhold said.
A March 31 survey by Metrostudy showed the inventory of available single-family detached homes and townhouses in Montgomery County was ‘‘very supply-constrained” at 700 units, compared with 1,026 in mid-2004, at the height of the boom. But the inventory had actually increased by more than 10 percent from Dec. 31. Meanwhile, inventory in Prince George’s and Frederick counties decreased considerably since December, Wenhold said.
Metrostudy is ‘‘really quite hopeful that the summer will increase sales as we burn through the remaining inventory and builders have more starts,” he said.
The resale market is down by 15 percent in Maryland and 18 percent in Virginia from the same time last year, according to Metrostudy.
This report originally appeared in The Business Gazette.
Falling Market
In Maryland, existing home sales in March fell 15.7 percent from a year ago, with the following decreases:
Montgomery County:16.4 percent
Frederick County:21.6 percent
Prince George’s County: 31.4 percent
Baltimore city: 8.5 percent
Source: U.S. Commerce Department
(gazette.net)
The insider jargon is little consolation to apprehensive homeowners who are tired of seeing ‘‘For Sale” signs languish in their front yards.
Average time on the market for a Montgomery County home was 93 days in March, compared with just 50 days in March 2006. In Prince George’s County, time on the market increased from 40 to 76 days and in Frederick County from 65 to 110 days, according to data from Metropolitan Regional Information Systems Inc.
And the U.S. Commerce Department last week reported that new home sales in March declined by 23.5 percent from March 2006. The news mirrors a similar picture in existing home sales, also released this week by the National Association of Realtors. The group reported an 11.3 percent drop from last March.
Still, housing experts who worked through the 1980s housing slump remain optimistic.
‘‘The drop in existing home sales in Maryland in the first quarter this year from a year ago was a ‘correction’ to a more normal homebuying market,” said Ilene Kessler, president of the Maryland Association of Realtors.
‘‘In 2005 and 2006, there was a lot of interest in buying,” Kessler said. ‘‘It’s now a more balanced market. A lot of people have already bought.”
The market is finding equilibrium, said Frank Armantea, vice president for mortgage lending at Mid-Atlantic Federal Credit Union in Germantown.
‘‘You have to look at it as situational,” Armantea said. ‘‘There are some areas of [Montgomery County] that are quite robust. Some are drawing multiple contracts in the more moderate price ranges.”
Mortgage lender Glen Lazovick with Mid-Atlantic said there are pockets of the county with a shortage of inventory in the $500,000 range, particularly in ‘‘down county Potomac and Bethesda.”
The housing boom that ended last year was unprecedented, in that lending rates did not change much, Armantea said.
Another unusual sign was that traditional pricing trends, such as proximity to Washington, D.C., did not hold, he said. For example, in 2005 some 2,800- to 3,800-square-foot homes in Frederick were selling for the same prices as similar houses in lower Montgomery County, he said.
Last month’s slowdown in Maryland was strange, said Kenneth Wenhold, regional director of Metrostudy of Fairfax, Va., a nationwide housing market survey service.
Sales in January and February were ‘‘considerably stronger” than a year ago, he said. But the last two weeks in March were much slower than expected, possibly due to bad weather and Easter, he speculated.
By last week, though, the number of visitors to model homes and the number of signed contracts had picked up again to about 8 percent higher than the previous week, Wenhold said.
A March 31 survey by Metrostudy showed the inventory of available single-family detached homes and townhouses in Montgomery County was ‘‘very supply-constrained” at 700 units, compared with 1,026 in mid-2004, at the height of the boom. But the inventory had actually increased by more than 10 percent from Dec. 31. Meanwhile, inventory in Prince George’s and Frederick counties decreased considerably since December, Wenhold said.
Metrostudy is ‘‘really quite hopeful that the summer will increase sales as we burn through the remaining inventory and builders have more starts,” he said.
The resale market is down by 15 percent in Maryland and 18 percent in Virginia from the same time last year, according to Metrostudy.
This report originally appeared in The Business Gazette.
Falling Market
In Maryland, existing home sales in March fell 15.7 percent from a year ago, with the following decreases:
Montgomery County:16.4 percent
Frederick County:21.6 percent
Prince George’s County: 31.4 percent
Baltimore city: 8.5 percent
Source: U.S. Commerce Department
(gazette.net)
Friday, May 11, 2007
Region's home prices rise just 1.8% in April
Baltimore records first decline in 4 years.
Amid a continuing slowdown, home prices in metropolitan Baltimore eked out a slim gain in April, thanks largely to strength in Baltimore County. The city recorded its first decline in more than four years.
The average sale price in Baltimore and the five surrounding counties rose 1.88 percent from $310,323 in April last year, Metropolitan Regional Information Systems Inc. reported yesterday.
Half the jurisdictions in the region registered an increase, and half a decrease.
Baltimore County posted the strongest appreciation at over 6 percent, with slight gains in Howard and Carroll counties. Anne Arundel County had the biggest drop, at nearly 5 percent.
The mixed-price picture came as home sales continued to stumble. The 2,831 homes sold last month were 11.23 percent fewer than the 3,189 homes sold in April 2006, according to MRIS. Sales declined in each jurisdiction except Howard and Carroll counties.
In Baltimore City, the average price fell a little more than $3,000 - or 1.79 percent - from April a year ago, the first drop since January 2003. Average gains have soared by double digits through much of that time as homebuyers sought cheaper alternatives to the counties and an urban lifestyle.
But as the booming real estate market has cooled, the pace of price appreciation has been shrinking since the middle of last year. The city's price drop likely reflects a slump in once rapidly appreciating, expensive waterfront neighborhoods such as Canton and Federal Hill, rather than a broader drop, said one economist yesterday.
"Those were areas seen as very hot markets," said Daraius Irani, director of the applied economics group at RESI, Towson University's research and consulting arm.
"People rushed into those markets and housing prices were bid up substantially. As the market has softened, and there is a decline in demand and tightening credit restrictions, those are areas that are likely to see slowdown. If you're not selling as many $500,000 units as you did in years past, that's going to tend to pull down overall averages."
While April's settlements reflect contracts signed in preceding months, the arrival of spring hasn't brought the boost to the housing market that typically comes with the season, agents said. And some believe that tightening credit requirements - the result of problems with subprime loans and rising foreclosure rates - will reduce the pool of buyers.
"It is somewhat of a random market," said Tom Mooney, a partner with O'Conor & Mooney Realtors in Baltimore. "We're getting showings, but buyers are not as quick to pull the trigger. There's very little impulse buying any more."
While 6,524 homes were listed for sale in April alone, contracts and contingent contracts were reached on just over half that number, or 3,536, properties, the MRIS said.
The number of homes for sale topped 17,000, nearly three times as many as were listed two years earlier at the height of the housing boom. Homes stayed on the market an average of three months, compared with the average of two months it took to sell in April 2006, MRIS said.
Buyers are holding out, expecting that prices will come down more.
"The market has not stabilized to the point where everybody is on the same page yet," said Sharon Martin-Sims, a broker with S. Lee Martin & Co. in Baltimore. "For this time of year, we should have been a little stronger by now."
With homes staying on the market longer, buyers have more to choose from, she said.
"Since buyers know it's a buyers market, they want to offer much lower than what sellers are asking for," Martin-Sims said. "Sellers, on the other side, don't want to understand the fact that prices should be coming down a little bit."
Offers tend to be for less than asking price, by 5 percent to 10 percent, on average, Realtors said. Martin-Sims said sellers are beginning to adjust prices more quickly.
A four-bedroom Colonial with a two-car garage in the Ten Hills neighborhood of Baltimore went on sale for $499,000 in September and has now been reduced to $399,000. Another house in Randallstown, a three- bedroom rancher, went on the market at $314,500 and was reduced by $10,000 after 30 days, Martin-Sims said.
Diane Boynton said she worried when she and her husband decided in April to sell their Timonium townhouse so they can move to a retirement community. "The bad part was the market," Boynton said. "We thought this is going to be a mess. We just missed the right time."
Boynton said the couple followed their real estate agent's advice to price the home within a certain range and listed the two-bedroom townhouse at $305,000, below prices neighbors got last year. The house sold in just five days for the asking price.
(baltimoresun.com)
Amid a continuing slowdown, home prices in metropolitan Baltimore eked out a slim gain in April, thanks largely to strength in Baltimore County. The city recorded its first decline in more than four years.
The average sale price in Baltimore and the five surrounding counties rose 1.88 percent from $310,323 in April last year, Metropolitan Regional Information Systems Inc. reported yesterday.
Half the jurisdictions in the region registered an increase, and half a decrease.
Baltimore County posted the strongest appreciation at over 6 percent, with slight gains in Howard and Carroll counties. Anne Arundel County had the biggest drop, at nearly 5 percent.
The mixed-price picture came as home sales continued to stumble. The 2,831 homes sold last month were 11.23 percent fewer than the 3,189 homes sold in April 2006, according to MRIS. Sales declined in each jurisdiction except Howard and Carroll counties.
In Baltimore City, the average price fell a little more than $3,000 - or 1.79 percent - from April a year ago, the first drop since January 2003. Average gains have soared by double digits through much of that time as homebuyers sought cheaper alternatives to the counties and an urban lifestyle.
But as the booming real estate market has cooled, the pace of price appreciation has been shrinking since the middle of last year. The city's price drop likely reflects a slump in once rapidly appreciating, expensive waterfront neighborhoods such as Canton and Federal Hill, rather than a broader drop, said one economist yesterday.
"Those were areas seen as very hot markets," said Daraius Irani, director of the applied economics group at RESI, Towson University's research and consulting arm.
"People rushed into those markets and housing prices were bid up substantially. As the market has softened, and there is a decline in demand and tightening credit restrictions, those are areas that are likely to see slowdown. If you're not selling as many $500,000 units as you did in years past, that's going to tend to pull down overall averages."
While April's settlements reflect contracts signed in preceding months, the arrival of spring hasn't brought the boost to the housing market that typically comes with the season, agents said. And some believe that tightening credit requirements - the result of problems with subprime loans and rising foreclosure rates - will reduce the pool of buyers.
"It is somewhat of a random market," said Tom Mooney, a partner with O'Conor & Mooney Realtors in Baltimore. "We're getting showings, but buyers are not as quick to pull the trigger. There's very little impulse buying any more."
While 6,524 homes were listed for sale in April alone, contracts and contingent contracts were reached on just over half that number, or 3,536, properties, the MRIS said.
The number of homes for sale topped 17,000, nearly three times as many as were listed two years earlier at the height of the housing boom. Homes stayed on the market an average of three months, compared with the average of two months it took to sell in April 2006, MRIS said.
Buyers are holding out, expecting that prices will come down more.
"The market has not stabilized to the point where everybody is on the same page yet," said Sharon Martin-Sims, a broker with S. Lee Martin & Co. in Baltimore. "For this time of year, we should have been a little stronger by now."
With homes staying on the market longer, buyers have more to choose from, she said.
"Since buyers know it's a buyers market, they want to offer much lower than what sellers are asking for," Martin-Sims said. "Sellers, on the other side, don't want to understand the fact that prices should be coming down a little bit."
Offers tend to be for less than asking price, by 5 percent to 10 percent, on average, Realtors said. Martin-Sims said sellers are beginning to adjust prices more quickly.
A four-bedroom Colonial with a two-car garage in the Ten Hills neighborhood of Baltimore went on sale for $499,000 in September and has now been reduced to $399,000. Another house in Randallstown, a three- bedroom rancher, went on the market at $314,500 and was reduced by $10,000 after 30 days, Martin-Sims said.
Diane Boynton said she worried when she and her husband decided in April to sell their Timonium townhouse so they can move to a retirement community. "The bad part was the market," Boynton said. "We thought this is going to be a mess. We just missed the right time."
Boynton said the couple followed their real estate agent's advice to price the home within a certain range and listed the two-bedroom townhouse at $305,000, below prices neighbors got last year. The house sold in just five days for the asking price.
(baltimoresun.com)
Baltimore: Affordable housing at a premium
The Baltimore region lacks a supply of affordable housing, a local housing official said.
BALTIMORE - Work force housing is a key to the future of Baltimore-area real estate. For the housing market to be successful, it must create a system to support people moving from low-income housing to moderate- and then high-income homes, Ilene Kessler, president of the Maryland Association of Realtors, told The Examiner.
Work force housing is at the core of that cycle, creating stable, affordable options for local hardworking residents, she said.
With an influx of middle-class and blue-collar workers coming to the area as a result of the Base Realignment and Closure initiative, finding and identifying housing to meet their needs will be key, Kessler said.
In the Baltimore region, March statistics by Metropolitan Regional Information Systems have houses selling for an average of $306,588. Locally, Anne Arundel County, where Fort Meade is, has homes going for an average of $395,037, while nearby Baltimore City remains more affordable at $178,019. In Harford County, where the Aberdeen Proving Ground is, homes are selling for an average of $296,432.
“The region lacks an adequate supply of housing in decent condition that is available to a wide range of low- and moderate-income households,” said Tania Baker, acting director of communications for Baltimore Housing.
About 28,000 new households will soon move to the area, with about 24,000 of these being homebuyers, the Maryland BRAC study conducted by the Maryland Department of Business and Economic Development found.
With the Mortgage Bankers Association reporting that Maryland had a 12.39 percent increase in subprime loans for the last quarter, Kessler said it was important that people in the housing market work together to keep these potential buyers in their homes.
(examiner.com)
BALTIMORE - Work force housing is a key to the future of Baltimore-area real estate. For the housing market to be successful, it must create a system to support people moving from low-income housing to moderate- and then high-income homes, Ilene Kessler, president of the Maryland Association of Realtors, told The Examiner.
Work force housing is at the core of that cycle, creating stable, affordable options for local hardworking residents, she said.
With an influx of middle-class and blue-collar workers coming to the area as a result of the Base Realignment and Closure initiative, finding and identifying housing to meet their needs will be key, Kessler said.
In the Baltimore region, March statistics by Metropolitan Regional Information Systems have houses selling for an average of $306,588. Locally, Anne Arundel County, where Fort Meade is, has homes going for an average of $395,037, while nearby Baltimore City remains more affordable at $178,019. In Harford County, where the Aberdeen Proving Ground is, homes are selling for an average of $296,432.
“The region lacks an adequate supply of housing in decent condition that is available to a wide range of low- and moderate-income households,” said Tania Baker, acting director of communications for Baltimore Housing.
About 28,000 new households will soon move to the area, with about 24,000 of these being homebuyers, the Maryland BRAC study conducted by the Maryland Department of Business and Economic Development found.
With the Mortgage Bankers Association reporting that Maryland had a 12.39 percent increase in subprime loans for the last quarter, Kessler said it was important that people in the housing market work together to keep these potential buyers in their homes.
(examiner.com)
Wednesday, May 9, 2007
Statistics indicate unprepared buyers are entering foreclosure
With the nation undergoing a surge in high-interest loans for people with a history of bad credit, analysts should have seen what was coming next: foreclosures. For March, there were nearly 149,150 foreclosure filings nationally, up 7 percent from February, RealtyTrac, a nationally recognized foreclosure Web site, said in its monthly report.
Maryland had 965 foreclosures in March.
“The difference between now and the past is all of the subprime mortgages,” said Deborah Ford, director of the undergraduate real estate program at the University of Baltimore. “Also, a lot of these adjustable-rate mortgages are resetting, meaning rates are continuing to go up. We have not had that in the past.”
People who read this also read:
Antero Pietila: Dixon’s cache of toys and trinkets
In Maryland this March, there was one foreclosure for every 2,220 households, substantially better than the nationwide figure of one for every 775 households — but it’s not all good news. Maryland saw a 160 percent jump in foreclosures for the month, compared to the national average of about 7 percent. Put up against last year’s numbers, foreclosures are up 327 percent in state.
Metropolitan Regional Information Statistics also indicate that people are spending more money on property. In March, real estate in the Baltimore region was selling for an average of nearly $306,588, an increase of about 4 percent from 2006. With this jump in cost, along with a 12.39 percent fourth-quarter increase in subprime mortgages reported by the Mortgage Bankers Association, residents can expect to see the number of foreclosures going up.
“I think it’s going to keep rising this year,” Ford said. “The rest of the nation is going up, too.”
(Examiner.com)
Maryland had 965 foreclosures in March.
“The difference between now and the past is all of the subprime mortgages,” said Deborah Ford, director of the undergraduate real estate program at the University of Baltimore. “Also, a lot of these adjustable-rate mortgages are resetting, meaning rates are continuing to go up. We have not had that in the past.”
People who read this also read:
Antero Pietila: Dixon’s cache of toys and trinkets
In Maryland this March, there was one foreclosure for every 2,220 households, substantially better than the nationwide figure of one for every 775 households — but it’s not all good news. Maryland saw a 160 percent jump in foreclosures for the month, compared to the national average of about 7 percent. Put up against last year’s numbers, foreclosures are up 327 percent in state.
Metropolitan Regional Information Statistics also indicate that people are spending more money on property. In March, real estate in the Baltimore region was selling for an average of nearly $306,588, an increase of about 4 percent from 2006. With this jump in cost, along with a 12.39 percent fourth-quarter increase in subprime mortgages reported by the Mortgage Bankers Association, residents can expect to see the number of foreclosures going up.
“I think it’s going to keep rising this year,” Ford said. “The rest of the nation is going up, too.”
(Examiner.com)
Baltimore: There's New Help For Those Facing Foreclosure
BALTIMORE, MD - Thousands of Marylanders may face the prospect of losing their homes but are too embarrassed to tell anyone.
Political reporter Pat Warren has more on the risk they're taking and where they can go for help.
It's called the secret shame--a situation so pervasive it's under investigation on Capitol Hill: Homeowners facing foreclosures on subprime loans.
Subprime loans are marketed to people with poor credit histories and limited incomes, who may not otherwise qualify.
By calling 311, the city's non-emergency line, you can be connected to a help hotline. There's a toll-free number to call for help, 888-995-HOPE.
On May 19, there's a call to action for people who are in danger of foreclosure. It's at 1 East Mount Royal Avenue.
(© MMVII, CBS Broadcasting Inc. All Rights Reserved.
video: http://wjz.com/video/?id=27368@wjz.dayport.com)
Political reporter Pat Warren has more on the risk they're taking and where they can go for help.
It's called the secret shame--a situation so pervasive it's under investigation on Capitol Hill: Homeowners facing foreclosures on subprime loans.
Subprime loans are marketed to people with poor credit histories and limited incomes, who may not otherwise qualify.
By calling 311, the city's non-emergency line, you can be connected to a help hotline. There's a toll-free number to call for help, 888-995-HOPE.
On May 19, there's a call to action for people who are in danger of foreclosure. It's at 1 East Mount Royal Avenue.
(© MMVII, CBS Broadcasting Inc. All Rights Reserved.
video: http://wjz.com/video/?id=27368@wjz.dayport.com)
Tuesday, May 8, 2007
Baltimore City: Bill aims to end eviction practice
Landlords would store tenants' items, could not dump on street if city passes measure.The practice of dumping evicted tenants' belongings - couches, appliances, tables, clothes - onto Baltimore streets could soon come to an end under a City Council bill being introduced today.
For years, taxpayers have been underwriting the $800,000 annual cost of disposing of the household furnishings of evicted renters that landlords are allowed to pile on city streets. The proposed legislation, sponsored by Councilman Kenneth N. Harris Sr., would prohibit that practice, require landlords to pay for the storage and disposal of such "eviction chattel," and give tenants three days to reclaim it.
"We didn't make everybody happy [with the bill]," said Harris, a council president candidate who represents North Baltimore's 4th District. "We came up with a compromise."
For more than a decade, the council has tried unsuccessfully to pass legislation to control the costly eviction practice. In fiscal year 2006, 7,062 evictions resulted in the dumping of 2,908 tons of belongings onto city streets, according to city statistics.
In 2003, the Abell Foundation found that evictions are more common in Baltimore than in many cities, in part because the population is largely poor and the eviction process unusually swift, The Sun reported at the time.
Renters can be ousted as quickly as 16 business days after they miss a rent payment. The process can take months elsewhere.
In Baltimore, the consequences extend beyond delinquent renters and affect neighborhoods that have to endure the piles of household goods.
"It's a problem all across the city," said Dan Pontious, regional policy director for the Citizens Planning and Housing Association. "It's humiliating for the tenants, and it certainly doesn't help revitalizing neighborhoods."
But the bill's introduction is just the first step, and the traditionally divisive topic is far from being resolved - despite Mayor Sheila Dixon's apparent support for finding a solution as part of her "cleaner, greener" Baltimore initiative.
Advocacy groups for landlords and tenants have been meeting for several weeks in a working group organized by City Solicitor George A. Nilson to hash out their differences over the proposed legislation.
Tenant representatives said they believe Dixon is supportive of the measure. The mayor's spokesman did not return calls for comment.
"I definitely think this is the furthest we've been on this issue," said Joe Coffey, executive director of Baltimore Neighborhoods Inc. "Renters in general aren't as popular with elected officials or in the community. It'd be great if the council got off its butt and did something about eviction chattel."
Although Harris was calling the draft bill a "compromise" on Friday, tenant and landlord representatives did not appear to be in agreement with the measure as it is currently written.
"I don't think it's anything written in stone," said Katherine Howard, general counsel for Regional Management Inc., a Baltimore company that manages 4,000 rental units in the city.
Alfred Singer, a board member of the Property Owners Association of Greater Baltimore Inc., would not comment. "We're still in the middle of negotiations," Singer said.
But tenant groups are generally pleased with the proposal, even though it does not give tenants as many protections as other cities provide. The Rental Housing Coalition has planned a rally outside of City Hall for 4 p.m. today in support of the measure, said Levern Blackmon, tenant advocate for the Public Justice Center.
"It is inhumane to take people's belongings and throw them on the street," Blackmon said. "Landlords are the only people who can dump trash on the street and not get fined."
Blackmon said he is confident that this is the year for the council to approve such legislation. "The reason we've gotten so far is because of the mayor," he said.
Michael Sarbanes, executive director of the Citizens Planning and Housing Association, predicted that the legislation "will make the landlord-tenant system a lot more efficient" while improving overall cleanliness in neighborhoods.
"Residents are working hard every day to keep their streets clean," Sarbanes said. "It doesn't make sense to have landlords putting tons and tons of stuff on neighborhood streets every day."
Howard said her company agrees with the main goals of the legislation: to end the dumping of eviction chattel and to provide advance notice of the exact eviction date.
Generally tenants are not warned about that date, a process that is overseen by a sheriff's deputy carrying out the court-ordered eviction.
The new legislation would require two warnings: the first would come via mail five days before eviction, and the second would come as a posting on the dwelling two days before the sheriff's visit.
Once the eviction date arrives, landlords would be allowed to take any remaining property and store it at another property or at a storage facility within a half-mile. A renter would have three days to reclaim the property before the landlord is free to dispose of it.
An earlier draft of the legislation proposed giving landlords a 50 percent discount for dumping at the landfill, a move supported by landlords. In 2006, it cost the city $40.85 per ton to dump at landfills, according to a public works official. The draft filed with the council, however, removed the discount.
"Everyone will have an opportunity to come before the council to express their likes or dislikes about the bill," Harris said.
Baltimore tenant groups wanted to give evicted renters seven days to reclaim their property but were willing to compromise on three days to move the bill forward. The Citizens Planning and Housing Association pointed to its research of other cities that offer more generous storage policies: Philadelphia requires a 30-day storage period; St. Paul, Minn., gives 60 days; Los Angeles allows 15 days.
"There are lots of good landlords who handle this issue properly," Coffey said. "But there is a number who don't. And that's why this [legislation] is needed."
Howard said there will be a trickle-down impact on renters if landlords are forced to pick up the costs of storage, hauling and disposal of eviction chattel - costs that come on top of the lost rent and the court fees associated with the eviction.
"All of that has a price tag attached to it, which just increases the bottom line for landlords," Howard said. "Any increase to the bottom line to do this is ... going to affect the affordability of the rent for everyone."
(Baltimore Sun)
For years, taxpayers have been underwriting the $800,000 annual cost of disposing of the household furnishings of evicted renters that landlords are allowed to pile on city streets. The proposed legislation, sponsored by Councilman Kenneth N. Harris Sr., would prohibit that practice, require landlords to pay for the storage and disposal of such "eviction chattel," and give tenants three days to reclaim it.
"We didn't make everybody happy [with the bill]," said Harris, a council president candidate who represents North Baltimore's 4th District. "We came up with a compromise."
For more than a decade, the council has tried unsuccessfully to pass legislation to control the costly eviction practice. In fiscal year 2006, 7,062 evictions resulted in the dumping of 2,908 tons of belongings onto city streets, according to city statistics.
In 2003, the Abell Foundation found that evictions are more common in Baltimore than in many cities, in part because the population is largely poor and the eviction process unusually swift, The Sun reported at the time.
Renters can be ousted as quickly as 16 business days after they miss a rent payment. The process can take months elsewhere.
In Baltimore, the consequences extend beyond delinquent renters and affect neighborhoods that have to endure the piles of household goods.
"It's a problem all across the city," said Dan Pontious, regional policy director for the Citizens Planning and Housing Association. "It's humiliating for the tenants, and it certainly doesn't help revitalizing neighborhoods."
But the bill's introduction is just the first step, and the traditionally divisive topic is far from being resolved - despite Mayor Sheila Dixon's apparent support for finding a solution as part of her "cleaner, greener" Baltimore initiative.
Advocacy groups for landlords and tenants have been meeting for several weeks in a working group organized by City Solicitor George A. Nilson to hash out their differences over the proposed legislation.
Tenant representatives said they believe Dixon is supportive of the measure. The mayor's spokesman did not return calls for comment.
"I definitely think this is the furthest we've been on this issue," said Joe Coffey, executive director of Baltimore Neighborhoods Inc. "Renters in general aren't as popular with elected officials or in the community. It'd be great if the council got off its butt and did something about eviction chattel."
Although Harris was calling the draft bill a "compromise" on Friday, tenant and landlord representatives did not appear to be in agreement with the measure as it is currently written.
"I don't think it's anything written in stone," said Katherine Howard, general counsel for Regional Management Inc., a Baltimore company that manages 4,000 rental units in the city.
Alfred Singer, a board member of the Property Owners Association of Greater Baltimore Inc., would not comment. "We're still in the middle of negotiations," Singer said.
But tenant groups are generally pleased with the proposal, even though it does not give tenants as many protections as other cities provide. The Rental Housing Coalition has planned a rally outside of City Hall for 4 p.m. today in support of the measure, said Levern Blackmon, tenant advocate for the Public Justice Center.
"It is inhumane to take people's belongings and throw them on the street," Blackmon said. "Landlords are the only people who can dump trash on the street and not get fined."
Blackmon said he is confident that this is the year for the council to approve such legislation. "The reason we've gotten so far is because of the mayor," he said.
Michael Sarbanes, executive director of the Citizens Planning and Housing Association, predicted that the legislation "will make the landlord-tenant system a lot more efficient" while improving overall cleanliness in neighborhoods.
"Residents are working hard every day to keep their streets clean," Sarbanes said. "It doesn't make sense to have landlords putting tons and tons of stuff on neighborhood streets every day."
Howard said her company agrees with the main goals of the legislation: to end the dumping of eviction chattel and to provide advance notice of the exact eviction date.
Generally tenants are not warned about that date, a process that is overseen by a sheriff's deputy carrying out the court-ordered eviction.
The new legislation would require two warnings: the first would come via mail five days before eviction, and the second would come as a posting on the dwelling two days before the sheriff's visit.
Once the eviction date arrives, landlords would be allowed to take any remaining property and store it at another property or at a storage facility within a half-mile. A renter would have three days to reclaim the property before the landlord is free to dispose of it.
An earlier draft of the legislation proposed giving landlords a 50 percent discount for dumping at the landfill, a move supported by landlords. In 2006, it cost the city $40.85 per ton to dump at landfills, according to a public works official. The draft filed with the council, however, removed the discount.
"Everyone will have an opportunity to come before the council to express their likes or dislikes about the bill," Harris said.
Baltimore tenant groups wanted to give evicted renters seven days to reclaim their property but were willing to compromise on three days to move the bill forward. The Citizens Planning and Housing Association pointed to its research of other cities that offer more generous storage policies: Philadelphia requires a 30-day storage period; St. Paul, Minn., gives 60 days; Los Angeles allows 15 days.
"There are lots of good landlords who handle this issue properly," Coffey said. "But there is a number who don't. And that's why this [legislation] is needed."
Howard said there will be a trickle-down impact on renters if landlords are forced to pick up the costs of storage, hauling and disposal of eviction chattel - costs that come on top of the lost rent and the court fees associated with the eviction.
"All of that has a price tag attached to it, which just increases the bottom line for landlords," Howard said. "Any increase to the bottom line to do this is ... going to affect the affordability of the rent for everyone."
(Baltimore Sun)
Maryland: Region avoids housing slump
Despite slower sales, prices are still rising in Baltimore area.
Baltimore's cooling housing market should continue to dodge the price slumps that have hit other parts of the country, experts said yesterday.
Home values will continue to gain moderately through the end of the year despite the slowdown in sales, thanks to relatively strong employment and job growth in the region, predicted Gregory H. Leisch, chief executive officer of Washington real estate consulting firm Delta Associates. Leisch presented his forecast at a housing outlook conference held by Metropolitan Regional Information Systems Inc., a Rockville-based real estate listing service that covers parts of Maryland, Washington, Northern Virginia, West Virginia and Pennsylvania.
The median price of a single-family home in the United States dipped 2.7 percent in 2006, compared with a year earlier, Leisch said. But it rose 4.8 percent in the Baltimore area, surpassing price gains in Chicago, New York and Los Angeles, Leisch said, even as the number of homes sold fell 13 percent.
And the average home price remained stable in the first quarter of this year.
The area, which has an unemployment rate below the national average, has been helped by its shift from a manufacturing base to an economy with growth in the medical, education and defense sectors, Leisch said.
"Baltimore was a Rust Belt city and now is one of the best-balanced regional economies," he said, with consistently high job growth and high-quality jobs, and thousands more expected in the next four years from a federal base realignment, know as BRAC, that will bring jobs to Fort Meade and Aberdeen Proving Ground.
"Is that sufficient to support a sturdy housing market? We think so," said Leisch.
The Washington metro area also fared well in the first three months of this year despite a slower pace of sales, according to the MRIS Trends in Housing Report, released in conjunction with the series of forecast conferences, including yesterday's at Martin's West in Baltimore County.
Though prices in the Baltimore region are projected to increase, values are not expected to approach the double-digit gains that persisted into the second quarter of last year.
And the average number of days homes are staying on the market has continued to rise, from 37 days in 2005 to 60 days in 2006 to 93 days in the first three months of this year.
Daraius Irani, the director of the Applied Economics Group at Towson University's Regional Economic Studies Institute and a panelist at yesterday's event, said job growth in Maryland has not been as strong as in past years.
"We are very puzzled by the fact that job growth has been anemic but unemployment is low," he said. "We view it as not enough job candidates are qualified in these high-skill fields.
The flood of new military and related jobs coming from BRAC will likely attract other companies seeking to locate near a concentration of high-tech businesses, Irani said.
Some 40,000 to 60,000 jobs overall are anticipated by 2011, creating an additional 25,000 households in Maryland and generating an estimated $500 million in income and property taxes annually, said Lisa Swoboda, a panelist and deputy director of the Office of Military and Federal Affairs in the state's Department of Business and Economic Development.
(Baltimore Sun)
Baltimore's cooling housing market should continue to dodge the price slumps that have hit other parts of the country, experts said yesterday.
Home values will continue to gain moderately through the end of the year despite the slowdown in sales, thanks to relatively strong employment and job growth in the region, predicted Gregory H. Leisch, chief executive officer of Washington real estate consulting firm Delta Associates. Leisch presented his forecast at a housing outlook conference held by Metropolitan Regional Information Systems Inc., a Rockville-based real estate listing service that covers parts of Maryland, Washington, Northern Virginia, West Virginia and Pennsylvania.
The median price of a single-family home in the United States dipped 2.7 percent in 2006, compared with a year earlier, Leisch said. But it rose 4.8 percent in the Baltimore area, surpassing price gains in Chicago, New York and Los Angeles, Leisch said, even as the number of homes sold fell 13 percent.
And the average home price remained stable in the first quarter of this year.
The area, which has an unemployment rate below the national average, has been helped by its shift from a manufacturing base to an economy with growth in the medical, education and defense sectors, Leisch said.
"Baltimore was a Rust Belt city and now is one of the best-balanced regional economies," he said, with consistently high job growth and high-quality jobs, and thousands more expected in the next four years from a federal base realignment, know as BRAC, that will bring jobs to Fort Meade and Aberdeen Proving Ground.
"Is that sufficient to support a sturdy housing market? We think so," said Leisch.
The Washington metro area also fared well in the first three months of this year despite a slower pace of sales, according to the MRIS Trends in Housing Report, released in conjunction with the series of forecast conferences, including yesterday's at Martin's West in Baltimore County.
Though prices in the Baltimore region are projected to increase, values are not expected to approach the double-digit gains that persisted into the second quarter of last year.
And the average number of days homes are staying on the market has continued to rise, from 37 days in 2005 to 60 days in 2006 to 93 days in the first three months of this year.
Daraius Irani, the director of the Applied Economics Group at Towson University's Regional Economic Studies Institute and a panelist at yesterday's event, said job growth in Maryland has not been as strong as in past years.
"We are very puzzled by the fact that job growth has been anemic but unemployment is low," he said. "We view it as not enough job candidates are qualified in these high-skill fields.
The flood of new military and related jobs coming from BRAC will likely attract other companies seeking to locate near a concentration of high-tech businesses, Irani said.
Some 40,000 to 60,000 jobs overall are anticipated by 2011, creating an additional 25,000 households in Maryland and generating an estimated $500 million in income and property taxes annually, said Lisa Swoboda, a panelist and deputy director of the Office of Military and Federal Affairs in the state's Department of Business and Economic Development.
(Baltimore Sun)
Monday, May 7, 2007
Prince George’s County tops in state for 2006 foreclosures
Prince George’s County led the state in foreclosures in 2006, and has continued that pattern for the first quarter of 2007.
A total of 1,558 foreclosures were recorded in the county last year, with 590 in the first three months of this year, up 56 percent from the same period in 2006.
But Prince George’s dubious distinction is nothing new, and was the case even before the subprime market plunged, said Darrell Carrington, a senior loan officer with Freestate Mortgage Services in Bowie.
In fact, troubles in the subprime mortgage market have not hit Maryland as hard as other states.
Of the nearly 129,000 subprime home loans serviced in Maryland in 2006, about 2 percent, or 2,580, were in foreclosure by the end of the fourth quarter, up from 1.3 percent, or 1,677, in the first quarter of last year, according to Mortgage Bankers Association 2006 National Delinquency Survey.
That’s still significantly lower than the national average of 5 percent.
Subprime loan delinquencies in Maryland also rose significantly in 2006, from almost 8 percent in the first quarter to 12 percent in the fourth quarter. The mortgage association could not provide county data.
Carrington said high home prices in Prince George’s, in relation to other nearby counties, is a factor in its high foreclosure rate.
The parents of many of today’s homebuyers needed to make a 20 percent down payment, ‘‘but those days are kind of gone,” he said.
Such a down payment on a $350,000 house would be $70,000, and most people don’t have that much cash, he said.
The result is that more of the purchase price is borrowed, resulting in higher mortgage payments.
Mortgage broker Kip S. Douglass, president of Douglass Mortgage Advisory Group in Upper Marlboro, said he has seen the rise in home loan defaults in Prince George’s County. In a listing he surveys, Douglass said, he noted 16 new notices of default filed on April 17.
That total — about double what he used to see — is no longer atypical, he said.
Some of these borrowers will catch up with payments before losing their home, some will file bankruptcy and others will work out a forebearance agreement with their lenders, Douglass said in an e-mail. Some will also try to sell the property, he said, but perhaps half will lose their home to foreclosure.
Some real estate business has been lost because people who were marginally qualified to buy a home before are no longer approved for loans, said Kevin Cyrus, assistant branch manager of Long and Foster Real Estate Inc. in Mitchellville. As the housing market has cooled, lenders are not as lenient, so buyers need either more money down or more help with closing costs, he said.
Since subprime lenders have suddenly either closed their doors or withdrawn from the subprime market, ‘‘they are no longer standing behind pre-approval letters they have already issued,” Cyrus said. The need for Realtors to scrutinize lender letters has heightened, he said.
Subprime market troubles and disappearing lenders have caused some problems, but nothing ‘‘catastrophic,” said Donald Frederick, president of the Prince George’s County Association of Realtors.
‘‘The biggest problems I’m aware of were delayed settlements, not canceled settlements,” Frederick said. ‘‘There are plenty of programs that replace these types of loans, so I don’t see the problem being as big as some people think it is.”
Banks insured by the Federal Deposit Insurance Corp., such as Bank of America, Sandy Spring Bank and BB&T, don’t dabble much in the subprime market.
Nationally, 23 percent of all subprime loans are made by FDIC-insured banks, said Kathleen Murphy, president and CEO of the Maryland Bankers Association. ‘‘It is a small percentage of the overall subprime lending market,” she said.
With some loan programs ending, and credit guidelines tightening, brokers must really be skilled at finding the right loan, Douglass said.
‘‘What’s happening is, people are starting to need more professional help now,” he said.
(Business Gazette)
A total of 1,558 foreclosures were recorded in the county last year, with 590 in the first three months of this year, up 56 percent from the same period in 2006.
But Prince George’s dubious distinction is nothing new, and was the case even before the subprime market plunged, said Darrell Carrington, a senior loan officer with Freestate Mortgage Services in Bowie.
In fact, troubles in the subprime mortgage market have not hit Maryland as hard as other states.
Of the nearly 129,000 subprime home loans serviced in Maryland in 2006, about 2 percent, or 2,580, were in foreclosure by the end of the fourth quarter, up from 1.3 percent, or 1,677, in the first quarter of last year, according to Mortgage Bankers Association 2006 National Delinquency Survey.
That’s still significantly lower than the national average of 5 percent.
Subprime loan delinquencies in Maryland also rose significantly in 2006, from almost 8 percent in the first quarter to 12 percent in the fourth quarter. The mortgage association could not provide county data.
Carrington said high home prices in Prince George’s, in relation to other nearby counties, is a factor in its high foreclosure rate.
The parents of many of today’s homebuyers needed to make a 20 percent down payment, ‘‘but those days are kind of gone,” he said.
Such a down payment on a $350,000 house would be $70,000, and most people don’t have that much cash, he said.
The result is that more of the purchase price is borrowed, resulting in higher mortgage payments.
Mortgage broker Kip S. Douglass, president of Douglass Mortgage Advisory Group in Upper Marlboro, said he has seen the rise in home loan defaults in Prince George’s County. In a listing he surveys, Douglass said, he noted 16 new notices of default filed on April 17.
That total — about double what he used to see — is no longer atypical, he said.
Some of these borrowers will catch up with payments before losing their home, some will file bankruptcy and others will work out a forebearance agreement with their lenders, Douglass said in an e-mail. Some will also try to sell the property, he said, but perhaps half will lose their home to foreclosure.
Some real estate business has been lost because people who were marginally qualified to buy a home before are no longer approved for loans, said Kevin Cyrus, assistant branch manager of Long and Foster Real Estate Inc. in Mitchellville. As the housing market has cooled, lenders are not as lenient, so buyers need either more money down or more help with closing costs, he said.
Since subprime lenders have suddenly either closed their doors or withdrawn from the subprime market, ‘‘they are no longer standing behind pre-approval letters they have already issued,” Cyrus said. The need for Realtors to scrutinize lender letters has heightened, he said.
Subprime market troubles and disappearing lenders have caused some problems, but nothing ‘‘catastrophic,” said Donald Frederick, president of the Prince George’s County Association of Realtors.
‘‘The biggest problems I’m aware of were delayed settlements, not canceled settlements,” Frederick said. ‘‘There are plenty of programs that replace these types of loans, so I don’t see the problem being as big as some people think it is.”
Banks insured by the Federal Deposit Insurance Corp., such as Bank of America, Sandy Spring Bank and BB&T, don’t dabble much in the subprime market.
Nationally, 23 percent of all subprime loans are made by FDIC-insured banks, said Kathleen Murphy, president and CEO of the Maryland Bankers Association. ‘‘It is a small percentage of the overall subprime lending market,” she said.
With some loan programs ending, and credit guidelines tightening, brokers must really be skilled at finding the right loan, Douglass said.
‘‘What’s happening is, people are starting to need more professional help now,” he said.
(Business Gazette)
New Initiative Helps Maryland Homebuyers Avoid Foreclosure
ANNAPOLIS, Md. -- Statistics show Baltimore city sees nearly twice as many home foreclosures than Philadelphia.
To combat that, lawmakers have created a new initiative to help potential homebuyers make good decisions when choosing a mortgage lender.
According to Rep. Elijah Cummings, D-Maryland, people need to realize the history of some of the firms that are available.
Click here to find out more!
"For example, if there's a 60 percent foreclosure rate and you know that from the beginning, then you've got to talk to somebody and say, 'Is this the right thing for me to do?'" Cummings said.
Cummings has introduced legislation in the past to strengthen regulations in the subprime lending market and to mandate preloan counseling.
(wbaltv.com)
To combat that, lawmakers have created a new initiative to help potential homebuyers make good decisions when choosing a mortgage lender.
According to Rep. Elijah Cummings, D-Maryland, people need to realize the history of some of the firms that are available.
Click here to find out more!
"For example, if there's a 60 percent foreclosure rate and you know that from the beginning, then you've got to talk to somebody and say, 'Is this the right thing for me to do?'" Cummings said.
Cummings has introduced legislation in the past to strengthen regulations in the subprime lending market and to mandate preloan counseling.
(wbaltv.com)
Fighting to Keep the Roof
Fighting to Keep the Roof
Strapped Owners Find Help From Their Lenders
Ernestine Witherspoon managed to hang onto her house in Northeast Washington even after she lost her job and fell far behind on her mortgage payments.
Her lender, Countrywide Home Loans, was weeks away from seizing the house when Witherspoon called, explained her situation, and worked out a plan to repay the $9,800 she owed. She scraped together $3,600 -- only because she landed a new job -- and Countrywide then tacked $25 onto her monthly payments for the life of the loan to make up the difference.
"I was treated well," said Witherspoon, 51, a secretary at a Maryland hospital. "But when you are in the position I was in, you have no choice but to accept the lender's terms if you want to keep your property, and that makes you feel very, very vulnerable."
Witherspoon benefited from the increasing willingness of lenders to help troubled borrowers stay in their homes. After easing lending standards in recent years, mortgage companies are facing a rising tide of late payments and defaults, driven by subprime borrowers with blemished credit or other factors that make them a risk to lenders. More than two dozen subprime lenders have shut down, and the rest of the industry is seeking ways to limit the damage.
"We would much rather work with a borrower than go through the foreclosure process," said Steve Bailey, Countrywide's senior managing director of loan administration. "We lose money on a foreclosure, the borrower is out of their home, and nobody is happy. The math works against us."
The lenders' new leniency works in favor of some borrowers. But to take advantage, homeowners have to move quickly, even if calling a mortgage company seems intimidating or stressful. Many people facing foreclosure simply "shut down" out of fear, says J. Michael Collins, a housing specialist with PolicyLab Consulting Group in Ithaca, N.Y.
"The more stressed people are, the less they're willing to seek help and the less they feel that lenders are helpful," he said.
If homeowners can overcome their anxiety and act soon enough, they have more options that can help avoid foreclosure. Those include refinancing the house, altering the terms of the original loan, filing for bankruptcy protection or even selling the house at a loss. But borrowers lose leverage, credibility and precious time when they try to dodge the lender, as more than half of them do in foreclosure cases, according to a survey by Freddie Mac, one of the largest investors in U.S. mortgages.
"As soon as you see trouble coming, that's the time to take action," said Ric Edelman, a financial planner in Fairfax.
The Equity Factor
If you're a financially troubled borrower, there are a few steps you should consider before contacting your mortgage company, especially if you have not missed a payment. Think about refinancing or taking out a home-equity loan, if you have equity in the property.
If refinancing won't work, identify every opportunity to raise cash. Sell your childhood toy collection on eBay. Rent out a room. Seek help from your church. "Do whatever it takes to raise money. You don't want to tell a creditor that you're having a problem if you can avoid it," especially if all you need is a one-time fix, Edelman said.
Telling a lender about your financial woes could put you at a disadvantage if you have equity in your home, said Jack Guttentag, professor of finance emeritus at the University of Pennsylvania's Wharton School and author of the Mortgage Professor column.
"The lender may tell you to come back after you've missed two payments," Guttentag said. By that time, your credit is shot, making it tough to borrow money elsewhere. If the lender then forecloses, that lender is protected against loss because the equity in your home could cover the loan balance and foreclosure-related costs, he said.
The riskiest borrowers typically don't have much equity, often because they have put little or no money down to buy their homes or have taken out second mortgages. As the housing market has softened, and home prices stagnated, those borrowers have found it hard to sell or refinance their way out of trouble.
Even if they could refinance, many borrowers with subprime loans face steep penalties if they pay off their loans early. Meanwhile, in response to the mortgage crisis, lenders have tightened their standards and made it harder for risky borrowers to qualify for new loans.
"It's a paradox, but the borrower who gets into trouble and has no equity is in a stronger negotiating position with the lender than the borrower who has equity," Guttentag said.
Work With the Lender
If refinancing is not an option, take a look at your mortgage statement and call the company that manages your loan. That call should be made quickly. The more time passes, the more a homeowner's credit tanks, limiting a lender's ability to work out a payment plan.
Lenders tend to be most amenable to the possibility of a forbearance, in which they suspend or reduce payments for a few months and then tack on portions of those payments to future ones. They will also consider lowering monthly interest rates, extending the life of the loan or altering the loan in some other way.
"Borrowers should seek modifications," said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "But the modification should not just keep the wolf away for a while longer. It should actually create an affordable loan."
So far, the number of mortgages modified has been modest. But the numbers are expected to rise substantially as more adjustable-rate mortgages begin to reset at higher rates at year's end, says Rod Dubitsky, an analyst at Credit Suisse.
"Right now, many people experiencing a reset have a lot of equity because of home-price appreciation at the end of 2005," said Dubitsky. "By the end of this year, fewer and fewer borrowers will have equity to refinance or sell their homes."
Lenders say it's in their interest to work with borrowers. Servicing a healthy loan costs them about $50 a year, and managing a delinquent or foreclosed one costs them about $1,000 and $2,000, respectively, said Robert Lacoursiere, an analyst at Banc of America Securities.
However, that does not mean there's a solution for every troubled borrower. Homeowners whose incomes cannot support their mortgage may get nothing more than a sympathetic ear -- if that -- from whoever handles their mortgage. The ultimate solution may be to walk way from the house.
"There's no incentive to work out payment arrangements if it only delays the inevitable," said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.
Instead, the borrower may be able to arrange a "short sale." With the mortgage holder's permission, a borrower can sell a home for less than the amount due on the loan and turn over the proceeds to the lender.
If the lender has reason to believe it can extract more value from the house, possibly by negotiating lower commissions from the agent involved, it may ask the homeowner to give it the deed of the house, surrender ownership rights and leave the property. This transaction is called a "deed in lieu of foreclosure."
To entice homeowners to leave quickly, some firms might even offer "cash for keys" -- a small sum of money that can help defray moving costs.
For lenders, all these deals typically reduce the cost of taking possession of the house.
In return, borrowers can shed their loan obligations, spare themselves the humiliation of a public foreclosure notice and protect their credit record. A short sale and a deed in lieu of foreclosure are far less damaging to a consumer's credit than an outright foreclosure.
But pay attention, says Richard Gottlieb, a consumer financial services attorney at Dykema Gossett. "A lender has every right to proceed against a borrower for the balance due on the mortgage loan," he said. "A borrower with significant assets is still at risk."
As a practical matter, most lenders will accept whatever money they get from a short sale or a deed in lieu of foreclosure, but borrowers need to make sure when they walk away that they are released of all financial obligations for the loan, consumer advocates said. That release should be put in writing.
If the lender forgives the shortfall, that has tax implications because it is considered income for the borrower, said Steven M. Buckman, a real estate attorney in the District. "And any time you have income, you have to pay income tax on it, federal and state." Lenders are required by law to report canceled debt to the IRS, and borrowers should be sure to get a statement of how much was forgiven on the loan.
A Last Resort
Anita McKenzie's lender suggested she do a short sale. But McKenzie does not want to walk away from her home. She said when she bought her townhouse in Germantown less than a year ago, she believed her agent and broker, who told her she could immediately refinance into a more affordable mortgage.
The refinancing never came through, leaving her stuck with a $3,650 monthly payment on her $40,000 salary. McKenzie fell behind on her payments. She's in danger of losing her house this summer.
"I don't know what to do except file for bankruptcy," said McKenzie, who has been working with HomeFree-USA, a housing counseling agency in the District.
McKenzie's counselor advised against it. Like many consumer advocates, she argues that bankruptcy proceedings should be used as a last resort because they damage a filer's credit, though less so than a foreclosure.
But in some situations, a bankruptcy filing makes sense, says Steven Ramsdell, a bankruptcy attorney in Alexandria.
"For people who have missed house payments, their credit has usually been dinged up already," Ramsdell said. "The credit ramifications of saving a house through bankruptcy should not be a deterrent if they can in fact save it."
Before filing for bankruptcy protection, consumers must attend credit-counseling sessions held by designated groups throughout the country.
Once they do, said Ramsdell, the kind of bankruptcy protection most effective in saving homes is Chapter 13, which immediately halts a foreclosure sale and freezes all collection actions for debts that predated the bankruptcy filing.
The court then approves a repayment plan that determines which creditors get paid back and when.
Under that arrangement, a person has up to five years to pay missed mortgage payments, essentially forcing the lender into a repayment plan and forcing a time frame that most lenders would not otherwise accept, Ramsdell said.
But while trying to make good on past debt, filers must keep up with their regular mortgage payments and other living expenses. For people without sufficient cash flow to make those payments -- plus contribute to the late ones -- this course of action is futile, Ramsdell says. It also makes no sense to file for bankruptcy protection when the house is worth less than the mortgage balance.
"If you owe $480,000 on a house that's worth only $400,000, it may not make sense to hang onto the house," Ramsdell said. "That's a hard thing for people to accept."
(Dina ElBoghdady, Washington Post)
Strapped Owners Find Help From Their Lenders
Ernestine Witherspoon managed to hang onto her house in Northeast Washington even after she lost her job and fell far behind on her mortgage payments.
Her lender, Countrywide Home Loans, was weeks away from seizing the house when Witherspoon called, explained her situation, and worked out a plan to repay the $9,800 she owed. She scraped together $3,600 -- only because she landed a new job -- and Countrywide then tacked $25 onto her monthly payments for the life of the loan to make up the difference.
"I was treated well," said Witherspoon, 51, a secretary at a Maryland hospital. "But when you are in the position I was in, you have no choice but to accept the lender's terms if you want to keep your property, and that makes you feel very, very vulnerable."
Witherspoon benefited from the increasing willingness of lenders to help troubled borrowers stay in their homes. After easing lending standards in recent years, mortgage companies are facing a rising tide of late payments and defaults, driven by subprime borrowers with blemished credit or other factors that make them a risk to lenders. More than two dozen subprime lenders have shut down, and the rest of the industry is seeking ways to limit the damage.
"We would much rather work with a borrower than go through the foreclosure process," said Steve Bailey, Countrywide's senior managing director of loan administration. "We lose money on a foreclosure, the borrower is out of their home, and nobody is happy. The math works against us."
The lenders' new leniency works in favor of some borrowers. But to take advantage, homeowners have to move quickly, even if calling a mortgage company seems intimidating or stressful. Many people facing foreclosure simply "shut down" out of fear, says J. Michael Collins, a housing specialist with PolicyLab Consulting Group in Ithaca, N.Y.
"The more stressed people are, the less they're willing to seek help and the less they feel that lenders are helpful," he said.
If homeowners can overcome their anxiety and act soon enough, they have more options that can help avoid foreclosure. Those include refinancing the house, altering the terms of the original loan, filing for bankruptcy protection or even selling the house at a loss. But borrowers lose leverage, credibility and precious time when they try to dodge the lender, as more than half of them do in foreclosure cases, according to a survey by Freddie Mac, one of the largest investors in U.S. mortgages.
"As soon as you see trouble coming, that's the time to take action," said Ric Edelman, a financial planner in Fairfax.
The Equity Factor
If you're a financially troubled borrower, there are a few steps you should consider before contacting your mortgage company, especially if you have not missed a payment. Think about refinancing or taking out a home-equity loan, if you have equity in the property.
If refinancing won't work, identify every opportunity to raise cash. Sell your childhood toy collection on eBay. Rent out a room. Seek help from your church. "Do whatever it takes to raise money. You don't want to tell a creditor that you're having a problem if you can avoid it," especially if all you need is a one-time fix, Edelman said.
Telling a lender about your financial woes could put you at a disadvantage if you have equity in your home, said Jack Guttentag, professor of finance emeritus at the University of Pennsylvania's Wharton School and author of the Mortgage Professor column.
"The lender may tell you to come back after you've missed two payments," Guttentag said. By that time, your credit is shot, making it tough to borrow money elsewhere. If the lender then forecloses, that lender is protected against loss because the equity in your home could cover the loan balance and foreclosure-related costs, he said.
The riskiest borrowers typically don't have much equity, often because they have put little or no money down to buy their homes or have taken out second mortgages. As the housing market has softened, and home prices stagnated, those borrowers have found it hard to sell or refinance their way out of trouble.
Even if they could refinance, many borrowers with subprime loans face steep penalties if they pay off their loans early. Meanwhile, in response to the mortgage crisis, lenders have tightened their standards and made it harder for risky borrowers to qualify for new loans.
"It's a paradox, but the borrower who gets into trouble and has no equity is in a stronger negotiating position with the lender than the borrower who has equity," Guttentag said.
Work With the Lender
If refinancing is not an option, take a look at your mortgage statement and call the company that manages your loan. That call should be made quickly. The more time passes, the more a homeowner's credit tanks, limiting a lender's ability to work out a payment plan.
Lenders tend to be most amenable to the possibility of a forbearance, in which they suspend or reduce payments for a few months and then tack on portions of those payments to future ones. They will also consider lowering monthly interest rates, extending the life of the loan or altering the loan in some other way.
"Borrowers should seek modifications," said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "But the modification should not just keep the wolf away for a while longer. It should actually create an affordable loan."
So far, the number of mortgages modified has been modest. But the numbers are expected to rise substantially as more adjustable-rate mortgages begin to reset at higher rates at year's end, says Rod Dubitsky, an analyst at Credit Suisse.
"Right now, many people experiencing a reset have a lot of equity because of home-price appreciation at the end of 2005," said Dubitsky. "By the end of this year, fewer and fewer borrowers will have equity to refinance or sell their homes."
Lenders say it's in their interest to work with borrowers. Servicing a healthy loan costs them about $50 a year, and managing a delinquent or foreclosed one costs them about $1,000 and $2,000, respectively, said Robert Lacoursiere, an analyst at Banc of America Securities.
However, that does not mean there's a solution for every troubled borrower. Homeowners whose incomes cannot support their mortgage may get nothing more than a sympathetic ear -- if that -- from whoever handles their mortgage. The ultimate solution may be to walk way from the house.
"There's no incentive to work out payment arrangements if it only delays the inevitable," said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.
Instead, the borrower may be able to arrange a "short sale." With the mortgage holder's permission, a borrower can sell a home for less than the amount due on the loan and turn over the proceeds to the lender.
If the lender has reason to believe it can extract more value from the house, possibly by negotiating lower commissions from the agent involved, it may ask the homeowner to give it the deed of the house, surrender ownership rights and leave the property. This transaction is called a "deed in lieu of foreclosure."
To entice homeowners to leave quickly, some firms might even offer "cash for keys" -- a small sum of money that can help defray moving costs.
For lenders, all these deals typically reduce the cost of taking possession of the house.
In return, borrowers can shed their loan obligations, spare themselves the humiliation of a public foreclosure notice and protect their credit record. A short sale and a deed in lieu of foreclosure are far less damaging to a consumer's credit than an outright foreclosure.
But pay attention, says Richard Gottlieb, a consumer financial services attorney at Dykema Gossett. "A lender has every right to proceed against a borrower for the balance due on the mortgage loan," he said. "A borrower with significant assets is still at risk."
As a practical matter, most lenders will accept whatever money they get from a short sale or a deed in lieu of foreclosure, but borrowers need to make sure when they walk away that they are released of all financial obligations for the loan, consumer advocates said. That release should be put in writing.
If the lender forgives the shortfall, that has tax implications because it is considered income for the borrower, said Steven M. Buckman, a real estate attorney in the District. "And any time you have income, you have to pay income tax on it, federal and state." Lenders are required by law to report canceled debt to the IRS, and borrowers should be sure to get a statement of how much was forgiven on the loan.
A Last Resort
Anita McKenzie's lender suggested she do a short sale. But McKenzie does not want to walk away from her home. She said when she bought her townhouse in Germantown less than a year ago, she believed her agent and broker, who told her she could immediately refinance into a more affordable mortgage.
The refinancing never came through, leaving her stuck with a $3,650 monthly payment on her $40,000 salary. McKenzie fell behind on her payments. She's in danger of losing her house this summer.
"I don't know what to do except file for bankruptcy," said McKenzie, who has been working with HomeFree-USA, a housing counseling agency in the District.
McKenzie's counselor advised against it. Like many consumer advocates, she argues that bankruptcy proceedings should be used as a last resort because they damage a filer's credit, though less so than a foreclosure.
But in some situations, a bankruptcy filing makes sense, says Steven Ramsdell, a bankruptcy attorney in Alexandria.
"For people who have missed house payments, their credit has usually been dinged up already," Ramsdell said. "The credit ramifications of saving a house through bankruptcy should not be a deterrent if they can in fact save it."
Before filing for bankruptcy protection, consumers must attend credit-counseling sessions held by designated groups throughout the country.
Once they do, said Ramsdell, the kind of bankruptcy protection most effective in saving homes is Chapter 13, which immediately halts a foreclosure sale and freezes all collection actions for debts that predated the bankruptcy filing.
The court then approves a repayment plan that determines which creditors get paid back and when.
Under that arrangement, a person has up to five years to pay missed mortgage payments, essentially forcing the lender into a repayment plan and forcing a time frame that most lenders would not otherwise accept, Ramsdell said.
But while trying to make good on past debt, filers must keep up with their regular mortgage payments and other living expenses. For people without sufficient cash flow to make those payments -- plus contribute to the late ones -- this course of action is futile, Ramsdell says. It also makes no sense to file for bankruptcy protection when the house is worth less than the mortgage balance.
"If you owe $480,000 on a house that's worth only $400,000, it may not make sense to hang onto the house," Ramsdell said. "That's a hard thing for people to accept."
(Dina ElBoghdady, Washington Post)
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