Climbing to the roof of a downtown Baltimore restaurant with a view of the city's skyline and inner-city neighborhoods, Gov. Martin O'Malley vowed yesterday to close corporate "loopholes" that he said allow large companies to avoid paying millions of dollars in state and local taxes each year.
"Businesses that benefit from our state's services must be willing to invest in those services with their tax dollars, so that everyone is paying their fair share," O'Malley said.
The Democratic governor said the state should close a "glaring loophole" that allows large corporations to avoid real estate recordation and transfer taxes - a levy typically equal to 2 percent of sale prices.
O'Malley climbed a ladder from the upper story of Gardel's restaurant to the roof, where he pointed to the Alex. Brown office building, which was sold last year but, because of the loophole, was not subject to transfer taxes. Philadelphia-based Resource America Inc. sold the 30-story tower last year for $120 million and avoided paying $2.4 million in city and state transfer and recordation fees.
"You know what it paid in transfer tax?" O'Malley said. "Not a single dime. If one of these houses around us had sold for $200,000, that homeowner would have paid $4,000 in the local transfer taxes. ... That's not fair, and that's not right."
Yesterday's news conference was the third this week that the governor has held to roll out more details of his blueprint to close a projected $1.7 billion shortfall in the state general fund budget that begins July 1 next year.
O'Malley has outlined plans to make the state income tax more progressive, increase the sales tax rate from 5 percent to 6 percent and extend it to more services and to reduce the state property tax rate by 3 cents per $100 of assessed value over three years.
Business groups and Republican legislators rapped the governor's business tax proposals yesterday, saying that they would make Maryland less competitive in attracting and keeping jobs.
"It's totally irresponsible for the state to go off on these spending splurges and expect the public to accept it," said Senate Minority Leader David R. Brinkley, a Frederick County Republican.
Some corporations avoid paying transfer taxes by making their real estate part of a limited liability corporation. When the time comes to sell the building, they sell the LLC instead, thus avoiding the 0.5 percent levy that the state charges on property sales. Seventeen counties and Baltimore City levy a transfer tax on real property transactions, with the city and Baltimore County imposing a 1.5 percent tax.
The General Assembly has considered bills several times in recent years to close that loophole, but they have never succeeded.
House Speaker Michael E. Busch, an Anne Arundel County Democrat, has made prohibiting that practice a priority, but Senate President Thomas V. Mike Miller, a Southern Maryland Democrat, has not previously supported it.
However, Miller said recently that he would shepherd such a bill through his chamber if it were part of a budget-balancing package that includes legalized slot machine gambling.
Groups, including the Maryland Chamber of Commerce, Maryland State Builders Association, and Maryland Association of Realtors, have opposed bills closing the loophole.
"It would make Maryland commercial real property less attractive as a business investment, and the bill has been in 12 times since 1990 and defeated 12 times because it is not a good tax policy," said Ronald W. Wineholt, the in-house lobbyist for the Maryland Chamber of Commerce.
Closing the loophole would be worth about $14 million a year for the state, making it a relatively small part of O'Malley's efforts to balance the budget. Most of the money generated by the tax would go to local governments, about $50 million a year.
But the measure could be politically important for O'Malley for two reasons: Not only does it contribute to the governor's effort to pitch his fiscal package as a plan to make state taxes fairer, but it also could help ease the pain of local leaders who could see their finances hurt by the state's budget-balancing.
O'Malley has said that he hopes to avoid making cuts in state aid to local governments - money that helps support schools, public safety and other popular programs but that has often been subject to reductions in tough fiscal times. But Miller, Busch and others have said local governments will have to feel some of the pain. Giving local governments new revenue from the transfer tax could ease that burden.
Anne Arundel County Executive John R. Leopold, a Republican, said support for closing the corporate tax loopholes crosses party lines. He said closing the transfer tax loophole in particular would mean millions for Anne Arundel County that could prove crucial in its ability to maintain public services.
"My concern, of course, is that part of the budget-reduction package will ultimately include reductions in state aid to counties," Leopold said. "Any monies we can secure to counterbalance those cuts are welcome."
Loophole and tax law
Gov. Martin O'Malley called yesterday for closing corporate loopholes in his third event this week on his revenue-raising plan. Highlights include:
• Closing a "loophole" - referred to as "controlling interest" - that enables some corporations to avoid recordation and transfer taxes by making their real estate part of a limited liability company. When they sell the LLC, they can avoid the 0.5 percent levy that the state charges on property sales, and additional levies that 17 counties and Baltimore City charge. Because a deed never changes hands, the transfer tax is not triggered. The O'Malley administration says the change could bring the state an additional $14 million per year, with about $50 million flowing to local governments.
• Enacting a tax law - referred to as "combined reporting" - designed to prevent large companies operating in Maryland from hiding profits in other states. Wal-Mart and other large companies have used real estate investment trusts to shift profits to states with low or no corporate taxes. If Maryland approves "combined reporting," the state would receive an additional $25 million. (by James Drew, Baltimore Sun)
Tuesday, October 30, 2007
MD Officials Try To Slow Foreclosures
Maryland officials are trying to slow foreclosures. The Secretary of Licensing and Regulation suggested Tuesday that lawmakers could extend the period between a borrower's default and the legal start of foreclosure actions. That period is currently 15-days, a Governor's Task Force says it should be at least 90.
About 7000 residents lost their homes in this year's third quarter, compared to less than 1600 in the first quarter. (By Katherine Amenta, WMDT)
About 7000 residents lost their homes in this year's third quarter, compared to less than 1600 in the first quarter. (By Katherine Amenta, WMDT)
Friday, October 26, 2007
Increase in sales tax is a bad deal for renters
Gov. Martin O’Malley, as part of his budget proposal, recently proposed that Maryland sales and use taxes would increased to 6 percent and applied to property management services. That means renters in apartments who use property management services will pay that tax through higher rents.
Homeowners and condo owners should take note. Many homeowner associations and condo boards are managed by professional management companies, and will also pay a 6 percent tax on top of their management fees. Those taxes will ultimately be paid by the property owners in higher HOA and condo assessments. This tax is bad enough when considering its impact on renters, but it will hit homeowners too.
This proposal is inconsistent with the governor's pledge to help working families. Maryland should work to help housing affordability not make it worse.
Small business takes it on the chin from this tax too!
Any small business renting space from a building owner using a property management service will ultimately pay this tax as it is passed down to them though higher rents. The property management tax is a bad deal for small business as well as homeowners and renters.
(Terry Fox, gazette.net)
Homeowners and condo owners should take note. Many homeowner associations and condo boards are managed by professional management companies, and will also pay a 6 percent tax on top of their management fees. Those taxes will ultimately be paid by the property owners in higher HOA and condo assessments. This tax is bad enough when considering its impact on renters, but it will hit homeowners too.
This proposal is inconsistent with the governor's pledge to help working families. Maryland should work to help housing affordability not make it worse.
Small business takes it on the chin from this tax too!
Any small business renting space from a building owner using a property management service will ultimately pay this tax as it is passed down to them though higher rents. The property management tax is a bad deal for small business as well as homeowners and renters.
(Terry Fox, gazette.net)
Tuesday, October 16, 2007
Area home sales plunge 30% from September 2006
Baltimore-area housing sales fell last month to the lowest level for a September in at least nine years, as the turmoil in the mortgage industry hit the slumping market full force.
The number of homes sold - 1,975 - dropped nearly 30 percent from a year earlier, already well into the downturn, Metropolitan Regional Information Systems Inc. reported yesterday. It is the lowest sales figure for September since MRIS began tracking the area in 1998.
By comparison, buyers snapped up more than 4,000 homes in September 2005, the last hurrah of the housing boom.
Average home prices still eked out a gain last month, according to MRIS, which runs the local multiple-listing service. Prices in the metro area rose just under 2 percent, to about $315,000, with most jurisdictions seeing slight gains.
It took homes an average of 95 days to sell, a month longer than a year earlier. And the inventory of unsold homes, nearly 21,000, set a record.
Lender bankruptcies, a credit crunch and a jump in interest rates for jumbo mortgages in August continue to depress sales nationwide. Yesterday, the National Association of Realtors lowered its forecast of 2007 U.S. existing-home sales for the eighth month in a row. It now expects that the number of homes changing hands will be off about 11 percent from last year.
"I think the buyers are scared - they're afraid that if they buy today, that tomorrow [the price] is going to drop 15 percent," said George Brookhart, an agent with Long & Foster in Ellicott City.
Moody's Economy.com predicts that the local and national markets will not hit bottom until late next year, and its forecasts show values falling about 15 percent in the Baltimore area over those months. There are signs of backtracking now: Average prices dropped about 4 percent in Harford and Howard counties last month, the MRIS data showed.
Prices rose about 4 percent in Baltimore County, 3.6 percent in Anne Arundel, 2 percent in Carroll and half a percent in the city.
Economy.com says prices in the region would be down overall if they included the value of incentives that sellers now routinely give to buyers, such as thousands of dollars in closing-cost help.
High-priced Howard County was hardest hit last month, with the number of sales dropping by 34 percent. The average home there sold for about $418,000 - the point at which buyers would need a jumbo loan if they were financing the entire purchase. Harford, with an average price of $285,000, saw the smallest decline, but sales were down 22 percent.
Jada Krall, who is trying to sell a two-year-old colonial in Harford for $444,400, said she sees homes for sale everywhere she goes in the county. She counts 15 in her subdivision alone. To make hers stand out, she's offering a $7,500 incentive to be used toward closing costs or upgrade work.
"We've seen a few houses in the neighborhood sell," said Krall, whose family is relocating to Tampa, Fla. "We're just hoping ours is going to be next."
She can expect good deals in Florida, at least. Economy.com expects price declines of 20 percent to 30 percent in some of the once-hot housing markets there.
Celia Chen, director of housing economics at Economy.com, said recent tightening of credit is holding back demand nationally even as foreclosures increase supply. Borrowers with good credit can still get traditional mortgages, she said, but 40 percent of the loans issued last year were "subprime" and "nonprime" - from jumbo to interest-only.
"The lack of that kind of funding is going to have a big negative impact on housing this year," Chen said.
To avoid the higher rates of jumbo loans, city residents Bonita and Radames Rodriguez are opting for a regular mortgage plus an equity line of credit to purchase a $615,000 new home in Canton.
"I don't like the idea of having two separate loans, but it's better, much better, than the alternative," said Bonita Rodriguez.
The couple, who work in sales, will settle on that house this month and also complete the sale of the Bolton Hill rowhouse they've owned for eight years. They're selling it for $575,000, $74,000 less than the original asking price in April.
But they're buying their new home for $135,000 less than the builder's original price.
Bonita Rodriguez believes it was priced way too high to begin with. "I think we got a good deal, but I don't think we got a real bargain," she said.
Real estate agents say the days of setting prices based on past sales are over. Now, said Ron Howard with ReMax Sails in Baltimore, it's about the competition - other homes on the market.
After one of his Canton rehabs sat on the market for six months, Mel Stachura of Urban Rehab Consultants LLC decided to deal with the competition by adding a bathroom and more closet space.
"You have to adapt to survive," said Stachura, who was reacting to feedback from prospective buyers who looked and left. More than 60 came through. "There's buyers out there - they're just picky."
They're much more demanding from start to finish than they used to be, said Tressa Manna, his agent.
"Buyers are asking for everything on the home inspection, to the point of, 'I want the burnt-out bulb in the hallway replaced,'" said Manna, with ReMax Sails.(By Jamie Smith Hopkins, Baltimore Sun )
The number of homes sold - 1,975 - dropped nearly 30 percent from a year earlier, already well into the downturn, Metropolitan Regional Information Systems Inc. reported yesterday. It is the lowest sales figure for September since MRIS began tracking the area in 1998.
By comparison, buyers snapped up more than 4,000 homes in September 2005, the last hurrah of the housing boom.
Average home prices still eked out a gain last month, according to MRIS, which runs the local multiple-listing service. Prices in the metro area rose just under 2 percent, to about $315,000, with most jurisdictions seeing slight gains.
It took homes an average of 95 days to sell, a month longer than a year earlier. And the inventory of unsold homes, nearly 21,000, set a record.
Lender bankruptcies, a credit crunch and a jump in interest rates for jumbo mortgages in August continue to depress sales nationwide. Yesterday, the National Association of Realtors lowered its forecast of 2007 U.S. existing-home sales for the eighth month in a row. It now expects that the number of homes changing hands will be off about 11 percent from last year.
"I think the buyers are scared - they're afraid that if they buy today, that tomorrow [the price] is going to drop 15 percent," said George Brookhart, an agent with Long & Foster in Ellicott City.
Moody's Economy.com predicts that the local and national markets will not hit bottom until late next year, and its forecasts show values falling about 15 percent in the Baltimore area over those months. There are signs of backtracking now: Average prices dropped about 4 percent in Harford and Howard counties last month, the MRIS data showed.
Prices rose about 4 percent in Baltimore County, 3.6 percent in Anne Arundel, 2 percent in Carroll and half a percent in the city.
Economy.com says prices in the region would be down overall if they included the value of incentives that sellers now routinely give to buyers, such as thousands of dollars in closing-cost help.
High-priced Howard County was hardest hit last month, with the number of sales dropping by 34 percent. The average home there sold for about $418,000 - the point at which buyers would need a jumbo loan if they were financing the entire purchase. Harford, with an average price of $285,000, saw the smallest decline, but sales were down 22 percent.
Jada Krall, who is trying to sell a two-year-old colonial in Harford for $444,400, said she sees homes for sale everywhere she goes in the county. She counts 15 in her subdivision alone. To make hers stand out, she's offering a $7,500 incentive to be used toward closing costs or upgrade work.
"We've seen a few houses in the neighborhood sell," said Krall, whose family is relocating to Tampa, Fla. "We're just hoping ours is going to be next."
She can expect good deals in Florida, at least. Economy.com expects price declines of 20 percent to 30 percent in some of the once-hot housing markets there.
Celia Chen, director of housing economics at Economy.com, said recent tightening of credit is holding back demand nationally even as foreclosures increase supply. Borrowers with good credit can still get traditional mortgages, she said, but 40 percent of the loans issued last year were "subprime" and "nonprime" - from jumbo to interest-only.
"The lack of that kind of funding is going to have a big negative impact on housing this year," Chen said.
To avoid the higher rates of jumbo loans, city residents Bonita and Radames Rodriguez are opting for a regular mortgage plus an equity line of credit to purchase a $615,000 new home in Canton.
"I don't like the idea of having two separate loans, but it's better, much better, than the alternative," said Bonita Rodriguez.
The couple, who work in sales, will settle on that house this month and also complete the sale of the Bolton Hill rowhouse they've owned for eight years. They're selling it for $575,000, $74,000 less than the original asking price in April.
But they're buying their new home for $135,000 less than the builder's original price.
Bonita Rodriguez believes it was priced way too high to begin with. "I think we got a good deal, but I don't think we got a real bargain," she said.
Real estate agents say the days of setting prices based on past sales are over. Now, said Ron Howard with ReMax Sails in Baltimore, it's about the competition - other homes on the market.
After one of his Canton rehabs sat on the market for six months, Mel Stachura of Urban Rehab Consultants LLC decided to deal with the competition by adding a bathroom and more closet space.
"You have to adapt to survive," said Stachura, who was reacting to feedback from prospective buyers who looked and left. More than 60 came through. "There's buyers out there - they're just picky."
They're much more demanding from start to finish than they used to be, said Tressa Manna, his agent.
"Buyers are asking for everything on the home inspection, to the point of, 'I want the burnt-out bulb in the hallway replaced,'" said Manna, with ReMax Sails.(By Jamie Smith Hopkins, Baltimore Sun )
Wednesday, October 10, 2007
Abell Foundation criticizes Baltimore Housing authority
The city's housing authority has abandoned its mission to house the poor, according to a new report by the Abell Foundation.
The report criticizes city housing officials for focusing on demolition of properties instead of providing new housing.
"On its seventieth anniversary, the Housing Authority - once on a mission to replace slums with safe homes for Baltimore's poor - is now in the demolition business," wrote Joan Jacobson, author of the Abell report,
The number of occupied public housing units in the city has declined by 42 percent in the past 15 years - from more than 16,000 to less than 10,000, according to the report, which says the authority's plans for new housing are "unclear."
City housing officials have also faced criticism for plans to use a $59 million affordable housing fund, created to provide homes for the poor and working class, to instead demolish units at 15 sites.
The Housing Authority of Baltimore City issued a response that called the report "deeply flawed and biased."
The authority said the report does not take into sufficient account federal funding cuts in the past six years, in which $79 million was cut from the authority's budget, or court orders that have made it harder to build new public housing.
Housing Commissioner Paul T. Graziano said the housing authority plans 3,700 housing units in mixed-income developments and demolition is needed to eliminate blight and make way for new housing.
"I think there is a failure to recognize that in order to create the viable mixed-income communities that our residents deserve, we need to tear down some of the old," Graziano said.
"These are not places where I feel good about the young children of the city growing up." (The Associated Press, examiner.com)
The report criticizes city housing officials for focusing on demolition of properties instead of providing new housing.
"On its seventieth anniversary, the Housing Authority - once on a mission to replace slums with safe homes for Baltimore's poor - is now in the demolition business," wrote Joan Jacobson, author of the Abell report,
The number of occupied public housing units in the city has declined by 42 percent in the past 15 years - from more than 16,000 to less than 10,000, according to the report, which says the authority's plans for new housing are "unclear."
City housing officials have also faced criticism for plans to use a $59 million affordable housing fund, created to provide homes for the poor and working class, to instead demolish units at 15 sites.
The Housing Authority of Baltimore City issued a response that called the report "deeply flawed and biased."
The authority said the report does not take into sufficient account federal funding cuts in the past six years, in which $79 million was cut from the authority's budget, or court orders that have made it harder to build new public housing.
Housing Commissioner Paul T. Graziano said the housing authority plans 3,700 housing units in mixed-income developments and demolition is needed to eliminate blight and make way for new housing.
"I think there is a failure to recognize that in order to create the viable mixed-income communities that our residents deserve, we need to tear down some of the old," Graziano said.
"These are not places where I feel good about the young children of the city growing up." (The Associated Press, examiner.com)
Monday, October 8, 2007
Retaliatory evictions are next issue for Baltimore City housing advocates
Retaliatory evictions are next issue for Baltimore City housing advocates
Unsightly piles of tenants’ furniture dumped on city sidewalks and lack of formal notice for evictions should be a thing of the past in Baltimore City, thanks to a new law just signed by Mayor Sheila Dixon.
But housing advocates said the law is just the first step toward a long-term effort to improve tenants rights.
“The next issue we want to tackle is landlord retaliation,” said John Netherecut, executive director of the Public Justice Center, a housing advocacy group. “We have some of the most lax laws in the country.”
Netherecut, whose organization joined dozen of tenants rights groups to muster support for the new law, said strengthening the laws preventing landlords from evicting tenants who complain or call a housing inspector is next.
“In most states, once the tenant alleges retaliation, that becomes part of a defense in an eviction case,” Netherecut said.
“Then the judge hears the facts from both sides,” he said.
But Kathy Howard, a lobbyist for the Maryland Multi-Housing Association, said any changes to the laws would add confusion to the eviction process.
“When you’re talking about whether or not someone is doing something for a retaliatory motive, that gets into what a landlord is thinking — which can be very muddy,” she said.
“The issue is whether or not the rent has been paid.”
Dixon signed the “chattel” bill into law Monday. The law requires landlords to take an evicted tenant’s belongings to a dump. The law also ensures tenants receive 14 days’ notice prior to an eviction.
The measure will improve the image of Baltimore, City Council President Stephanie-Rawlings-Blake said at a news conference Monday. “Children should be able to play outside without running into a living room set.”
Outgoing Councilman Kenneth Harris, D-4th District, who introduced the chattel bill, said: “I don’t know if there is anyone on the council who has the agenda like I did to make sure renters are treated fairly.” (by Stephen Janis, The Examiner)
Unsightly piles of tenants’ furniture dumped on city sidewalks and lack of formal notice for evictions should be a thing of the past in Baltimore City, thanks to a new law just signed by Mayor Sheila Dixon.
But housing advocates said the law is just the first step toward a long-term effort to improve tenants rights.
“The next issue we want to tackle is landlord retaliation,” said John Netherecut, executive director of the Public Justice Center, a housing advocacy group. “We have some of the most lax laws in the country.”
Netherecut, whose organization joined dozen of tenants rights groups to muster support for the new law, said strengthening the laws preventing landlords from evicting tenants who complain or call a housing inspector is next.
“In most states, once the tenant alleges retaliation, that becomes part of a defense in an eviction case,” Netherecut said.
“Then the judge hears the facts from both sides,” he said.
But Kathy Howard, a lobbyist for the Maryland Multi-Housing Association, said any changes to the laws would add confusion to the eviction process.
“When you’re talking about whether or not someone is doing something for a retaliatory motive, that gets into what a landlord is thinking — which can be very muddy,” she said.
“The issue is whether or not the rent has been paid.”
Dixon signed the “chattel” bill into law Monday. The law requires landlords to take an evicted tenant’s belongings to a dump. The law also ensures tenants receive 14 days’ notice prior to an eviction.
The measure will improve the image of Baltimore, City Council President Stephanie-Rawlings-Blake said at a news conference Monday. “Children should be able to play outside without running into a living room set.”
Outgoing Councilman Kenneth Harris, D-4th District, who introduced the chattel bill, said: “I don’t know if there is anyone on the council who has the agenda like I did to make sure renters are treated fairly.” (by Stephen Janis, The Examiner)
Tuesday, October 2, 2007
Washington Mutual Announces New Standards for Brokers
Oct. 1 (Bloomberg) -- Washington Mutual Inc., the largest U.S. savings and loan, is requiring that mortgage brokers show they disclosed lending terms to borrowers as a record number of Americans face losing their homes to foreclosure.
Brokers who do business with Washington Mutual must provide evidence that they revealed their compensation and explained terms of the loan they recommended including amounts, prepayment penalties, and whether interest rates or payments may change, the Seattle-based lender said in a statement today. Washington Mutual also said it would try to call every borrower represented by a broker to review the terms of a loan before closing.
Mortgage brokers have been criticized in Congress and by consumer advocates who say insufficient disclosure, deceptive lending practices and lax regulation helped raise foreclosures on U.S. homes to a record high in August. Rising interest rates squeezed homebuyers with poor credit histories prompting the worst housing slump in 16 years.
``This is a step in the right direction and it's very important this is done to avert future problems,'' said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America, a Washington-based advocacy group. ``Lenders in general need to play more of an oversight role if they use brokers.''
Washington Mutual rose 38 cents, or 1 percent, to $35.69 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has dropped 21 percent this year.
Proposed Legislation
About 59 percent of all mortgages last year were arranged through brokers, according to Columbia, Maryland-based Wholesale Access Mortgage Research & Consulting Inc.
``These efforts are about further simplifying the process of obtaining a home loan for our customers and helping to ensure that our customers fully understand the various choices available to them,'' Alan Gulick, a Washington Mutual spokesman, said in an e-mailed statement. The changes go into effect Oct. 9, he said.
U.S. House Financial Services Committee Chairman Barney Frank said that he's writing legislation to halt predatory mortgage lending and increase consumer protection.
Frank, a Massachusetts Democrat, circulated an outline of a plan last week that would require mortgage brokers to be licensed and registered under state or federal law. He may also propose eliminating incentive pay to brokers based on a customers' choice of mortgage terms.
Brokers serve as middlemen while lenders are responsible for reviewing applications as well as making approval and funding decisions that lead to bad mortgages, George Hanzimanolis, president of the National Association of Mortgage Brokers, said in an interview last month.
`Already Required'
``Brokers are already required to do this,'' Hanzimanolis said today in commenting on disclosures to borrowers. ``The government requires us to do it. Maybe they are just trying to reiterate what the rules are.''
U.S. Representative Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, introduced legislation July 12 to create a national registration system and a new licensing standard for brokers. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat seeking his party's presidential nomination, unveiled legislation Sept. 5 that would bar brokers from steering borrowers into costly loans.
``Any lender that is buying loans from anyone has quality control, has full underwriting capabilities,'' Hanzimanolis said today. ``If there are loans that are bad, those are things they should be identifying up front.''
Brokers who do business with Washington Mutual must provide evidence that they revealed their compensation and explained terms of the loan they recommended including amounts, prepayment penalties, and whether interest rates or payments may change, the Seattle-based lender said in a statement today. Washington Mutual also said it would try to call every borrower represented by a broker to review the terms of a loan before closing.
Mortgage brokers have been criticized in Congress and by consumer advocates who say insufficient disclosure, deceptive lending practices and lax regulation helped raise foreclosures on U.S. homes to a record high in August. Rising interest rates squeezed homebuyers with poor credit histories prompting the worst housing slump in 16 years.
``This is a step in the right direction and it's very important this is done to avert future problems,'' said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America, a Washington-based advocacy group. ``Lenders in general need to play more of an oversight role if they use brokers.''
Washington Mutual rose 38 cents, or 1 percent, to $35.69 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has dropped 21 percent this year.
Proposed Legislation
About 59 percent of all mortgages last year were arranged through brokers, according to Columbia, Maryland-based Wholesale Access Mortgage Research & Consulting Inc.
``These efforts are about further simplifying the process of obtaining a home loan for our customers and helping to ensure that our customers fully understand the various choices available to them,'' Alan Gulick, a Washington Mutual spokesman, said in an e-mailed statement. The changes go into effect Oct. 9, he said.
U.S. House Financial Services Committee Chairman Barney Frank said that he's writing legislation to halt predatory mortgage lending and increase consumer protection.
Frank, a Massachusetts Democrat, circulated an outline of a plan last week that would require mortgage brokers to be licensed and registered under state or federal law. He may also propose eliminating incentive pay to brokers based on a customers' choice of mortgage terms.
Brokers serve as middlemen while lenders are responsible for reviewing applications as well as making approval and funding decisions that lead to bad mortgages, George Hanzimanolis, president of the National Association of Mortgage Brokers, said in an interview last month.
`Already Required'
``Brokers are already required to do this,'' Hanzimanolis said today in commenting on disclosures to borrowers. ``The government requires us to do it. Maybe they are just trying to reiterate what the rules are.''
U.S. Representative Spencer Bachus of Alabama, the top Republican on the House Financial Services Committee, introduced legislation July 12 to create a national registration system and a new licensing standard for brokers. Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat seeking his party's presidential nomination, unveiled legislation Sept. 5 that would bar brokers from steering borrowers into costly loans.
``Any lender that is buying loans from anyone has quality control, has full underwriting capabilities,'' Hanzimanolis said today. ``If there are loans that are bad, those are things they should be identifying up front.''
Monday, October 1, 2007
Report criticizes Housing Authority for demolishing public housing
The number of occupied public housing units in Baltimore has dropped 42 percent over the past 15 years — from 16,525 to 9,625 — as the Housing Authority of Baltimore City “is now in the demolition business,” according to a report from The Abell Foundation.
“With virtually no plans to replace the deteriorated units being razed or sold, tenant representatives and housing advocates have watched with growing alarm as they wonder if the Housing Authority has abandoned its mission to house the poor,” wrote Joan Jacobson, author of the recent report, “The Dismantling of Baltimore’s Public Housing.”
While more than a quarter of Baltimore families live in poverty, the Housing Authority is removing or demolishing 2,400 homes from its inventory, according to the report.
The report further states the Housing Authority is planning to spend almost twice as much on demolition, $24 million, as it will spend on redevelopment, $14 million, in 2007 and 2008.
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“Today’s demolition plans offer no sense of hope for Baltimore’s neediest,” Jacobson wrote.
In a lengthy response, the Housing Authority said the report failed to recognize the funding crisis and complex challenges that affect every public housing authority in the nation.
The Housing Authority plans to lease 2,500 new Section 8 units in the next year. The Housing Authority reported funding for public housing decreased 33 percent from 1999 to 2006.
While the number of public housing units has decreased over the years, the Housing Authority has said it has increased its Section 8 vouchers to make up for the loss of units, as reported in The Examiner’s “Housing Matters” series, Sept. 17 and 18.
“The Jacobson report is filled with inaccuracies, distorts the historical record and offers no useful recommendations to respond to the crisis caused by the steady erosion of federal support for public and other types of affordable housing,” the Housing Authority said.
The Abell Foundation is a Baltimore nonprofit dedicated to improving the quality of life in the city.
Recommendations
» The state should pass a fair-housing law that requires landlords to accept Section 8 vouchers, similar to laws in Howard and Montgomery counties.
» A “one-for-one” replacement policy for demolished units should be adopted.
» Developers, city officials and housing experts should study city public housing. (by Andrew Cannarsa, examiner.com)
“With virtually no plans to replace the deteriorated units being razed or sold, tenant representatives and housing advocates have watched with growing alarm as they wonder if the Housing Authority has abandoned its mission to house the poor,” wrote Joan Jacobson, author of the recent report, “The Dismantling of Baltimore’s Public Housing.”
While more than a quarter of Baltimore families live in poverty, the Housing Authority is removing or demolishing 2,400 homes from its inventory, according to the report.
The report further states the Housing Authority is planning to spend almost twice as much on demolition, $24 million, as it will spend on redevelopment, $14 million, in 2007 and 2008.
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“Today’s demolition plans offer no sense of hope for Baltimore’s neediest,” Jacobson wrote.
In a lengthy response, the Housing Authority said the report failed to recognize the funding crisis and complex challenges that affect every public housing authority in the nation.
The Housing Authority plans to lease 2,500 new Section 8 units in the next year. The Housing Authority reported funding for public housing decreased 33 percent from 1999 to 2006.
While the number of public housing units has decreased over the years, the Housing Authority has said it has increased its Section 8 vouchers to make up for the loss of units, as reported in The Examiner’s “Housing Matters” series, Sept. 17 and 18.
“The Jacobson report is filled with inaccuracies, distorts the historical record and offers no useful recommendations to respond to the crisis caused by the steady erosion of federal support for public and other types of affordable housing,” the Housing Authority said.
The Abell Foundation is a Baltimore nonprofit dedicated to improving the quality of life in the city.
Recommendations
» The state should pass a fair-housing law that requires landlords to accept Section 8 vouchers, similar to laws in Howard and Montgomery counties.
» A “one-for-one” replacement policy for demolished units should be adopted.
» Developers, city officials and housing experts should study city public housing. (by Andrew Cannarsa, examiner.com)
Foreclosure Fraud
The D.C. Council contemplates a law to prevent it.
WHEN JOY JENISE Jackson and her bridegroom, Kurt Fordham, walked down the aisle together at the Mayflower Hotel last year, they did it in style. The happy couple joined their 360 guests for lobster and four wedding cakes, then bestowed gifts on their attendants that included a house and a Porsche. The newlyweds were also business partners, in the Lanham-based Metropolitan Money Store, a "foreclosure rescue" service that advertised itself as a savior to families in danger of losing their homes.
How romantic. Alas, Metropolitan Money Store was a scam to bilk hundreds of financially troubled homeowners out of the equity in their homes -- allegedly to the tune of $60 million, according to a class-action lawsuit filed in U.S. District Court in Maryland. The company allegedly pitched its services to minorities via radio advertising, then siphoned off their wealth through "straw buyers" who would acquire title to their homes. The Secret Service and FBI are conducting investigations.
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Metropolitan Money Store is only the latest alleged version of an old scam that preys on people -- often elderly or minority -- who find themselves in this difficult family crisis. Foreclosure happens fast; as the bank letters begin arriving, people panic. Certainly the risk is not confined to Maryland, which had enacted legislation designed to combat foreclosure-rescue abuses in 2005. The District's attorney general has filed suit on behalf of at least 27 District residents who were allegedly victimized by the Metropolitan Money Store.
The D.C. Council is considering a bill to prohibit foreclosure consultant rip-offs in the District. Shepherded by Mary M. Cheh (D-Ward 3), the legislation, which is likely to pass, would outlaw the kind of promise that the Metropolitan Money Store allegedly made and allegedly broke: Hand over the title to your house in return for a bailout. The bill also declares that anyone who engages in the foreclosure rescue business is legally bound to act in the homeowner's best financial interest. No doubt the next generation of con artists will try to find a way around these strictures. But with the housing market headed for what could be extended difficulty, the District's homeowners need protection against fraud, and this bill is a good start toward giving it to them. (www.washingtonpost.com)
WHEN JOY JENISE Jackson and her bridegroom, Kurt Fordham, walked down the aisle together at the Mayflower Hotel last year, they did it in style. The happy couple joined their 360 guests for lobster and four wedding cakes, then bestowed gifts on their attendants that included a house and a Porsche. The newlyweds were also business partners, in the Lanham-based Metropolitan Money Store, a "foreclosure rescue" service that advertised itself as a savior to families in danger of losing their homes.
How romantic. Alas, Metropolitan Money Store was a scam to bilk hundreds of financially troubled homeowners out of the equity in their homes -- allegedly to the tune of $60 million, according to a class-action lawsuit filed in U.S. District Court in Maryland. The company allegedly pitched its services to minorities via radio advertising, then siphoned off their wealth through "straw buyers" who would acquire title to their homes. The Secret Service and FBI are conducting investigations.
Comments that include profanity or personal attacks or other inappropriate comments or material will be removed from the site. Additionally, entries that are unsigned or contain "signatures" by someone other than the actual author will be removed. Finally, we will take steps to block users who violate any of our posting standards, terms of use or privacy policies or any other policies governing this site. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.
Metropolitan Money Store is only the latest alleged version of an old scam that preys on people -- often elderly or minority -- who find themselves in this difficult family crisis. Foreclosure happens fast; as the bank letters begin arriving, people panic. Certainly the risk is not confined to Maryland, which had enacted legislation designed to combat foreclosure-rescue abuses in 2005. The District's attorney general has filed suit on behalf of at least 27 District residents who were allegedly victimized by the Metropolitan Money Store.
The D.C. Council is considering a bill to prohibit foreclosure consultant rip-offs in the District. Shepherded by Mary M. Cheh (D-Ward 3), the legislation, which is likely to pass, would outlaw the kind of promise that the Metropolitan Money Store allegedly made and allegedly broke: Hand over the title to your house in return for a bailout. The bill also declares that anyone who engages in the foreclosure rescue business is legally bound to act in the homeowner's best financial interest. No doubt the next generation of con artists will try to find a way around these strictures. But with the housing market headed for what could be extended difficulty, the District's homeowners need protection against fraud, and this bill is a good start toward giving it to them. (www.washingtonpost.com)
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