State unveils plan to prevent foreclosures

Facing a historic economic mess and spikes in foreclosures, the state has finalized an agreement with six mortgage service companies to help struggling Marylanders keep their homes.

The plan to be announced today will establish a "cooling off period" for people who start to face foreclosure, halting all foreclosure actions and accrual of fees and penalties for 60 days. The companies that have agreed to cooperate with Gov. Martin O'Malley's plan are HSBC, GMAC ResCap, Litton Loan Servicing, Ocwen, Citigroup and AmeriNational Community Services.

Almost 25 percent of mortgage loans in the state will be covered by the agreement, according to the state Department of Labor, Licensing and Regulation.

Other parts of the plan will have those companies designate certain employees as "Team Maryland" to act as a point of contact for Maryland homeowners working through the state's Foreclosure Prevention Assistance Network.

Under the agreement, the companies also will create internal policies and incentives encouraging modification of loans rather than foreclosures.

The agreement comes at a time when foreclosures are rising in Anne Arundel County.

Foreclosure filings have jumped from 161 in September to 240 in October, said Lucinda Jones, the supervisor of civil records at the Circuit Court of Anne Arundel. She said the trend will probably continue this fall and filings could reach 270 or higher this month.

"We got a huge amount in yesterday," Ms. Jones said. "I do believe there is going to be a steady increase for the next couple of months."

The deal ends months of negotiations that began in February, when Mr. O'Malley criticized the loan industry for its lack of customer service and giving troubled homeowners busy signals as often as real assistance.

"The state of Maryland is committed to providing relief and offering solutions to homeowners at risk of foreclosure," he said in a release. "As a state, we have an obligation to protect our middle class families, particularly during this time of economic uncertainty."

Over the past year, Mr. O'Malley has been aggressive in changing the foreclosure process in Maryland as the implosion of the subprime and housing markets reverberate across the nation.

The governor created the "Bridge to HOPE"

Loan program, which provides small loans at zero interest to homeowners having difficulty with payments, and launched an advertising campaign to make sure troubled Marylanders don't wait to take action.

During the last General Assembly session, a host of housing reforms were passed to give people more time to keep their homes, including an extension of the foreclosure process to 150 days.

State officials encouraged Maryland residents facing foreclosure to call 1-877-462-7555 or visit www.MDHOPE.org.

"Maryland has been at the forefront of creating policies and reforms to combat the foreclosure crisis that has swept the nation," Thomas Perez, the secretary of the Department of Labor, Licensing and Regulation, said in a release. "These agreements are a critical component of our comprehensive efforts to provide homeowners with the resources and assistance they need to remain in their homes."

Some observers said the state's new agreement will help ease the situation here.

The plan is part of a "phenomenal" effort by Mr. O'Malley, said Sally Snowberger, the director of homeownership for the Housing Commission of Anne Arundel County.

"We've been working on this for a long time," she said. "People are not being foreclosed on as quickly had he not done this."

Tim O'Malley, senior vice president of sales and marketing at loan servicer AmeriNational Community Services, said his company is proud to be a part of the new agreement. Mr. O'Malley is not related to the governor.

"I think it goes a long way to put some procedures in place to help. It is the right thing to do," he said. "It is another example of the governor rolling up his sleeves and getting involved." (By LIAM FARRELL and KATIE ARCIERI, www.hometownannapolis.com)

Question 2: not all that pretty...

Please take 5 minutes and read University of Maryland's in-depth analysis and decide for yourself how you going to vote for it.
"An Analysis of the Impact of Introducing Video Lottery Terminals in Maryland"

How Maryland's real estate taxes compare nationally

The Tax Foundation is out with its list of the most expensive counties for residential property levies. Amounts are for 2007.

The highest as usual are the New York City suburbs, clocking in at a median annual tax of $7,000 or $8,000 per house. (Median means half the homes were taxed above those amounts and half below.) New York’s Westchester County tops the list at $8,422. New York, New Jersey, Connecticut and Illinois all have counties near the top of the rankings.

The U.S. county with the least expensive median real estate tax is Apache County, Arizona, at $133.

The most expensive Maryland county is Howard, with a median tax of $3,775. The least expensive in Maryland is Allegany County at $990.

Measuring property taxes in absolute dollars, however, only tells part of the story.
Taxes in Niagara County, N.Y., are only $2,802 per house. But as a percentage of home value they’re the highest in the nation at close to 3 percent.

Baltimore City has Maryland’s highest property tax as a portion of home value – 1.1 percent. Allegany County’s is nearly as high at 0.9 percent. Howard, Prince George’s, Baltimore and Frederick counties are all 0.8 percent. Everybody else is lower.

Ranked against other states, Maryland property taxes are 13th highest in the country in dollar terms, at $2,436 for the median house. But the state ranked 31st highest for property taxes as a percentage of home value and 22nd for property taxes as a percentage of homeowner income.

UPDATE: Commenters correctly point out that the Tax Foundation's tax rates as a percentage of home value for Maryland localities don't correspond to statutory rates. Baltimore City is way off -- 1.1 percent according to the foundation vs. a 2.3 percent real property tax rate on the books. I can't explain the discrepancy -- assessed value vs. market value? The foundation table's footnotes say all data are from the U.S. Census American Community Survey, using the median real estate tax paid on owner-occupied dwellings and the median value for those homes. (By Jay Hancock, Baltimore Sun)

Capitol Heights a hot spot in Maryland for foreclosure activity

Town ranks among the top county communities dealing with housing crisis

Capitol Heights is a reflection of the severity of the county's housing crisis, ranking among the top communities in the state facing a large number of foreclosures.

According to a state Department of Housing and Community Development report released in August, "Property Foreclosures in Maryland Second Quarter 2008" Capitol Heights is deemed a foreclosure "hot spot," an area that had more than 49 foreclosures in July. Based on individual ZIP codes, Capitol Heights had the highest number of foreclosures with 222. Following behind were Upper Marlboro with 219 and Fort Washington with 201.

Prince George's County accounted for about one-third of state foreclosure activity, at 32 percent, with Montgomery County at 14.7 percent and Baltimore City at 11.1 percent.

Mary Dade, a housing counseling program manager for Capitol Heights-based nonprofit United Communities Against Poverty, said 70 to 80 percent of clients in Capitol Heights seeking help were not victims of adjustable rate mortgages whose interest rates skyrocketed but had "regular old mortgages."

Dade said these were residents who refinanced their homes but continued to rack up debt. UCAP holds monthly foreclosure counseling workshops to educate residents.

Dade said she can understand why other areas such as Fort Washington and Upper Marlboro with $100,000 incomes were hard hit.

"They bought more house than they could afford," Dade said. "They bought $500,000 to $600,000 homes when their income really can't support more than [$350,000] at the max."

Residents are further impacted by a weak economy and higher cost of living, Dade said.

"Food's higher," Dade said. "Gas is off the charts. Energy. People are just having a hard time trying to live and that fixed income does not go as far as it used to. We've got a lot of societal issues and economic issues impacting on this mortgage crisis."

Lloyd Baskin, manager of the Department of Housing and Community Development's Homeownership Center, said the Capitol Heights area was likely hit hard because lenders targeted black senior homeowners whose home values increased by double-digit percentages in the 1990s and that homeowners, using a home equity line of credit and second mortgages, "cashed out" the equity on their homes.

Baskin said they could not predict how many more foreclosures the area could face.

"Suddenly one life-changing incident, like a family member losing their job or divorce, can cause folks to lose their homes," Baskin said.

Baskin said the county plans to partner with groups such as Coalition For Homeownership Preservation in Prince George's County and Prince George's Community College to hone in on problem areas such as Capitol Heights, Fort Washington and Bowie to give homeowners financial literacy training.

Baskin said programs such as the Prince George's County Mortgage Refinance Program and "Bridge to HOPE," where residents can borrow up to $15,000 to repay after a house is sold or refinanced, are available for families to get back on their feet.

Town of Capitol Heights Town Administrator James Booth said the incorporated town does not have a program in place to help residents in danger of losing their homes.

The following ZIP codes have the highest number of foreclosures in the state:

Capitol Heights (20743) – 222
Upper Marlboro (20774) - 219
Fort Washington (20744) - 201
Upper Marlboro (20772) - 167
Clinton (20735) - 152 (by Natalie McGill, www.gazette.net)

Tax lien sales in Baltimore

Like a lot of Baltimoreans, Al-Amin As´Salaam learned about tax sales the hard way. A 63-year-old retired post office supervisor and disabled veteran, As´Salaam lives on Oak Hill Avenue in East Baltimore. His rowhouse, assessed at about $20,000, has windows taped over with newspaper clippings about his life as an organizer in the civil rights movement. Now white-haired, overweight, and supported by a walking stick, he takes medication for clinical depression. He also suffers from chronic pain, which requires medication. He lives alone, in the company of one cat. He spends much of his time—the one thing he has plenty of—rifling through legal briefs and affidavits, entangled in the murky business of tax sales.

In Maryland, as in all other states, tax sales are a final recourse for collecting unpaid taxes. When Baltimore residents fall behind on their tax payments, after several notifications, the city sells the debt, or lien, in an annual tax sale in May. Investors bid on the liens, offering a premium to the city for the rights to ownership. Once they buy the lien, it’s up to them to persuade residents to pony up. The added incentive? If the homeowner doesn’t pay the bill within six months, investors can move to foreclose on the property; once the foreclosure is granted, the home is theirs.

For the investors and the city, it’s a win-win proposition. Even if the investors don’t end up with the house, they receive 18 percent interest on the lien, and, in the event of foreclosure, they bill their legal fees to the homeowner. Baltimore City collects the unpaid taxes. In 2007, it recouped about $22 million through tax sales, amounting to about 5 percent of the city’s total property tax revenue of $500 million.

For small homeowners like As´Salaam who have fallen behind on payments, however, the process can turn into a labyrinthine nightmare—one that transforms a small debt into a huge one.

As´Salaam’s story begins on January 7, 2008, when his sister found a foreclosure notice from the law firm of Heidi Kenny shoved in the storm-door handle. As´Salaam had fallen behind in his property tax. But if he thought the city had let it go, he was wrong.

Unbeknownst to As´Salaam, his lien had been sold the previous May 12 at a tax sale to Steve Berman of City TSC Holdings, located at 11426 York Road in Cockeysville. In November, that lien was transferred by Berman to another holding company, Property Homes LLC, also located at 11426 York Road. Six months later, a complaint to foreclose on As´Salaam’s house was filed on behalf of Property Homes by lawyer Heidi Kenny, whose offices are also located at 11426 York Road. Now As´Salaam had to figure out how to pay the money he needed to pay to prevent foreclosure.

In April, with assistance from housing rights advocates at the nonprofit ACORN Housing, he filed a petition to redeem, which required Kenny’s firm to submit an affidavit documenting the $2,200 in legal fees and expenses. The affidavit includes a list of the work involved in the $1,500 legal fee. The first item is for “initial client contact.” The client was, in this case, Property Homes LLC, listed at the address of Kenny’s law firm. The next: “Attorney opened file in data system, ordered title report, and sent engagement documents.” The next: “Paralegal tracked redemption of property by periodically checking with Baltimore City to verify tax lien still open.” About two pages of documented work follow.

Because of those legal fees and expenses, As´Salaam’s total debt had ballooned from $672.26 to more than $3,000. “I felt I’d been ambushed,” he says, thumbing through a massive pile of panicked e-mails that he had sent Kenny’s firm. “They’d set me up for this.”

As´Salaam may not have known it, but he was dealing with some of the bigger players in Baltimore tax sales. Real estate investor Steve Berman, whose LLCs purchased 41 percent of the city’s available liens at the May 2007 online auction, is the husband of lawyer Heidi Kenny, who initiated the foreclosure process on November 26.

The couple has been active in tax sales both in and around Baltimore for more than a decade. Since 2002, according to her affidavit for attorney’s fees, Kenny has filed “over four thousand tax sale foreclosure cases throughout the State of Maryland and over two hundred tax sale foreclosure cases in the District of Columbia.” Her husband admitted in federal court to rigging bids in Baltimore County tax sale auctions and agreed to pay a $750,000 fine in return for cooperation with federal prosecutors. Berman sat out the 2008 tax sale, but Kenny purchased 43 percent of Baltimore City’s available liens, at a cost of $16 million.

The couple is used to controversy, having been cited often in the Baltimore Sun’s coverage of the city’s ground rent scandal in 2006. In that series, several investors were accused of taking advantage of an obscure Baltimore tax to initiate foreclosures against Baltimore homeowners. In a meeting at the Venable law firm in Towson, Kenny agrees to give her side of the story—on background and in the presence of a Venable lawyer.

Kenny says that As´Salaam’s problems were brought on by himself, and that, after the motion to foreclose had been filed, As´Salaam had been notified four times of his obligations. She showed me three copies of e-mails sent by her office to As´Salaam. (All had been sent after the foreclosure had been initiated.) Kenny also notes that As´Salaam has been in debt before and that his house was up for tax sale in 2003. (As´Salaam says that repayment of his debt to Capital One, which he attributes to medical bills, is pending, and his earlier debt to the city in 2003 was easily settled because it still belonged to the city.) Kenny also says that As´Salaam owns another property across the street, which he could use as equity to pay his debts. (As´Salaam says it’s his mother’s house, transferred to his ownership in 1986, and now vacant.)

Frank Conaway, currently clerk of the Circuit Court for Baltimore City and the man on the receiving end of all the motions to foreclose in Baltimore City, says that this is a familiar, sad story for many lower-income Baltimoreans. Six months after the tax sales, in late November, when purchasers of tax sales are entitled to initiate foreclosure, huge bundles of foreclosure motions are brought into the Mitchell Courthouse. As´Salaam’s was one of those. Low-income homeowners who have fallen behind in their tax bills get charged with legal bills for foreclosure and suddenly are overwhelmed by debt. “So many people call me a day or two before they’re going to get foreclosed,” Conaway says. “It brings tears to your eyes. And I ask them, ‘Why didn’t you call me a couple of months ago?’ They’re supposed to get notified. Somehow they don’t.”

Many, he says, are elderly, sick, and saddled with debt. “It’s ridiculous to see their property being taken for a debt of five or six hundred dollars. Something’s not right about that.” Conaway says he’s filed complaints against Kenny with the state’s legal oversight panel in Annapolis, but they’ve been dismissed. “That’s what makes it messy,” he says. “It may be immoral, but it’s not illegal. It’s the way they do business.”

But Kenny argues that the reputation is unwarranted: By paying the debts on property taxes, she’s actually doing the city a favor and doing it according to state law. In effect, the city is handing off the job of debt collection to lawyers such as herself, who then take the blame for doing something the city doesn’t have the resources to do for itself. Kenny worries that she is being vilified for paying As´Salaam’s property tax and then attempting to collect his lien using the only enforcement method available to her.

At the very least, the As´Salaam case illustrates how tax sales can entangle homeowners and creditors in a costly battle. For As´Salaam, a $672 debt has become an ongoing dispute that grows more complex—and expensive—the more he protests. And many city and state officials are decidedly uncomfortable with the perception that low-income property owners have become a lucrative income base for lawyers who charge foreclosure fees.

But the story may have a happy ending. In the last year, competing interests in the tax sale system have been working to rein in its abuses. Steps have been taken to assure that foreclosure remains an option of last resort, not a way of strangling unwitting homeowners with high legal fees.

Over several months last winter, a task force composed of housing advocates, tax sale investors, and representatives from state and local government set out to reform the tax sale process statewide. “It’s one of the most mundane subjects you could ever get involved in,” acknowledges State Sen. George Della, who’s become an advocate for reform. “But it’s important.”

Compromise didn’t come easy, and Della paints a picture of long, somewhat contentious sessions. In the end, he says, while no side got exactly what it wanted, a series of recommendations was hammered out. The general assembly passed a bill, SB 854, containing many of those recommendations, and Gov. O’Malley signed the bill into law on April 24. The bill, sponsored by State Sen. Verna Jones and cosponsored by Della, requires that outstanding taxes be at least $250 before they can be sold as liens. It effectively caps attorney’s fees at $1,300. And it mandates that those who purchase liens notify property owners within sixty days of the tax sale, so that they will have the opportunity to pay their debt without incurring the additional legal fees. Under that law, As´Salaam might have avoided his current mess.

Ned Carey, a Baltimore tax sale investor and a blogger for Realestateinvesting.com, says he agrees that the process needed reform. He acknowledges that some big players were clearly using the process to charge customers huge foreclosure fees, entangling homeowners in a process that made it even more difficult to pay back their debts.

If the reforms can reduce these predatory practices, Carey says tax sales really can be win-win-wins: Carey says he spends about $100,000 each year purchasing liens at tax sales—usually on abandoned property. (He describes himself as a “second tier” investor, compared with Kenny.) When the liens go unpaid, he takes possession of the house and either fixes it up or sells it to someone who intends to rehab—hopefully, but not always, at a profit. The city collects unpaid debt, and abandoned homes land back on the market.

Carey also has a few words of advice to anyone who finds that the lien on his or her house has been sold. “Don’t panic. But then don’t take it too easy, either. You’ve got six months. Pay the lien, and you’ll avoid the problem. As for me being the bad guy, the city would be doing the same thing … only they’d be doing it a lot faster.” (by John Barry www.urbanitebaltimore.com)

Beware of foreclosure scammers

You get what you pay for, right? Well ... If you live by that rule of thumb and you're trying to avoid foreclosure, you'll seek out a for-profit foreclosure consultant who will charge you for any services provided. But consumer-protection advocates say you're much better off going to a nonprofit housing counseling agency that will work with you for free.

Reason No. 1 is pretty obvious.

"They're charging a lot of money for something the homeowners don't need to be paying those kinds of sums for," Robert Strupp, director of research and policy with the Community Law Center, says of foreclosure consultants.

It's thousands of dollars in some cases, he says. Any money you don't shell out for foreclosure help is money you could use to pay late fees and other lender penalties.

Ruth L. Griffin of the Maryland Housing Counselors Network says the only thing a nonprofit approved by the U.S. Department of Housing and Urban Development might ask a struggling borrower to pay is an incidental cost such as the expense of ordering a credit report. There's a list of those groups at www.hud.gov/foreclosure.

Strupp and the Maryland Attorney General's Office say you're also putting yourself at risk of being scammed if you go anywhere but a HUD-approved nonprofit.

"We have several suits currently pending against people who were purporting to offer foreclosure rescue and in fact took the houses," says Bill Gruhn, chief of the attorney general's consumer protection division.

In Gruhn's opinion, this is not a shop-around situation. When I asked if a borrower who does some due diligence first should sign on with a for-profit consultant, his answer was succinct: "No."

As nonprofit counselors get overloaded with people seeking help, Strupp worries that homeowners will turn to for-profit consultants by default. But attorneys are starting to volunteer their time, and more nonprofit counselors are on the job than before.

"We weren't really doing this last year ... but there was so much volume that we really felt like we needed to help," says Felix Torres Colon, executive director of Neighborhood Housing Services of Baltimore, a nonprofit lender that now does foreclosure counseling too. The group sees about 240 homeowners a month, he says.

"Helping people with foreclosure is very difficult; some people have really impossible situations," Torres Colon says. "So if anyone tells you it's going to be really easy and quick and all you have to do is pay a few bucks, run away." (By Jamie Smith, Baltimore Sun)

To help the homeowners

The Maryland State Bar Association had published the brochure that covers the basics of foreclosure proceeding in Maryland. It is accessible from Bar's website: http://tinyurl.com/68pydd

A man using Craigslist to aid in his renting of properties he did not own was arrested late Thursday night, Fairfax County police said.

Richard Hiner, 31, of Catlett, allegedly advertised rental homes on Craigslist, bringing potential renters on tours of the properties and then having them sign a rental contract with a down payment.
His victims would later learn the properties were bank-owned and in foreclosure.
Police were notified of the scheme by four victims between July 13 and July 18.
Detectives posing as potential renters responded to an online advertisement and arrested Hiner when he arrived for the meeting.

Baltimore condo sales plummeting in tough residential real estate market

Homeowners worried about the sliding value of their home have at least one thing to be grateful for — the condominium market might be even worse.

“The condo market is hurting from same factors hurting the general home market,” said Jody Landers, executive vice president of the Greater Baltimore Board of Realtors. “Financing isn’t easy, and people are deciding this isn’t the time to buy.”

Both new condo sales and condo resales in the Baltimore metro area are well behind last year’s pace, according to midyear data released last week by Delta Associates, a Washington, D.C.-based real estate research firm. Since last spring, condo values have also dropped slightly more than local home values, according to the data.

Just 59 new condos were sold in Baltimore City and Anne Arundel, Baltimore, Harford and Howard counties during the second quarter, down from 303 in the same quarter last year.

In the first quarter, a net of just 13 condos were sold in the metro area, and Baltimore City reported new condo sales of -119, which Delta attributed to cancellations of contracts already signed.

For the year ending June 30, 109 new condos were sold, down 90 percent from 1,101 in the 12 months ending June 30, 2007, according to Delta’s figures.

Condo resales are on pace for a 50 percent decline this year, according to the data. Through May 31, 919 condo resales were reported in the metro region, an average of 184 per month. But last year, 3,237 resales were reported, an average of 270 per month.

Median resale prices in the Baltimore area fell 4.7 percent in May to $225,214 from $236,223 during the same month a year ago.

“They’re not immune to the rest of the market,” said David Martz, a Realtor with Long and Foster Fells Point specializing in condos. “To me, except for the [condo] fee, there’s no difference between a condo resale and a regular town home resale.”

By comparison, metro-area home prices fell 1.14 percent in May and sales volume was down 30.4 percent from the same month a year before, according to data gathered by Realtor-owned Metropolitan Regional Information Systems. MRIS data include condo sales as well as single-family sales.

But Delta’s numbers, especially the number of contracts broken, are reported by the condo developers themselves and so could be suspect, said Ross Mackesey, sales manager with Coldwell Bank Federal Hill who has represented about 50 condo projects.

He said the numbers could also be unintentionally skewed by new, large developments such as those in Harbor East throwing many units on the market at once.

“The Baltimore condo market is finite enough that we can actually look at Delta’s numbers and pin down events that skewed them,” Mackesey said. “But that doesn’t mean year-over-year [numbers] ... don’t have some validity.” (by Aaron Cahall, The Examiner)

Subprime Mortgages and Race: A Bit of Good News May Be Illusory

Subprime mortgages have been linked to a meltdown in housing and questionable Wall Street practices, and they may have been the original domino that set off America's current economic crisis.

But the loans -- typically made to people with poor credit -- have long been hailed for one reason: They were thought to be a powerful way to increase homeownership rates among minorities, and to provide a mechanism to undo the "redlining" policies of past decades, in which some banks refused to extend loans in predominantly minority neighborhoods, even to applicants with good credit.

Intersecting lines of new sociological evidence, however, suggest that this silver lining may have actually been a part of the cloud: There is growing evidence that the subprime mortgage industry may have both benefited from and contributed to racial segregation in the United States.

The financial industry has strenuously argued that subprime loans were given to people with low incomes and poor credit -- regardless of race.

George Washington University sociologist Gregory D. Squires, however, has been looking at rates of subprime loans issued in about 350 U.S. metropolitan areas. Squires's preliminary findings show that subprime loans were indeed more likely to be issued to people with poor credit and those with limited incomes -- no surprise there. But when Squires holds income and credit factors constant in his analysis, he finds that subprime loans were more likely to be concentrated in areas with higher levels of racial segregation.

"We see these loans heavily concentrated in poor neighborhoods and targeted to minority neighborhoods," he said. "There is some evidence that these neighborhoods were actually targeted -- that lenders have gone after people whom they think are less sophisticated borrowers, including single women and the elderly."

"Credit rating and income would and does explain some of the patterns," Squires added. "But when you control for those, segregation is also a factor. . . . In those metro areas where segregation is highest, the share of loans that are subprime goes up."

The city of Baltimore recently decided to sue a bank over subprime lending practices and race issues. In a lawsuit filed in U.S. District Court, the city argued that it was facing an "unprecedented crisis of residential mortgage foreclosures" and argued that Wells Fargo, a prominent mortgage lender, ought to bear some responsibility for the growing numbers of defaults.

"In contrast to 'redlining,' which involves denying prime credit to specific geographic areas because of the racial or ethnic composition of the area, reverse redlining involves the targeting of an area for the marketing of deceptive, predatory or otherwise unfair lending practices because of the race or ethnicity of the area's residents" the city charged in its complaint.

In 2005 and 2006, according to the complaint and Brad Blower, a lawyer at the firm Relman & Dane that is representing the city, two-thirds of Wells Fargo's foreclosures in Baltimore were in areas that were more than 60 percent African American, whereas only 15.6 percent of the foreclosures were in areas that were less than 20 percent African American.

Wells Fargo rejects the charges and has said racial factors played no role in its lending. If larger numbers of subprime loans were issued in some neighborhoods, in other words, it was only because those neighborhoods tended to have poorer people with weak credit. Individual issues -- not racial patterns -- explains why some people defaulted while others did not, the company argued.

Disparities in lending by race, however, have been striking in many parts of the country: In New York City, for example, an analysis by the Furman Center for Real Estate and Urban Policy found that around 40 percent of subprime loans issued between 2004 and 2006 were made to blacks, and an additional third of such loans were given to Hispanics. Whites, by contrast, received around 10 percent of such loans, as did Asians.

In a rigorous national analysis based on data collected in the 1990s, researchers Carolyn Bond and Richard Williams found the same phenomenon nationwide. But in addition to demonstrating large racial disparities in who got such loans, Bond and Williams also found the loans -- far from reversing racial segregation -- may have actually contributed to increased levels of segregation in the United States.

"By 1999 the proportion of black borrowers receiving loans from subprime lenders was six times what it was in 1992," the researchers wrote in a paper they published in the journal Social Forces.

While the cheap loans did increase black homeownership rates, especially in predominantly minority neighborhoods, they simultaneously increased the risk that homeowners would default on their loans, send houses into foreclosure and drive down the value of entire neighborhoods, making them less attractive for people from other social classes and racial groups who might have once considered moving in.

"Many subprime borrowers are losing their homes, and the deteriorating and destabilized neighborhoods that result are unlikely to foster integration," Bond and Williams concluded. "In the absence of effective action, the findings suggest that persistent or even increasing levels of segregation may be one of the most important long-term consequences of the current home lending crisis." (By Shankar Vedantam, Washington Post)

How-to Monday: Finding foreclosures

The more you hear about foreclosures piling up, the more you may be tempted to buy one. There's a lot to consider if you do -- but first things first: how to find them.

A foreclosure becomes a foreclosure when the home goes to auction. Frequently, the buyer is the lender -- that's what happens when there's no one else willing to bid at least as much as the lender wants. If you think there's a deal to be had, you can be that bidder.

You'll find ads for impending auctions in the newspapers. Or you can see listings online. Alex Cooper Auctioneers, for instance, keeps a tally of scheduled foreclosure auctions -- typically on courthouse steps. Express Real Estate Auction Services has foreclosure auctions listed as well, as does Tidewater Auctions. Harvey West Auctioneers doesn't separate its foreclosure listings from its regular auctions, but you can see the full list HERE.

Then there are companies you can pay for pre-foreclosure and foreclosure information, such as ForeclosureS.com and RealtyTrac. (Paul R. Cooper, a vice president with Alex Cooper, pooh-poohs the idea of paying. If you're willing to do your own homework, "all the information's free," he said.)

Remember: You have to come prepared to make an immediate deposit if you're going to bid at an auction. Alex Cooper expects cash, a cashier's check or a certified check.

If auctions worry you, there's another option: Buy from the bank afterward.

Some lenders keep a list of their post-auction properties -- known as "Real Estate Owned," or REO -- on their websites. Countrywide, last I checked, had more than 250 in Maryland. Others with lists include Chase Mortgage, Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (which oversees FHA-insured loans).

Or ask a real estate agent. Realtors often market foreclosed properties for lenders, so they'll be listed for sale. (Agents can, if they choose, note on Metropolitan Regional Information Systems' multiple listing service whether a property is a foreclosure.) You can look for agents who take a lot of foreclosure listings or those who work with a lot of buyers interested in foreclosures.

A note of caution before you rush off to buy: While a foreclosed home could be a great value, seasoned real estate investors say there's no guarantee. The asking price or starting bid could be more than the house is really worth, particularly if the previous owner started with a small down payment. Or the house might need more repair work than you can afford.

That's where research and due diligence come in. You might, for instance, start by looking up the property's assessment record -- click on "property sales" to see recent sales prices elsewhere on the same street -- and by checking out the loan history. ( by Jamie Smith Hopkins, Baltimore Sun)

Baltimore Metro Area numbers for May 2008

Number of homes on the market in the Baltimore metro area for under $250,000 in May 2006: 3,600.

In May 2007: 5,400.

In May 2008: almost 7,400.

Baltimore metro area home sales fell 30 percent in May compared with a year ago, continuing the trend. Average prices were up modestly -- 1 percent, to about $316,000 -- but median prices were down about the same amount. (The median is the midpoint, which means half the homes are more expensive and half are less.)

Seems like the housing market has been playing the same song since last September.

Interested in seeing the figures or checking out county-by-county performance? Go to Metropolitan Regional Information Systems' stats page. (http://weblogs.baltimoresun.com/business/realestate/blog/)

Despite Interest Rate Cuts, Foreclosures Hit Record High

Even though lower interest rates have made many adjustable-rate mortgages more affordable, foreclosures continue to reach new heights as more than 1 million homeowners face losing their home, according to industry figures released yesterday.

That's because what began as a mortgage crisis focused largely on subprime borrowers has spread and is being fed by the slowing economy it helped create. Borrowers once considered the most creditworthy have been hamstrung by declining home prices, making it difficult to refinance their home to dodge a financial crunch.

About 2.47 percent of home mortgages were in foreclosure during the first quarter of the year, up from 1.28 percent during the comparable period last year and the highest point since the Mortgage Bankers Association began compiling figures in 1979. Another 6.35 percent of home mortgages were delinquent but not yet in foreclosure, up from 4.84 percent last year, the survey found. Taken together, that means that almost 9 percent of mortgages nationally were in trouble, even though sharp Federal Reserve interest rate cuts have cushioned payment increases for some homeowners.

More than 60 percent of the loans entering foreclosure are adjustable-rate mortgages, but the problem does not appear to be the "rate shocks" widely forecast about a year ago. Many of "the loans went bad before any of the resets took place, which is why talking about carving out solutions for just ARM reset problems is misplaced," said Guy Cecala, publisher of Inside Mortgage Finance.

A borrower with a typical-size subprime ARM could expect payments to increase about $70 a month if it reset now, compared with about $450 a month if it had reset in December, according to the American Securitization Forum, a financial industry group.

"So we're not going to see rate shocks causing defaults," said Christopher Mayer, real estate professor at Columbia Business School.

Also, while delinquency rates among subprime borrowers continue to rise, prime borrowers are a growing part of the problem, Mayer said. During the first quarter, the number of prime loans that began foreclosure increased faster than subprime loans, according to the Mortgage Bankers Association.

"The recent increases have been coming from the safer group of borrowers. They are the next shoe to come down," Mayer said.

And although the Fed's interest rate decreases have helped some homeowners with adjustable-rate mortgages, those with artificially low teaser or introductory rates are still experiencing significant increases, said Mark Goldman, a real estate finance lecturer at San Diego State University. "Most of the adjustable-rate loans are resetting to very modest rates, but it can still be a big shock," he said.

Even a slight increase in payments, compounded by rising food and fuel prices, can push homeowners to the financial edge, analysts said. "There is no question: The softening economy, gas prices, all that is just throwing more lighter fluid on an already inflamed situation," Cecala said.

For instance, a growing percentage of troubled borrowers who contact the Consumer Credit Counseling Service of Greater Atlanta have reduced income, having lost overtime pay or a second job, according to data collected by the group. Last year, 22 percent of homeowners listed reduced income as the reason they are in distress. So far this year, it is about 28 percent.

In April, clients spent an average of $335 a month on groceries, up from $291 during the comparable period last year. They spent $242 on gasoline this year, up from $181 in April 2007.

Many clients have adjustable-rate mortgages, but that is not necessarily what caused their problem, said Scott Scredon, a spokesman for the counseling service. "Their rate is going up, plus they lost their job. . . . Then you throw in the rising costs of fuel and food, and it takes away more and more of their disposable income," he said.

The intensity of the foreclosure problem, which is expected to worsen, varies across the country. In the District, 2.39 percent of loans included in the survey were seriously delinquent or in foreclosure in the first quarter, according to the Mortgage Bankers Association. That is up from 1.09 percent during the same period last year. In Maryland, 3.02 percent of mortgages were in trouble, compared with 1.21 percent. And in Virginia, the rate rose to 2.52 percent from 1.99 percent.

The bulk of the problem remains in California and Florida, which reported, respectively, that 9.24 percent and 8.25 percent of subprime ARMs were entering foreclosure, said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association. "Clearly things in California and Florida are going to get worse before they get better," he said. (By Renae Merle, Washington Post Staff Writer. Friday, June 6, 2008)

A Growing Problem: Overgrown Lawns At Foreclosed Homes

The number of foreclosures has skyrocketed around Maryland, jumping a whopping 40 percent between April and May. While there isn't always a foreclosure sign in front of the home, there's a very good chance the grass hasn't been mowed.

The foreclosure crisis is affecting more than just people; it's affecting lawns.

Frederick city officials tell NBC25 they simply can’t keep up. They’re getting an explosion of calls from residents complaining about out-of-control lawns in their neighborhoods.

"The foreclosing market has tripled our complaint basis," said Michael Blank, who works in code enforcement for the city.

Grass and weeds above 10 inches tall are violating the City of Frederick's rules. That's when officials step in to do something about it.

"Anything over 10 inches get a notice for them to remove and cut the grass within five days," Blank said.

But since the foreclosed homes are vacant, no one's there to clean up. That's when the city hires people to mow and manicure the lawn for a pretty penny.

Blank says the average bill runs around $200 per cut.

It could be even higher, depending on how much there is to clean up.

The city doesn't just absorb the costs. They forward the bills to the last known owner, or to the mortgage company.

It's not just a city issue; Frederick County officials are getting a lot of complaints, too.

There's not much the county can do about it though because they don't have a lawn ordinance.

"There's really no advice that we can give to them that will in fact, provide a remedy for them," said Larry Smith, a Frederick County zoning administrator.

Frederick city officials are considering assigning someone full-time to do grass, weed and trash inspections on foreclosed homes. (www.your4state.com)

MD Comptroller: foreclosures will hit local budgets hard

The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official.

And recent emergency legislation passed by the Maryland General Assembly, will have little effect on Maryland's tide of foreclosures. Now, the state's hands are tied, said Comptroller Peter Franchot.

Franchot said he applauds efforts by Gov. Martin O'Malley and the legislature, but that it is too little too late.

"It's not their fault," Franchot said during a recent visit to The Frederick News-Post. "The responsibility for the foreclosure crisis rests with Washington. The last several years of Washington have been like the Wild West. Anything goes. And that lack of regulation has a price that we're going to pay for years to come."

The bill O'Malley signed will lengthen the foreclosure process from 15 to 150 days, and require a lender to wait 90 days before filing a foreclosure action. It also strengthens prohibitions on mortgage fraud

According to the governor's office, in the fourth quarter of 2007, Prince George's, Montgomery, Washington and Worcester counties saw foreclosures double from previous quarter.

In other counties, such as Kent, Garrett and Somerset, numbers almost tripled.

Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.

Local revenue will be particularly hit in 2009 and 2010, Franchot said.

"We're in a real mess," he said.

Copyright 2008 The Frederick News-Post. All rights reserved.

The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official.

And recent emergency legislation passed by the Maryland General Assembly, will have little effect on Maryland's tide of foreclosures. Now, the state's hands are tied, said Comptroller Peter Franchot.

Franchot said he applauds efforts by Gov. Martin O'Malley and the legislature, but that it is too little too late.

"It's not their fault," Franchot said during a recent visit to The Frederick News-Post. "The responsibility for the foreclosure crisis rests with Washington. The last several years of Washington have been like the Wild West. Anything goes. And that lack of regulation has a price that we're going to pay for years to come."

The bill O'Malley signed will lengthen the foreclosure process from 15 to 150 days, and require a lender to wait 90 days before filing a foreclosure action. It also strengthens prohibitions on mortgage fraud

According to the governor's office, in the fourth quarter of 2007, Prince George's, Montgomery, Washington and Worcester counties saw foreclosures double from previous quarter.

In other counties, such as Kent, Garrett and Somerset, numbers almost tripled.

Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.

Local revenue will be particularly hit in 2009 and 2010, Franchot said.

"We're in a real mess," he said. (The Frederick News-Post. All rights reserved)

City Plans Housing Project Next To Contaminated Park

Baltimore officials want to buy seven homes next to a park that's been closed because of arsenic contamination.

The homes would be demolished to make way for the West Covington project in south Baltimore. Plans call for hundreds of homes and more than a million square feet of retail space and offices next to Swann Park, which is being cleaned up and will reopen.

Some of the homeowners next to Swann Park say they want to leave. But others say they're worried the city won't give them a fair price. The park was closed after arsenic contamination dating from the 1970s was discovered last year. (wbaltv.com)

Bills seek to ease crisis in housing

Gov. Martin O'Malley held his first bill signing of the year yesterday to enact a number of emergency bills designed to address the foreclosure crisis gripping the state.

The Democratic governor approved three bills to lengthen the minimum length of foreclosure proceedings from 15 days to more than four months, to enact tougher criminal sanctions against mortgage fraud and to crack down on foreclosure-rescue scams in which troubled borrowers are duped into losing title to their homes.

O'Malley and legislative leaders said they wanted the bills signed as soon as possible because, as emergency legislation, they become law immediately. State officials cited a worsening housing crisis in which more than 13,000 homeowners in Maryland were in foreclosure at the end of last year, a 150 percent increase from the previous year.

A group of homeowners who have lost their homes to foreclosure or who are faced with the prospect of losing their homes joined the ceremony. "I hope that you can see we are trying, and that we're all in this together," O'Malley told the crowd. (baltimoresun.com)

Hope for public housing

Alphonso R. Jackson took credit for improving public housing when he announced his resignation last week as secretary of housing and urban development. But, in fact, the Bush administration has attempted to starve the once-promising Hope VI program aimed at urban poverty. Members of Congress, including Maryland's Sen. Barbara A. Mikulski, have kept it on life support, and now a more ambitious revitalization deserves passage.

Since 1992, Hope VI has used more than $6 billion in federal funds to help alleviate concentrated poverty by replacing dilapidated public housing projects with mixed-income development. The program offered chances at homeownership and other opportunities to boost the economic fortunes of neighborhoods and their residents.

But too often, low-income residents have seen their homes destroyed but not replaced. And while many families have been able to use vouchers to resettle in better neighborhoods, others have found their housing options limited. In Baltimore, complexes such as Pleasant View Gardens and the Terraces replaced crime-ridden projects, but there were fewer new units and some displaced families no longer qualified.

Nationally, the Hope VI revitalization effort led to a net loss of 43,000 public housing units between 1992 and 2006, according to an analysis by the Urban Institute. And many of the more than 1 million public housing units remaining have fallen into disrepair for lack of federal investment.

But Congress is considering new versions of Hope VI with significant and necessary changes that deserve support. In January, the House passed a bill that would mostly require one-for-one replacement of demolished units. It would also give residents more of a voice in planning and provide more support services to those who relocate.

Senator Mikulski is pushing a bill that would give housing authorities more leeway to decide whether to replace demolished units and tries to link access to new units to improved school performance of resident children. The House version, which also offers displaced residents better opportunities to occupy new housing, is generally preferable, but the differences between the bills are hardly irreconcilable.

After years of neglect, what's most important is to restore viability to Hope VI and offer better public housing options. (baltimoresun.com)

The Promised Uplands

Residents and Developers Wait to See What The Future Holds For Westside Baltimore Neighborhood

Like so many visions of the future in Baltimore, it begins with a wrecking crane. On the Baltimore City Housing Authority's web site, you can watch a clip from WMAR-TV news dated Oct. 26, 2006. Then-Mayor Martin O'Malley, nine days before the gubernatorial election, is sitting at the controls of a Cat tractor, taking the first ceremonial shot at the 60-year-old, 979-unit Uplands Apartments complex. The tractor's shovel slams into a large chunk of a red-brick, two-story building at the corner of Swan Avenue and Frederick Road in West Baltimore. The fire department hoses down the dust. Cut to O'Malley, missing the hard hat he'd worn in the previous shot, surrounded by members of the local community and speaking of a new Uplands--a neighborhood, he says, where "people with different backgrounds, of different races, and, yes, with different incomes can raise children in decent housing."

The Housing Authority's vision for Uplands isn't getting much press attention these days, but if all goes as planned, by mid-2008, this small West Baltimore community is going to be the site of the massive redevelopment of what may be the largest undeveloped tract of urban land on the East Coast. What started in 2003 as a plan for building about 800 units on the 52 acres once part of the Uplands Apartments complex has expanded to a plan for building about 1,100 units on more than 100 acres, including 38 acres currently occupied by the New Psalmist Baptist Church, and six acres now part of the commercial triangle at the intersection of Edmondson Avenue and Old Frederick Road.

When the project is completed--in 2013, according to some estimates--the Uplands redevelopment will be a built-from-the-ground-up mix of mixed-income multiapartment mansionettes, rowhouses, freestanding houses, public parks, and greenways. It's a big developer's dream: on city-owned land, assisted by U.S. Department of Housing and Urban Development (HUD) funding, financed by city bonds, surrounded by relatively prosperous neighborhoods to the west (Hunting Ridge and Ten Hills), and physically buffered from the more depressed sections of Edmondson Village to the east. According to Baltimore Housing head Paul Graziano, it's also what Baltimore needs: "a historic opportunity to build a new community, eliminate blight, and provide diversity."

O'Malley may have jumped the gun in that WMAR video. He took his chunk out of the old complex and went on to win the governorship, leaving the city and the redevelopment of Uplands in the hands of Mayor Sheila Dixon. The demolition, however, stopped immediately after the news cycle. Since 2004, former Uplands tenants have been engaged in a lawsuit against HUD and the city, which, they felt, had not provided them with the federally mandated housing assistance they were entitled to. Lawyers for Baltimore's Legal Aid Bureau, acting on behalf of former Uplands tenants, went to federal court to get a stay on demolition.

Now, four years after the city purchased the property from HUD, the deadlock may be over, and the real demolition can begin. On Dec. 19, a settlement for Uplands tenants was approved by the Baltimore City Board of Estimates. The newest iteration of the Uplands redevelopment provides that 175 of the planned 1,100 units will be offered to tenants who had lived in Uplands Apartments; the majority of the set-aside units would be available as rentals to tenants who earn up to 60 percent of the area's median income. (Baltimore-area median income as of March 2007, according to HUD, is $75,800.) The rest of the units will be offered for sale, 74 percent of them moderately priced and the remaining 26 percent available at top "market prices."

The shift to mixed income represents a major change for a community that once housed more than 2,000 lower-income tenants. In the 2000 U.S. Census, the median income for Uplands was $20,139. Of the tenants of the Uplands Apartments themselves, about half were living in government-subsidized Section 8 housing, according to information in the class-action lawsuit filed on behalf of Uplands Apartments tenants.

Now all of the old tenants are gone, and the new neighborhood is yet to come.

It's easy to pass by Uplands on a daily commute down Route 40 without noticing it. To the north of Edmondson Avenue, there's the Williamsburg-style Edmondson Village Shopping Center, which in 1947 was one of the nation's first regional suburban shopping centers. To the south, a few large, homogenous dorm-style brick buildings are visible in a wooded area. A small building bears a battered overhang reading uplands apartments.

Turning off Old Frederick onto Manordene Road, though, the size of Uplands becomes more apparent. The winding lanes lead into the heart of a large, silent community. The buildings are big, homogenous, made of solid brick, built according to post-war specifications by local builder Ralph Chiaro. They're not pretty; on the other hand, they don't look like they're going to tip over any time soon. They're now neatly boarded up with plywood painted red. Trash and dead branches have piled up, and on occasion flocks of ravens congregate around the desolate, campus-style lawns. On rainy days, the streets flood. A few concrete barriers have been inserted at intersections, to scare off lost drivers. A dead body was found in the area in April 2007. There have been others before.

It's impossible to pinpoint the exact moment when someone decided that this urban wasteland was going to be turned into a new neighborhood. But for decades, Uplands Apartments had been emblematic of one of Baltimore's most pressing problems: the segregation of lower-income citizens in large tracts of deteriorating housing. Several decades ago, a group of well-connected developers with political connections let Uplands, and much of neighboring Edmondson Village, slip into decline. Now, a group of well-connected developers--Uplands Visionaries, they're called--hopes to turn Uplands into the kind of stable, racially and economically mixed neighborhood that many in Baltimore have always dreamed of, and they're relying on market forces to do it. While many of the details of the project are still up in the air, at least one thing is clear. Buried in the wooded edge of the city, and largely invisible to those living east of Martin Luther King Boulevard, the redevelopment of Uplands is a big deal--and a big gamble--for Baltimore's future.

By 2003, when the city acquired the site, developers' eyes had been on Uplands Apartments for several years. The property's long physical decline had been accompanied by mounting debts throughout the '90s, and it was foreclosed on in 1999, and HUD took it over in 2000. Numerous possibilities for the site were being bandied around by interested parties, and in 2002, the adjacent New Psalmist Baptist Church, already bursting at the seams with a congregation of more than 8,000, was mulling plans for a Christian-based living community on the Uplands Apartments lot. Commercial developers, as well as the city, considered filling the Uplands acreage with market-rate housing.

When HUD finally sold Uplands Apartments to the city in December 2003, for a nominal fee of $20, it stipulated that the city would have to include 74 percent "affordable housing," accessible to median-income Baltimoreans, in any project. Sandwiched between the rental units and the "market price" units are a block of units that would would be priced as affordable to people who earned 115 percent of the city's median income ($75,800 in 2007), while another group of units would be affordable to people who earned 80 percent of Baltimore's median income.

To realize the project master plan and summon a vision of what a new mixed-income Uplands might look like, the city called on two out-of-town contractors. Laurie Volk, of Clinton, N.J.'s Zimmerman/Volk Associates, which has worked on a number of recent projects in Baltimore, was put in charge of the marketing analysis. Architect David Dixon, of Boston-based Goody Clancy, was put in charge of the design. The vision for the new Uplands--an "urban village," as it's called--begins with them.

Speaking by phone from New Jersey, Volk explains that, when it comes to building neighborhoods in cities like Baltimore, the old rules of supply and demand don't apply.

Older development strategies, she says, targeted "fast-growth areas," under the assumption that houses would sell better in neighborhoods where more people were looking to move. Such strategies meant that large developers generally stayed away from places like Baltimore, with their urban woes and declining populations, and work in suburban areas. Now, in post-industrial cities like Pittsburgh and Baltimore, mixed-income developers have developed complex methods for detecting "market niches."

This new approach, Volk says, "is focused more on potential than demand." To zero in on this potential, her firm generates information from data banks, both public and private. (One of the secret ingredients of its stat-crunching is the IRS, which "keeps data about where people are moving from, coordination potential, and lots of information about who they are," Volk notes.)

According to Volk, Baltimore should be looking to meet the needs of not just one market niche, but many. Her vision of the new neighborhood is a far cry, to say the least, from the earlier cultural and ethnic makeups of Baltimore neighborhoods. Nor does it involve the simple categories of lower, middle, and upper class that shaped and reshaped the city in the post-war era. The categories that she places potential homeowners in would leave old-school developers and slumlords scratching their heads. E-Type, for instance: "That's a target market, a key demographic, high-technology early adapters, single, who live in urban neighborhoods, more willing to take chances."

Over the phone from his office in Boston, architect David Dixon refers to the "old Baltimore" and the "new Baltimore." Old Baltimore, he says, is segregated and divided up into insular neighborhoods. The new Uplands he has designed will change all that. "Uplands is a model for future neighborhoods," David Dixon, no relation to Mayor Dixon, says. "It's an urban-suburban community." His version of the vision could be called market-based utopianism: an urban environment where people of different ethnicities and backgrounds coexist, without ever getting uncomfortable with one another.

When asked for a model of what the new Uplands will be, he cites Roland Park. It sounds like a curious choice, given the affluence--and racial homogeneity--of that area. But as an urban designer, Dixon is focused on the structural elements of Roland Park: trees, grass, winding cul-de-sacs, and a physical buffer zone against encroaching blight. "There's a large range of housing types" in Roland Park, he notes. "It's durable. It's been there a long time. There's a great variety of trees. It's the sort of neighborhood where people can count on permanence."

An illustration in the (still provisional) master plan of the winding streets of a new Uplands offers a view of what Dixon is talking about. There's a long, central strip of grass, where a sketched figure is walking a dog by what looks like a poplar tree. A young couple wanders, hand in hand, in the distance. A compact car slowly wends its way down the central boulevard. On the right hand side of the street, there's a minivan, presumably for the young parents. At the end of the street, a gated entrance is visible (although Dixon is careful to emphasize that Uplands will not be a gated community). An empty nester is walking down the left-hand side with his hands in his jean pockets. Duplexes line both sides of the street, and a multiapartment mansionette is visible in the background. Above the picture is the signature phrase: "Build Communities, Not Developments."

Zimmerman/Volk's number-crunching techniques further came to the conclusion that the new Uplands would support the 1,100-unit project. Initially, she says, nearby communities were worried that such density would result in overcrowding and deterioration, which were among the reasons Uplands Apartments became blighted in the first place. Volk contends that the new Uplands won't face the same problems.

The old Uplands community, she says, was not economically viable. "That sort of thing results in a concentration of poverty," Volk says. "It serves just one specific low-income demographic. That winds up attracting drug dealers, miscreants, who bedevil the poor people who are living there."

The old approach to development involved either building in growing communities, or trying to insert new housing in poorer areas. The new urbanist mixed-income approach taken with the Uplands project, Volk argues, offers the chance to start over from the ground up. "The new focus is on the rebuilding of a neighborhood," she says. "That doesn't just replace the old structures, but you don't just wind up with a lot of the same people with the same problems."

What one doesn't get from the visionaries is a sense that Uplands itself had any notable history of its own. But Uplands didn't start out as a blighted community.

If the Uplands Visionaries get what they're looking for--a mixed, stable, middle- class community--they'll be bringing the neighborhood full circle. The year 1948, when local developer Ralph Chiaro built Uplands Apartments on the site of a wooded former private estate, was a heady one for Baltimore developers. Troops were coming home from World War II, and young couples, often assisted by government loans, were starting families and beginning their bid for middle-class stability.

The idea of building neighborhoods from the ground up was emerging. A Sept. 10, 1950, article in the morning Baltimore Sun paints these developers as "creators of neighborhoods."

Beyond the mechanics of construction and financing, the creator of neighborhoods plays an important role as a builder of cities. One of his primary performances is to fit his subdivision into the outer edge of the city as one would a piece of a jigsaw puzzle. It is then that he becomes a city planner, visualizing far in advance the atmosphere, feeling, and the appearance of the neighborhood he is going to build.

If the vision has changed, it's because the idealized neighborhood of the 1950s was homogeneously white. A 1956 photo from Edward Orser's book Blockbusting in Baltimore: The Edmondson Village Story shows a crowd of jacketed, skirt-wearing white Baltimoreans witnessing the ribbon-cutting at a new Hecht's at Edmondson and Swann avenues, in what was then an all-white neighborhood. Even during this ribbon-cutting, however, rapid shifts were at work that would, within a few years, transform Edmondson Village and Uplands.

Orser's 1994 book carefully documents the dynamics of the population shifts that Uplands experienced in the late '50s, as landlords and speculators lured would-be homeowners from the city's overflowing black community into all-white Edmondson Village.

"People look at [Edmondson] now, but they don't realize how fast the change occurred," Orser, a UMBC professor of American studies, says over the phone. "It was an accelerated atmosphere of fear. Landlords played on people's anxieties." Over the course of a decade, white homeowners, anxious about the arrival of one or two black families, fled to the counties, selling their houses cheap to speculators, who then sold them to African-Americans for marked-up prices. Edmondson and Edmondson Village shifted from being a neighborhood of white homeowners to a neighborhood of black homeowners. In other media outlets, Angela Bethea-Spearman, president of the Uplands Community Association and chairwoman of the Southwest Development Committee, has said that the Uplands Apartments themselves, located on the edge of more prosperous communities, began to attract lower-income renters, many of whom came from inner-city housing projects.

In 1968, the federal Fair Housing Act was passed, and government funding of Section 8 housing for the poor ushered in a new age of equal-opportunity housing. But real-estate speculators began to exploit that program as well.

In 1972, a well-connected local real-estate investor named Morton Sarubin purchased the Uplands property. In the 1970s and '80s, he owned (or partially owned) a number of HUD-funded housing projects in the area. A close associate of former Mayor William Donald Schaefer, Sarubin was also owner of downtown's Peabody Court hotel, which he bought in 1985 and sold for a considerable profit in '91.

While Uplands Apartments rarely lacked tenants, the apartments themselves deteriorated throughout the 1980s and '90s. But the deterioration of Uplands was not inevitable, nor was it a result of the federal government being stingy with funds. Much of the rent money coming into Uplands was from HUD Section 8 funds. A 2001 HUD audit of Baltimore Housing includes a scathing critique of a public-housing program that was barely functioning, and where unsupervised misappropriation of voucher funds was rampant. During the years when HUD funding was poorly supervised, property-management fees were frequently skimmed by managers who poured money into shell companies. Some of that was going on in Uplands, which was still owned at least in part by Sarubin, although the number of companies involved in various lawsuits involving the property makes it difficult to parse to what extent at what time.

In 2001, Uplands co-owner and property manager Monte Greenbaum, of Maryland Properties Management, pleaded guilty to conspiracy for his role in skimming $1.2 million from projects that he managed throughout most of the '90s. In 2003, Humphreys Associates Inc.--the management agent for five multifamily projects owned by Sarubin--admitted in a court settlement to splitting management fees with Sarubin for personal gain. As the 2003 HUD audit report puts it, "Humphreys and the Sarubin family created a pair of shell corporations through which to funnel and conceal fee splitting payments of $750,000." Sarubin, now 84, did not respond to phone messages left at his number.

Nonetheless, by 1998, Sarubin had defaulted on Federal Housing Authority-insured mortgage payments. In 1999, HUD initiated complaints about Uplands Apartments' physical condition, and in 2001 HUD took over administration of the property. Meanwhile, Uplands Apartments had almost completely emptied out. By 2003, when Baltimore City purchased Uplands from HUD, there were only 17 families still living in the 979-unit complex. And in January 2004, they, too, left. Eventually all Uplands inhabitants between 2001 and 2004 were later involved in a class-action lawsuit. Attempts to set up meetings with former Uplands tenants were unsuccessful as of press time.

The neighborhood coalitions from the communities bordering Uplands are enthusiastic about the demolition. The New Psalmist Baptist Church, meanwhile, has little reason to complain: It plans to sell its current acreage to the city for $14 million. In exchange, the city is offering the church a $2.4 million plot of land in Seton Park off of Liberty Heights Avenue, where it plans to build a new church with a capacity of about 4,000. That's about half the size of New Psalmist's congregation, but it's more than twice the size of the building it has now.

Barbara Samuels, managing attorney for the Maryland ACLU's Fair Housing Project, has represented public-housing residents in Baltimore for more than a decade. She thinks that Uplands is part of what has become an ongoing story for the city: A large tract of lower-income housing is demolished and replaced by a mixed-income neighborhood that can only house a small portion of its original population. When asked where Uplands tenants have gone since 2003, Samuels' voice trails off. "I don't know where these people go," she says. "Some of them have gone to Cherry Hill, others . . . we can't keep in touch with them." She says that, judging from her past experience, life hasn't necessarily improved for them. "HUD relocated . . . people, giving them vouchers, even though the voucher program was dysfunctional," she says. "We know from depositions [in the lawsuit] that they were aware of that, and that there's something wrong with using a dysfunctional program. No landlords were taking vouchers, except for the most desperate ones. So those people went to some pretty bad neighborhoods."

Instead of building new neighborhoods, Samuels argues, the city needs to spend its money on the available infrastructure. Uplands Apartments, she says, were solid brick structures, even if the apartments themselves had deteriorated. While housing projects like the now-demolished Murphy Homes or Cherry Hill Homes are generally in drug-ridden neighborhoods, Uplands offered lower-income residents with Section 8 vouchers the chance to attend a decent school in a decent neighborhood. "And that's the kind of housing we should be preserving, not destroying," she says.

Whether or not Uplands should be preserved is a moot point now, especially now that the tenant suit is nearing resolution.

After the initial master plan was completed, in 2004, the city moved to the next step--searching for a developer to knock down the old buildings and build the new community. A request for qualifications also went out in 2006, as the city searched for a developer to coordinate the different aspects of the project--finance, construction, etc. Three developers applied, and in the summer of 2007, the city chose Philadelphia-based Pennrose Properties as its primary developer. Pennrose has since formed a coalition of local developers and officials under the auspicious title of Uplands Visionaries.

The visionaries also include the Uplands Partners, a coalition of local contractors and developers. These are led by Ambridge LLC, which is currently a single-person corporation headed by Anthony Ambridge, ex-city councilman and one-time city real-estate officer. They also include Doracon Contracting, which is headed by Ronald Lipscomb, an associate of Ambridge's and a longtime Sheila Dixon confidant. Other local developers include Banks Contracting and Harrison Developers. Outside Uplands Partners, another development company, Bethesda-based EYA LLC, is also participating in the project. Michael Cryor, head of the Maryland Democratic Party, and Wayne Curry, former Prince George's County executive, are also consultants for the project.

When asked about the actual nuts and bolts of the enterprise, the various Uplands Visionaries are much less effusive than the urban designers. The visionaries who bothered to return phone calls referred questions to Ivy Carter, Pennrose's manager in Baltimore.

Pennrose's local office is in Locust Point, on the first floor of an inauspicious three-story office building on Fort Avenue. Carter is an 18-year veteran of Pennrose who got her start working with the company when it revitalized west Philadelphia's Brewerytown area, a project that transformed a blighted section near the University of Pennsylvania into a haven for empty nesters and the creative class. She's friendly enough when entertaining questions about Uplands but doesn't have much specific to say. As she puts it, the work is still in process.

"You know, we'd be happy to sit down with you when plans become more final," she says. "We want your readers to know what the vision is, and what the plan is. You know, it'll provide us with positive marketing."

For the moment, though, there's no finalized master plan, and no finalized plan for financing the Uplands redevelopment. As the project's size has increased, the estimated cost has gradually grown from $200 million to $300 million, to $300-$400 million. Several legal cases still need to be resolved. The federal judge hasn't yet approved the settlement between HUD and former Uplands residents. And adjacent businesses inside the proposed footprint of the project are challenging the city's right to eminent domain. Meanwhile, the original size of the project has ballooned, more than doubling since it was first announced.

Asked for a copy of Pennrose's proposal for the project, she says that it's a work in progress. For the moment, the city has accepted Pennrose as lead developer, but that's the only thing agreed upon. As for the cost estimate, Carter admits that it's a stab in the dark, based on a provisional cost-per-building estimate. In other words, it's probably going nowhere but up.

When asked why Pennrose was chosen for the job, Carter seems more certain. Pennrose has a decade-long relationship with Baltimore City and has contributed to the city's largest affordable-housing projects. These include construction of the mixed-income housing at the Towns at Orchard Ridge off of Sinclair Lane (2008), rehabilitation in Reservoir Hill ('04), apartment rehabilitation in Druid Hill ('04), and construction of a senior-citizen complex in Cherry Hill ('03). Pennrose also has close connections with local and minority firms, also a requirement for city contracts. Basically, Carter says, "we're pretty familiar with the city and the agencies we have to work with to make it happen."

In an era when condominiums have stopped selling, she says, affordable housing may be the next big thing. And given the complexity of such ventures, it's a business that's tough for small developers to break into. Establishing dominance in the market involves a complex network of relationships in which a successful developer juggles the various issues of federal financing, local government regulations, subcontractors, and community groups. Carter rattles off the names of other states where Pennrose is active: Pennsylvania, New Jersey, New York, Ohio, Tennessee, Georgia.

Here in Maryland, the ties between Pennrose and the O'Malley and Dixon administrations have been tight ever since Pennrose's Brewerytown project caught the attention of some local urban planners in the '90s. Indeed, the ties seem to be tight throughout the world of affordable housing and redevelopment. Pennrose has worked closely in its home state with the Reinvestment Fund, a Philadelphia-based firm that plans and finances large-scale projects. The Reinvestment Fund was the consultant that Baltimore's Planning Commission turned to when it needed help reshaping the city's moribund master plan in 2006. While there's nothing inherently insidious about the relationships, it's clear that much of the reshaping of America's urban environment is being directed by a small group of developers and designers. Carter agrees, and she says it's for a reason.

"Affordable housing is an area that a lot of people don't know about," she says. "It's very specialized. You have to know about the products and, you know, how to get to make the deal work."

A look through campaign-finance records indicates that Pennrose, and other Uplands Visionaries, have certainly cultivated good relationships with local politicians, not least through generous political donations (see sidebar).

In his losing campaign for mayor last year, former City Councilman Keiffer Mitchell Jr. made a point of noting in his campaign literature that the developers chosen by the city for Uplands had given a total of $17,000 to Mayor Sheila Dixon's campaign coffers. (Mitchell did not respond to calls for comment for this story.) Eighth District City Councilwoman Helen Holton, who has been a strong supporter of the Uplands redevelopment since the area became part of her district after redistricting in 2002, doesn't think developers giving money to candidates is much of an issue. "I don't think that's what needs to be taken up," she says. "They gave to [O'Malley]. Some of them have given to me. It's not an uncommon thing. They probably gave some to Keiffer, too."

She is correct: According to records, Mitchell received $250 from Banks and $250 from Doracon, both in 2004.

And then there's the Baltimore City housing market, which has gone from boom to bust in the past two years and may not have hit bottom yet. Relying on market forces to push the Uplands redevelopment toward success doesn't seem as much like the risky bet it might have been four years ago. Architect David Dixon acknowledges that there are risks involved in the project, especially in a depressed housing market. Then again, he contends, risk is what makes Baltimore a better city. He mentions a few other cities--Detroit, for instance--that have been inactive in the face of population decline and goes on to speak highly of O'Malley as a mayor who took bold initiatives, tearing down old public housing and financing new neighborhoods in their place. "He was willing to get the city to invest based on future tax value," David Dixon says. Mayor Dixon, he adds, also deserves much of the credit for Uplands: "She could have fought it. She could have stayed on the sidelines. She didn't, though."

Even many of those dubious about the project, such as the Fair Housing Project's Barbara Samuels, seem to share the same hopes implicit in the Upland Visionaries vision: a city where poverty is no longer an isolating, homogenizing force.

In the case of Uplands, time will tell. In several months, if what the visionaries say is true, the wrecking cranes will be back out on Old Frederick Road in full force. And after another five to seven years, the verdicts will be in. Even in the final stages of planning, David Dixon admits it's a bit of a gamble. And, like most visionaries, he seems to believe it's worth it. (City Paper www.citypaper.com, By John Barry)

Web site red-flags problem renters

Shawn Parsons thought he had done his research.

Before he offered a lease for his Fells Point home to a prospective tenant, he reviewed her credit and checked her references.

But after that tenant wrote bad checks, sublet the place without permission and damaged the property, he wanted to warn other landlords not to trust her.

The consumer protection division of the state attorney general office offers a brochure with more information for landlords and tenants, available online at www.oag.state.md.us/consumer/landlords.htm. Paper copies can be requested by calling 410-576-6500 or 888-743-0023.

"If we could have found out anything about this, it would have saved us $17,000 and seven months of [those] people renting the property," Parsons, of Fallston, said. "It brought so much stress into our lives."

Parsons posted some details about his experience on donotrentto.com, a two-year-old Web site that compiles information about problem tenants so renters can make better decisions. For a $14.99 annual membership, landlords can search the database by name to gauge whether others have experienced problems with an applicant.

The Web site reflects how tenants and landlords are turning more to the Internet to check each other out. Apartment-hunters can also visit various Web sites for reviews of buildings and complexes.

But sites such as donotrentto.com also raise concerns among consumer advocates and tenants about potential misuse. Unlike credit reports, now routinely checked during the application process, such sites are not part of a regulated industry and lack an approved system for verifying claims and appealing inaccuracies.

"You just can't put things out there for people to slam somebody or mess somebody over," said Stephanie Cornish of Baltimore Neighborhoods Inc., a group that assists both landlords and tenants.

And privacy experts say this sort of Web site presents potential problems of misidentification or identity theft that are characteristic of the Internet age.

"We're creating all kinds of new information infrastructures but all too often without any checks and balances," said Jay Stanley, a spokesman for the American Civil Liberties Union's Technology and Liberty Program.

Joseph Collins, the managing partner of donotrentto.com, said the site helps landlords protect themselves and their property.

The inspiration for the Ann Arbor, Mich., company developed after a group of landlords there met and realized they had similar problems with tenants.

"We said to ourselves, 'We can't be the only ones going through these issues,'" he said.

Collins said that he had just evicted a tenant who vandalized his house in addition to stealing the refrigerator, the stove and the front door upon departure. "I spent $7,000 just to get it back in rentable shape," he said.

Credit reports aren't fail-safe, because sometimes people don't have a credit history. "You don't really know the extent of the person until you speak to their previous landlord," he said.

But what if a prospective tenant lies and provides a relative's number when asked for references?

"There are thousands of good tenants out there, but one tenant could cause you devastation with the amount of damage they could do to your property," Collins said.

Thus far, landlords across the nation and even a few internationally have entered the names of hundreds of tenants, including one from Spain, he said. There are about 25 Maryland tenants, he said.

Landlords can try to evict tenants through the court system, but if the person leaves without paying and leaves no forwarding address, landlords have no recourse, he said.

"A lot of people pretty much drop it," he said. As a result, he added, credit reports "might not show anything, because a landlord was not at a financial state where they could get all this prosecuted."


Property owners or managers can describe their renter problems and even upload photos of damage. The "add tenant" form asks for the last digits of a person's Social Security number or driver's license number, to help differentiate among people with common names, Collins said.

Right now, you don't need to subscribe to enter a listing about a tenant - only to search for a name.

Landlords must enter an e-mail address but otherwise are not required to confirm that they own and are renting property. If a tenant calls to report erroneous information, "normally I take care of things within 24 hours," Collins said.

The consumer protection division of the state attorney general office offers a brochure with more information for landlords and tenants, available online at www.oag.state.md.us/consumer/landlords.htm. Paper copies can be requested by calling 410-576-6500 or 888-743-0023.

But how do people know if something is posted on the site about them?

"If they want to find out if somebody enters something, sign up and get all the privileges," he said. "We don't restrict tenants from becoming members."

Rebecca Bowman, a Maryland assistant attorney general, said the Web site creates the potential for libel but otherwise does not violate laws.

Landlords should be very careful about the information they post about a tenant. "As long as it is accurate and you have documentation of it, you don't have a problem," she said.

Bowman said such sites might be "helpful to look at, but you need to take everything with a grain of salt."

"Certainly all of this gives me pause, whenever there's information out there that's being kept on people that they don't know about," Bowman said. On the other hand, "there are many, many, many kinds of these things out there. I don't know that this is any better or any worse."

She pointed out that the network relies on people submitting information.

"All of that is based on the credibility of the people posting," she said.

Prospective tenants turned down for a rental should ask why, she advised.

Cornish, of Baltimore Neighborhoods, said tenants have more recourse when landlords take a dispute to court. "Those things are easier to go back and straighten out," she said.

She's heard of landlords refusing to offer a reference to tenants in an attempt to keep them from moving. The ACLU's Stanley said that landlords have a First Amendment right to write about their experiences on the Internet, but companies that act as commercial databases - as well as commercial data aggregators - should be subject to the privacy laws that credit companies face.

Landlords also have other options to inform their peers about potentially difficult tenants. They can pay to inform credit reporting agencies of outstanding debts, such as unpaid rent, said Joseph Rooney, deputy commissioner for financial regulation for the Maryland Department of Labor, Licensing and Regulation.

"If landlords would use the credit reporting system to report negatives, there's a legal framework where people can dispute the amount owed," Rooney said.

For example, if you are denied credit based on negative information on your credit report, you can get a free copy to verify the information and challenge potential inaccuracies.

Legal filings, including judgments and liens, should also appear on a person's credit report, Rooney said. (By Liz F. Kay | Baltimore Sun)

Insurers squeeze out buyers

First it was the lenders. Now it's the mortgage insurance industry: Entire product lines are being yanked off the real estate financing shelf, potentially squeezing large numbers of buyers and refinancers out of the market.

On Feb. 6, the oldest and largest private insurer of home loans -- MGIC -- issued a bombshell warning that, in large parts of the country, it would no longer provide coverage on cash-out refinancings, reduced-documentation loans, mortgages with down payments less than 5 percent, loans for rental houses or other non-owner-occupied investor properties, and mortgages with negative amortization features, such as payment-option loans.

The bans, which take effect March 3, cover four states in their entirety, the District of Columbia, plus 25 other major real estate markets. The states are Arizona, California, Florida and Nevada. Metropolitan markets on the list include the Maryland and Northern Virginia suburbs of Washington, D.C. and Baltimore.

MGIC also tightened eligibility standards nationwide on a number of low-down-payment loan categories:

• Homebuyers who seek mortgages with less than 5 percent down must now have minimum FICO credit scores of 680, up from the previous 620.

• Cash-out refinancings on all non-owner-occupied rental or investment properties no longer will be eligible for insurance.

• Borrowers who seek to use reduced documentation plans must now make minimum down payments of 10 percent, have FICO scores of 660 or higher, and be able to demonstrate that at least 50 percent of their annual income is derived from self-employment.

• All buyers of condominiums in declining markets will now need to come up with 10 percent down payments. Buyers of single-family homes in those areas with less than 10 percent down payments will need FICOs of 680 or higher.

Milwaukee-based MGIC is a giant in the industry with nearly $200 billion in insurance coverage in force on 1.3 million mortgages. Like other private mortgage underwriters, it provides lenders protection against losses on low-down-payment loans -- those with less than 20 percent borrower equity. Competitors are expected to adopt cutbacks similar to MGIC's in the coming weeks.

Private mortgage insurers played a key role during the housing boom by helping millions of people with modest incomes and marginal credit to purchase homes with minimal down payments. But now the industry is facing rising claims on loans that went sour. MGIC, for example, estimates that it lost $1.3 billion during the fourth quarter of 2007, according to Michael J. Zimmerman, senior vice president for investor relations.

MGIC's retrenchment parallels recent moves by mortgage lenders. Most of them are now restricting the hyper-creative financing that powered the boom. Essentially the industry is saying: We were willing to go with the flow when all the arrows were pointing up during the boom years, but now that party is over.

The major bright spot still left for purchasers seeking a home with low down payments: FHA. The Federal Housing Administration's insurance program has no connection with private insurance. Borrowers can still put 3 percent down and qualify for a fixed-rate, 30-year FHA loan.

(Kenneth Harney -- Nation's Housing)

Baltimore gains downtown housing

Two high-profile apartment projects in downtown Baltimore have wrapped up construction and are adding several hundred luxury residences to the market, one in a historic, former office building in the hub of west-side redevelopment and the other a new building overlooking Camden Yards.

Construction is nearly done on the 183-unit former Baltimore Gas and Electric Co. headquarters, a nearly century-old Beaux-Arts building at 39 W. Lexington St., and the developer is kicking off leasing this weekend.

And the long-delayed The Zenith, a 191-unit tower at 511 W. Pratt St., marked completion of construction yesterday, though some tenants started moving in late last year. The apartment tower is 20 percent leased and 13 percent occupied, a Zenith manager said.

Both projects are expected to be big contributors to the transformation of downtown from a predominantly business district to an area where people live and shop as well as work. They are part of the 3,265 rental units that have been added since 2000, downtown, which was double the number of downtown apartments it had a decade ago, said Bob Aydukovic, vice president of economic development for the Downtown Partnership. "It shows that demand for downtown housing is very strong," Aydukovic said.

About 955 rental units are in various stages of construction downtown, with several large projects slated to open this year. In addition, hundreds more are planned in various projects, including in the city's old retail district near the former BGE building.

Despite a slowdown in the for-sale side of the housing market, interest in leasing has grown and rents are rising, Aydukovic said.

At The Zenith, apartments rent for $1,350 for a studio, an average $1,800 for a one-bedroom, and an average $2,600 for a two-bedroom, said Corinne Warner, property manager for The Zenith, which was developed by Brian D. Morris, Dean S. Harrison and Ronald H. Lipscomb.

The six two-story penthouses, all of which overlook Camden Yards, range from $3,200 to $4,600 a month, Warner said.

"Studios have been our most popular, and two of the six penthouses are leased," she said.

The developers are negotiating with a restaurant tenant to open on site, possibly by summer, Warner said.

The $42 million project at 39 W. Lexington St. project transformed the former BGE headquarters, which opened in 1916 as the headquarters for BGE predecessor Consolidated Gas, Electric Light and Power Co. of Baltimore.

The conversion restored features such as carved marble panels with figures that represent knowledge, light, heat and power, and cast- iron work on the façade.

The building's top floor houses five two-story duplex apartments and the 19th floor, the former BGE executive floor, has retained such features as oak paneling and fireplaces, said developer David Hillman, chairman of Southern Management Corp.

Rents for apartments, which include studios, and one and two bedrooms, range from $1,300 a month for studios, to $4,000 for penthouses, including utilities. The building will offer concierge service and a limousine for getting around town, Hillman said. Plans call for a restaurant that will front on Liberty Street and a coffee shop.

Demand for new west-side apartments has been strong, said Ronald M. Kreitner, executive director of WestSide Renaissance Inc., and 39 W. Lexington "broadens what the options are."

Aydukovic said The Zenith, which opened for leasing in October, has averaged four leases a week, a strong pace especially in the winter months and in the face of new competition.

"Rents continue in an upward trend, and we're still not seeing any massive shifts of renters from one building to another," Aydukovic said. "This is all new blood." (By Lorraine Mirabella | Baltimore Sun)

Loan crisis in Prince George's

Home mortgage foreclosures soar

The mortgage crisis roiling communities across the country is being acutely felt in Prince George's County, where thousands of residents -- many lured in recent years by relatively affordable real estate prices -- are in danger of losing their homes.

Middle-class homebuyers flocked to the county in the early part of this decade as prices in other Washington-area suburbs surged. Now, scores of families face the threat of foreclosure, throwing one of the nation's wealthiest majority-black suburbs into what state and local officials who gathered here yesterday called an emergency.

Prince George's had twice as many home foreclosures in the first nine months of 2007 as any other Maryland locality, according to data compiled by the firm RealtyTrac Inc. and released yesterday by state officials. The firm reported that Baltimore City, Baltimore County and Montgomery County, which had the next-highest numbers of foreclosures, each had half as many as Prince George's.


Officials are alarmed by the trend -- the number of foreclosures is expected to increase drastically in coming months, as many adjustable-rate mortgage rates jump.

"Prince George's County is ground zero in Maryland's foreclosure challenge," said Thomas Perez, secretary of the state Department of Labor, Licensing and Regulation and co-chairman of the governor's foreclosure task force. "There are a disproportionate number of residents in Prince George's County who have subprime loans. Regrettably, there is a racial correlation."

At Henry Wise Jr. High School, several dozen people -- including legislators, state officials and County Council members -- discussed ways to head off the crisis. Participants proposed holding night community meetings to reach out to distressed homeowners, providing counseling and creating a county fund that would allow subprime homeowners to qualify for state aid programs.

Mortgage problems nationwide stem from factors such as people buying homes they could not afford, being deceived by unscrupulous lenders and taking out exotic loans whose interest rates have skyrocketed.

Prince George's, which sits northeast of Washington and is the state's second-largest jurisdiction with 840,000 residents, has long been a destination for African-Americans, who make up two-thirds of the population. In recent years, the county has also seen an influx of immigrants. The county's median household income -- $65,850, according to a 2006 survey -- exceeds the national average.

State officials cited data yesterday from RealtyTrac Inc., a California-based provider of foreclosure information that concedes that its numbers might be imprecise because of the difficulty in collecting foreclosure data in Maryland. But no one denies that Prince George's County has been particularly hard hit. Through the first nine months of 2007, there were more than 3,300 foreclosures, the firm says.

Stephen Fuller, an economist at George Mason University in Fairfax, Va., attributes the crisis in Prince George's to several factors, including the general affordability of the county's housing stock.

"You think of that as a strength, but it also attracted buyers who were marginally financially capable of supporting the mortgage," Fuller said.

Many people who bought homes in the county during the boom were first-time homebuyers and young families with children -- and many were so-called subprime borrowers, those with weaker-than-average credit scores. As a result, they took on adjustable-rate mortgages whose interest rates have increased beyond what they can afford.

Compounding the problem was a construction boom in the county where, unlike other areas in the Washington region, vast tracts of land had remained largely undeveloped, Fuller said.

"They just couldn't stop it," Fuller said of construction there.

Because of the sheer number of homes sold in the county this decade, the high number of foreclosures is not surprising, Fuller said.

One homeowner in danger of losing his home is Samuel Moore, a 37-year-old youth development specialist for a D.C. nonprofit.

Moore was a D.C. renter when he started looking for a home in 2006. A real estate agent suggested a four-bedroom house in the Prince George's town of Clinton, and he paid $283,000 for the house that November.

Within weeks, he said, the ceiling in the dining room caved in, pipes burst and the toilet in the main bathroom crumbled. After spending his entire savings on repairs, Moore said, he could no longer afford the house. "It turned into a money pit," he said.

He put the home on the market early last year, and so far, four potential buyers have expressed interest to his real estate agent. But he said none qualified for a mortgage.

Moore said he has not been able to find a renter and will not be able to make this month's payment.

"I thought I had enough foresight" to avoid buying a house with so many problems, he said. "I wind up exhausting all of my savings."

Caprise Coppedge, a housing counselor for United Communities Against Poverty in Capitol Heights, said an average of 10 homeowners daily seek her counseling, though she has time for only one. She said she was counseling one homeowner a week in 2006.

She said the common theme among her clients is "lack of financial literacy."

"They don't quite understand the lending process, and they're not understanding what type of mortgage they're getting," she said.

Gov. Martin O'Malley announced an initiative last summer aimed at preventing home foreclosures through credit counseling, enforcement of lending practice standards and refinancing assistance to stop what he said is a rising threat to the state's middle class.

Officials said yesterday that they must do all they can to help homeowners now because in March, a wave of homeowners will be hit with adjusted rates.

"I wish I could tell you the problem has bottomed out and things are going to get better," Perez said. (BaltimoreSun.com)