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)
Showing posts with label Baltimore city. Show all posts
Showing posts with label Baltimore city. Show all posts
Tuesday, September 2, 2008
Monday, April 21, 2008
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)
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)
Thursday, March 20, 2008
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)
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)
Monday, October 1, 2007
Report criticizes Housing Authority for demolishing public housing
The number of occupied public housing units in Baltimore has dropped 42 percent over the past 15 years — from 16,525 to 9,625 — as the Housing Authority of Baltimore City “is now in the demolition business,” according to a report from The Abell Foundation.
“With virtually no plans to replace the deteriorated units being razed or sold, tenant representatives and housing advocates have watched with growing alarm as they wonder if the Housing Authority has abandoned its mission to house the poor,” wrote Joan Jacobson, author of the recent report, “The Dismantling of Baltimore’s Public Housing.”
While more than a quarter of Baltimore families live in poverty, the Housing Authority is removing or demolishing 2,400 homes from its inventory, according to the report.
The report further states the Housing Authority is planning to spend almost twice as much on demolition, $24 million, as it will spend on redevelopment, $14 million, in 2007 and 2008.
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“Today’s demolition plans offer no sense of hope for Baltimore’s neediest,” Jacobson wrote.
In a lengthy response, the Housing Authority said the report failed to recognize the funding crisis and complex challenges that affect every public housing authority in the nation.
The Housing Authority plans to lease 2,500 new Section 8 units in the next year. The Housing Authority reported funding for public housing decreased 33 percent from 1999 to 2006.
While the number of public housing units has decreased over the years, the Housing Authority has said it has increased its Section 8 vouchers to make up for the loss of units, as reported in The Examiner’s “Housing Matters” series, Sept. 17 and 18.
“The Jacobson report is filled with inaccuracies, distorts the historical record and offers no useful recommendations to respond to the crisis caused by the steady erosion of federal support for public and other types of affordable housing,” the Housing Authority said.
The Abell Foundation is a Baltimore nonprofit dedicated to improving the quality of life in the city.
Recommendations
» The state should pass a fair-housing law that requires landlords to accept Section 8 vouchers, similar to laws in Howard and Montgomery counties.
» A “one-for-one” replacement policy for demolished units should be adopted.
» Developers, city officials and housing experts should study city public housing. (by Andrew Cannarsa, examiner.com)
“With virtually no plans to replace the deteriorated units being razed or sold, tenant representatives and housing advocates have watched with growing alarm as they wonder if the Housing Authority has abandoned its mission to house the poor,” wrote Joan Jacobson, author of the recent report, “The Dismantling of Baltimore’s Public Housing.”
While more than a quarter of Baltimore families live in poverty, the Housing Authority is removing or demolishing 2,400 homes from its inventory, according to the report.
The report further states the Housing Authority is planning to spend almost twice as much on demolition, $24 million, as it will spend on redevelopment, $14 million, in 2007 and 2008.
People who read this also read:
“Today’s demolition plans offer no sense of hope for Baltimore’s neediest,” Jacobson wrote.
In a lengthy response, the Housing Authority said the report failed to recognize the funding crisis and complex challenges that affect every public housing authority in the nation.
The Housing Authority plans to lease 2,500 new Section 8 units in the next year. The Housing Authority reported funding for public housing decreased 33 percent from 1999 to 2006.
While the number of public housing units has decreased over the years, the Housing Authority has said it has increased its Section 8 vouchers to make up for the loss of units, as reported in The Examiner’s “Housing Matters” series, Sept. 17 and 18.
“The Jacobson report is filled with inaccuracies, distorts the historical record and offers no useful recommendations to respond to the crisis caused by the steady erosion of federal support for public and other types of affordable housing,” the Housing Authority said.
The Abell Foundation is a Baltimore nonprofit dedicated to improving the quality of life in the city.
Recommendations
» The state should pass a fair-housing law that requires landlords to accept Section 8 vouchers, similar to laws in Howard and Montgomery counties.
» A “one-for-one” replacement policy for demolished units should be adopted.
» Developers, city officials and housing experts should study city public housing. (by Andrew Cannarsa, examiner.com)
Tuesday, September 18, 2007
Mayor Dixon Focusing On Development, New Top Cop
The election is behind her and Mayor Sheila Dixon is looking ahead to perhaps her most looming task: appointing a top cop for Baltimore.
"I'm going to make a decision very soon because we need to have the police department focused and not worried about who's going to be the commissioner," Dixon said.
A biotechnology park next to Johns Hopkins is already in the works and now the mayor wants to focus on developing the east side of the city around it, with businesses, housing and a new charter school. In all, it's a project that requires some creative financing, borrowing $85 million.
"So that whole area is going to be stimulated by helping families in the community one, be able to have opportunities for jobs and training, two, quality housing, and then three, a great K-8 school that's going to focus on medical and bio to prepare our kids to get in that arena," she said.
City council members have priorities of their own. Council President Stephanie Rawlings-Blake, fresh off her election victory, is targeting heroin addiction, hoping to push for more doctors in the city to prescribe the treatment drug buprenorphine.
"Heroin addiction is a terrible problem in the city and if we make inroads in heroin addiction, we would slow the engine that is our criminal justice system down," Rawlings-Blake said.
Among the dozens of other bills high on the administration's priority list: regulating valet parking services in the city and reserving some city parking spaces for car-sharing vehicles.
The mayor has a deadline. These bills must be acted on by the first week in December, when the new councilmembers take office. If not, those bills will have to be introduced all over again.(CBS Broadcasting Inc. All Rights Reserved.)
"I'm going to make a decision very soon because we need to have the police department focused and not worried about who's going to be the commissioner," Dixon said.
A biotechnology park next to Johns Hopkins is already in the works and now the mayor wants to focus on developing the east side of the city around it, with businesses, housing and a new charter school. In all, it's a project that requires some creative financing, borrowing $85 million.
"So that whole area is going to be stimulated by helping families in the community one, be able to have opportunities for jobs and training, two, quality housing, and then three, a great K-8 school that's going to focus on medical and bio to prepare our kids to get in that arena," she said.
City council members have priorities of their own. Council President Stephanie Rawlings-Blake, fresh off her election victory, is targeting heroin addiction, hoping to push for more doctors in the city to prescribe the treatment drug buprenorphine.
"Heroin addiction is a terrible problem in the city and if we make inroads in heroin addiction, we would slow the engine that is our criminal justice system down," Rawlings-Blake said.
Among the dozens of other bills high on the administration's priority list: regulating valet parking services in the city and reserving some city parking spaces for car-sharing vehicles.
The mayor has a deadline. These bills must be acted on by the first week in December, when the new councilmembers take office. If not, those bills will have to be introduced all over again.(CBS Broadcasting Inc. All Rights Reserved.)
Thursday, August 23, 2007
756 to share $1 million in housing settlement
Advocates for the disabled announced yesterday that 756 people are in line to share $1 million from the settlement of a Baltimore housing discrimination lawsuit.
A victims' compensation fund was established as part of a landmark 2004 settlement in a lawsuit alleging that thousands of people with disabilities were intentionally or illegally excluded from public housing. Other terms of the settlement, worth more than $100 million, include development of more than 1,000 units of public housing accessible to people with disabilities and a program to help them obtain housing.
The parties in the lawsuit - the Maryland Disability Law Center, the U.S. Department of Justice and the Housing Authority of Baltimore City - jointly filed in U.S. District Court yesterday a recommendation to compensate the 756 people. Both the law center and the justice department had sued the housing authority.
Last summer, officials mailed 40,000 notices to potential housing discrimination victims, urging them to take advantage of the compensation fund. Soup kitchens and shelters also held informational meetings about it. About 2,500 claims were filed, said Lauren Young, the disability law center's legal director.
Assuming the court approves the arrangement, each of the identified victims will receive about $1,300 sometime in the next few months, Young said.
"These payments are given to individuals in recognition that their civil rights were violated based on their disabilities," she said in a statement.
Among those recommended for compensation are people who were denied housing because they used wheelchairs, and a person who had requested grab bars and fell repeatedly in the shower.
University of Baltimore's law school is planning to offer financial counseling sessions for recipients of the money. (baltimoresun.com)
A victims' compensation fund was established as part of a landmark 2004 settlement in a lawsuit alleging that thousands of people with disabilities were intentionally or illegally excluded from public housing. Other terms of the settlement, worth more than $100 million, include development of more than 1,000 units of public housing accessible to people with disabilities and a program to help them obtain housing.
The parties in the lawsuit - the Maryland Disability Law Center, the U.S. Department of Justice and the Housing Authority of Baltimore City - jointly filed in U.S. District Court yesterday a recommendation to compensate the 756 people. Both the law center and the justice department had sued the housing authority.
Last summer, officials mailed 40,000 notices to potential housing discrimination victims, urging them to take advantage of the compensation fund. Soup kitchens and shelters also held informational meetings about it. About 2,500 claims were filed, said Lauren Young, the disability law center's legal director.
Assuming the court approves the arrangement, each of the identified victims will receive about $1,300 sometime in the next few months, Young said.
"These payments are given to individuals in recognition that their civil rights were violated based on their disabilities," she said in a statement.
Among those recommended for compensation are people who were denied housing because they used wheelchairs, and a person who had requested grab bars and fell repeatedly in the shower.
University of Baltimore's law school is planning to offer financial counseling sessions for recipients of the money. (baltimoresun.com)
Friday, August 17, 2007
Housing needs
A recent report from the federal Department of Housing and Urban Development shows that increasing numbers of the nation's poor are spending more of their income on rent while also waiting longer for federal subsidies. The report reflects the worsening crisis in the supply of affordable housing, a shortage that is certainly being felt in Baltimore.
Steps are being taken here to deal with the problem, but far more needs to be done.
Nearly 6 million households nationwide met HUD's definition of worst-case housing needs in 2005 (the latest available data), meaning that those families and individuals made less than half of an area's median income, received no rental assistance and paid 50 percent or more of their monthly income for rent or lived in substandard housing. The number had increased by 817,000 households since HUD's last tally, in 2003, a 16 percent jump.
A bill passed recently by the House of Representatives' financial services committee could help. It would establish a National Affordable Housing Trust Fund aiming to give states and localities up to $1 billion a year to produce, rehabilitate and preserve 1.5 million housing units for low-income families in the next decade. It's a worthy idea, but it's also been on the drawing boards for several years. Congress should push for affordable-housing relief with more urgency.
In the meantime, cities like Baltimore cannot wait and need to act on their own. From 2000 to 2005, housing prices in the city doubled while wages increased only 19 percent (a disturbing trend reflected nationwide in the HUD report). A 2005 analysis of the rental market found a shortfall of nearly 26,000 affordable units for households making less than half of the area median income, and nearly 45,000 units for households making less than 80 percent of area median income.
The City Council has passed an inclusionary zoning law that requires developers receiving large city subsidies to set aside 20 percent of units for affordable housing. It has also created an affordable-housing fund, putting in nearly $60 million over multiple years to increase the supply of affordable units. Still needed is a more comprehensive and coherent plan that should include even more investment of city dollars and a greater commitment to develop and restore more affordable units as well as provide more housing vouchers for low-income families.
Baltimore has taken some important steps, and for the next fiscal year the city is slated to get some additional federal funding. But a long-term shortfall in federal housing dollars also needs to be reversed, so that Baltimore and other cities don't have to run so much harder and faster to get ahead of the affordable-housing crisis. (baltimoresun.com)
Steps are being taken here to deal with the problem, but far more needs to be done.
Nearly 6 million households nationwide met HUD's definition of worst-case housing needs in 2005 (the latest available data), meaning that those families and individuals made less than half of an area's median income, received no rental assistance and paid 50 percent or more of their monthly income for rent or lived in substandard housing. The number had increased by 817,000 households since HUD's last tally, in 2003, a 16 percent jump.
A bill passed recently by the House of Representatives' financial services committee could help. It would establish a National Affordable Housing Trust Fund aiming to give states and localities up to $1 billion a year to produce, rehabilitate and preserve 1.5 million housing units for low-income families in the next decade. It's a worthy idea, but it's also been on the drawing boards for several years. Congress should push for affordable-housing relief with more urgency.
In the meantime, cities like Baltimore cannot wait and need to act on their own. From 2000 to 2005, housing prices in the city doubled while wages increased only 19 percent (a disturbing trend reflected nationwide in the HUD report). A 2005 analysis of the rental market found a shortfall of nearly 26,000 affordable units for households making less than half of the area median income, and nearly 45,000 units for households making less than 80 percent of area median income.
The City Council has passed an inclusionary zoning law that requires developers receiving large city subsidies to set aside 20 percent of units for affordable housing. It has also created an affordable-housing fund, putting in nearly $60 million over multiple years to increase the supply of affordable units. Still needed is a more comprehensive and coherent plan that should include even more investment of city dollars and a greater commitment to develop and restore more affordable units as well as provide more housing vouchers for low-income families.
Baltimore has taken some important steps, and for the next fiscal year the city is slated to get some additional federal funding. But a long-term shortfall in federal housing dollars also needs to be reversed, so that Baltimore and other cities don't have to run so much harder and faster to get ahead of the affordable-housing crisis. (baltimoresun.com)
Thursday, August 16, 2007
Md. mortgage program thriving
Nearly 4,000 turned to the state last year for $767 million in low-interest home loans.
Here's a mortgage program that's not in trouble.
Nearly 4,000 homebuyers turned to the state for their home loans last fiscal year, a record for Maryland's 28-year-old loan program at a time of increasing disarray in the mortgage industry.
The state made about $767 million in low-interest loans to buyers, almost all of them purchasing their first home, in the 12 months that ended June 30. That's three-and-a-half times the amount it lent the previous fiscal year - and far above the $269 million record set in the 1995 fiscal year.
Stephen D. Silver, the state Department of Housing and Community Development's chief financial officer, credits timing for the big jump in demand.
The state expanded its "More House 4 Less" offerings a few years ago from a single product to several - 30-, 35- and 40-year mortgages including interest-only loans - but word filtered out slowly.
Meanwhile, first-time homebuyers found their private mortgage options shrinking this year as foreclosures rose and lenders, stung, backed away from borrowers with shaky credit or little money to put down.
"I'm sure we are picking up some people that were being steered toward subprime," said Silver, referring to loans aimed at borrowers with credit problems.
Thus far, the state has fewer delinquent loans than do lenders with mortgages in Maryland insured by the Federal Housing Administration, the state housing and community development agency said.
The state's loans have below-average interest rates - about 6 percent last fiscal year while the market rate was closer to 6.5 percent. Borrowers are also eligible for assistance with down payment and closing costs.
The products are all fixed rate. "We wanted to make sure our borrowers were getting something with no surprises," Silver said.
The state made 3,882 loans last fiscal year, triple the number a year earlier. Though that's a fraction of all new loans, it's a hefty increase at a time of slumping home sales.
Home values, which remain high, are part of the reason homebuyers would flock to a program that offers down payment and closing-cost help. Many first-time buyers are hard pressed to put even 5 percent down. With average sales prices in Maryland at $380,000, a 5 percent down payment would equal $19,000.
Ryan W. James, senior mortgage banker with First Horizon Home Loans in Timonium, said the More House 4 Less loans - sometimes called "CDA" because they're handled by the state's Community Development Administration - have grown in popularity as the state made it easier and quicker to get one.
"CDA had a bad reputation for a long time," said James, who said he now does 10 to 15 of the loans a month and said the processing time is much faster than it once was. "What took weeks with CDA now takes days. ... That helped a lot."
The average More House 4 Less borrower got a loan equaling 99 percent of the value of the home. Nine out of 10 participants got down payment assistance, closing-cost help or both from the state.
Borrowers had to be buying either for the first time or in targeted areas, such as Baltimore City. The average borrower had a household income of about $55,000 and purchased a home priced at almost $200,000.
The state housing agency, which finances its loans with mortgage revenue bonds, said it hasn't run into trouble getting money as investors abandon other parts of the mortgage market. Silver figures that's because the bonds are rated AA and are mostly tax-exempt, and because all the mortgages the state approves have either private or government insurance. (baltimoresun.com)
Here's a mortgage program that's not in trouble.
Nearly 4,000 homebuyers turned to the state for their home loans last fiscal year, a record for Maryland's 28-year-old loan program at a time of increasing disarray in the mortgage industry.
The state made about $767 million in low-interest loans to buyers, almost all of them purchasing their first home, in the 12 months that ended June 30. That's three-and-a-half times the amount it lent the previous fiscal year - and far above the $269 million record set in the 1995 fiscal year.
Stephen D. Silver, the state Department of Housing and Community Development's chief financial officer, credits timing for the big jump in demand.
The state expanded its "More House 4 Less" offerings a few years ago from a single product to several - 30-, 35- and 40-year mortgages including interest-only loans - but word filtered out slowly.
Meanwhile, first-time homebuyers found their private mortgage options shrinking this year as foreclosures rose and lenders, stung, backed away from borrowers with shaky credit or little money to put down.
"I'm sure we are picking up some people that were being steered toward subprime," said Silver, referring to loans aimed at borrowers with credit problems.
Thus far, the state has fewer delinquent loans than do lenders with mortgages in Maryland insured by the Federal Housing Administration, the state housing and community development agency said.
The state's loans have below-average interest rates - about 6 percent last fiscal year while the market rate was closer to 6.5 percent. Borrowers are also eligible for assistance with down payment and closing costs.
The products are all fixed rate. "We wanted to make sure our borrowers were getting something with no surprises," Silver said.
The state made 3,882 loans last fiscal year, triple the number a year earlier. Though that's a fraction of all new loans, it's a hefty increase at a time of slumping home sales.
Home values, which remain high, are part of the reason homebuyers would flock to a program that offers down payment and closing-cost help. Many first-time buyers are hard pressed to put even 5 percent down. With average sales prices in Maryland at $380,000, a 5 percent down payment would equal $19,000.
Ryan W. James, senior mortgage banker with First Horizon Home Loans in Timonium, said the More House 4 Less loans - sometimes called "CDA" because they're handled by the state's Community Development Administration - have grown in popularity as the state made it easier and quicker to get one.
"CDA had a bad reputation for a long time," said James, who said he now does 10 to 15 of the loans a month and said the processing time is much faster than it once was. "What took weeks with CDA now takes days. ... That helped a lot."
The average More House 4 Less borrower got a loan equaling 99 percent of the value of the home. Nine out of 10 participants got down payment assistance, closing-cost help or both from the state.
Borrowers had to be buying either for the first time or in targeted areas, such as Baltimore City. The average borrower had a household income of about $55,000 and purchased a home priced at almost $200,000.
The state housing agency, which finances its loans with mortgage revenue bonds, said it hasn't run into trouble getting money as investors abandon other parts of the mortgage market. Silver figures that's because the bonds are rated AA and are mostly tax-exempt, and because all the mortgages the state approves have either private or government insurance. (baltimoresun.com)
Wednesday, August 15, 2007
Jury awards $4 million in lead case
Damages could be reduced under state-cap law, attorney for city housing authority says.
A city jury has found that the Housing Authority of Baltimore City should pay $4 million in damages to two siblings poisoned by lead paint in their publicly owned rowhouse in the 1980s.
The verdict - issued Thursday - directed $2.5 million to Joseph Avery Jr., 23, of the 3000 block of Rosedale Court and $1.5 million to his sister, Lisa Avery, 21, of the 1700 block of McCulloh St.
The family filed suit against the housing authority in 2005.
The damages could be reduced to a maximum of $350,000 for each sibling under the state payment caps in place at the time they were tested for lead poisoning, said J. Marks Moore III, the attorney for the housing authority's insurance company. The city may appeal the verdict.
But Bruce H. Powell, the Averys' attorney, said he plans on challenging the state cap in a post-trial hearing Aug. 29.
"You have a right to a jury trial, and you have a right to what the jury awards you," Powell said. "The jury thought that they were compensating these people in a way that was fair, and that's not the case."
Lead poisoning, which often occurs when children ingest chipped household paint, can cause mental problems, including cognitive deficits and aggressive behavior.
At the four-day trial, a vocational rehabilitation expert testified that the Avery siblings show symptoms of lead poisoning. Both were in special education, and neither earned a high school diploma.
Last year, 1,274 children in Maryland had lead poisoning, according to statistics from the Maryland Department of the Environment.
That figure includes 936 newly reported cases, 573 of which occurred in Baltimore.
As more research has emerged highlighting effects of lead poisoning, the amount in damages paid by property owners has increased, Moore said.
Since the early 1990s, Moore has handled at least 200 lead poisoning cases for the housing authority, with 10 reaching trial. When he started, a typical verdict ordered $200,000 in damage payments, he said.
"Now, you see just about all of them in the millions," he said. "They really don't have a basis in relation to the underlying facts of the case. I think they're excessive."
The housing authority deferred questions about its lead poisoning cases to Moore.
Ruth Ann Norton, executive director of Baltimore's Coalition to End Childhood Lead Poisoning, said that most current cases of childhood lead poisoning can be blamed on private landlords rather than public housing.
Many city houses built through the 1950s included lead paint. Since it was banned nationwide in 1978, the city has worked to repair lead-tainted houses it owns and reach out to poisoned children, Norton said.
"There has been much progress made there in the intervening 20 years, and so a child living in city-owned housing today would have hopefully a much different experience," she said.
The Averys' mother, Trina Ashley, moved into a Gilmor Homes rowhouse on Bakbury Court in 1984, shortly before giving birth to Joseph. The housing authority had built the home in 1940 with specifications that indicated that lead paint was used.
While living in the home, Ashley repeatedly complained about flaking lead paint, Powell said. In 1986 and 1987, the children were tested for lead and found to have levels that were acceptable at the time but later considered poisonous by Centers for Disease Control and Prevention standards.
In 1988, the Health Department tested the home for chipped lead paint and found it in five locations.
The only location where the lead concentration exceeded acceptable amounts was the front door, and whether the now-deceased surveyor's report indicated lead had been found in the other locations was a trial issue.
A month after the house was tested, the family moved. (baltimoresun.com)
A city jury has found that the Housing Authority of Baltimore City should pay $4 million in damages to two siblings poisoned by lead paint in their publicly owned rowhouse in the 1980s.
The verdict - issued Thursday - directed $2.5 million to Joseph Avery Jr., 23, of the 3000 block of Rosedale Court and $1.5 million to his sister, Lisa Avery, 21, of the 1700 block of McCulloh St.
The family filed suit against the housing authority in 2005.
The damages could be reduced to a maximum of $350,000 for each sibling under the state payment caps in place at the time they were tested for lead poisoning, said J. Marks Moore III, the attorney for the housing authority's insurance company. The city may appeal the verdict.
But Bruce H. Powell, the Averys' attorney, said he plans on challenging the state cap in a post-trial hearing Aug. 29.
"You have a right to a jury trial, and you have a right to what the jury awards you," Powell said. "The jury thought that they were compensating these people in a way that was fair, and that's not the case."
Lead poisoning, which often occurs when children ingest chipped household paint, can cause mental problems, including cognitive deficits and aggressive behavior.
At the four-day trial, a vocational rehabilitation expert testified that the Avery siblings show symptoms of lead poisoning. Both were in special education, and neither earned a high school diploma.
Last year, 1,274 children in Maryland had lead poisoning, according to statistics from the Maryland Department of the Environment.
That figure includes 936 newly reported cases, 573 of which occurred in Baltimore.
As more research has emerged highlighting effects of lead poisoning, the amount in damages paid by property owners has increased, Moore said.
Since the early 1990s, Moore has handled at least 200 lead poisoning cases for the housing authority, with 10 reaching trial. When he started, a typical verdict ordered $200,000 in damage payments, he said.
"Now, you see just about all of them in the millions," he said. "They really don't have a basis in relation to the underlying facts of the case. I think they're excessive."
The housing authority deferred questions about its lead poisoning cases to Moore.
Ruth Ann Norton, executive director of Baltimore's Coalition to End Childhood Lead Poisoning, said that most current cases of childhood lead poisoning can be blamed on private landlords rather than public housing.
Many city houses built through the 1950s included lead paint. Since it was banned nationwide in 1978, the city has worked to repair lead-tainted houses it owns and reach out to poisoned children, Norton said.
"There has been much progress made there in the intervening 20 years, and so a child living in city-owned housing today would have hopefully a much different experience," she said.
The Averys' mother, Trina Ashley, moved into a Gilmor Homes rowhouse on Bakbury Court in 1984, shortly before giving birth to Joseph. The housing authority had built the home in 1940 with specifications that indicated that lead paint was used.
While living in the home, Ashley repeatedly complained about flaking lead paint, Powell said. In 1986 and 1987, the children were tested for lead and found to have levels that were acceptable at the time but later considered poisonous by Centers for Disease Control and Prevention standards.
In 1988, the Health Department tested the home for chipped lead paint and found it in five locations.
The only location where the lead concentration exceeded acceptable amounts was the front door, and whether the now-deceased surveyor's report indicated lead had been found in the other locations was a trial issue.
A month after the house was tested, the family moved. (baltimoresun.com)
Unsold homes swell to record in region
Stacey Wooden and her husband, David Schreiber, have had their Mount Washington home on the market for four months. The couple initially listed their home for $769,000 but eventually dropped the price by almost $70,000.
Home prices flattened in July in metropolitan Baltimore, as unsold houses swelled to a record and buyers faced tightening credit from a distressed mortgage industry.
The average price of a home in the region rose less than half a percent to $331,053 last month from $329,855 in July 2006, according to Metropolitan Regional Information Systems Inc., a Rockville multiple-listing service.
Average prices rose as much as 4.2 percent in Carroll County and 3.5 percent in Baltimore City, but were down slightly in Anne Arundel, Baltimore and Harford counties and flat in Howard County.
As the number of homes on the market mounted, buyers were being forced to cut prices to make a sale happen.
At the same time, buyers - some with good credit - are finding their home loan options more limited as lenders pull back in light of problems in the subprime market.
"The pool of buyers has been shrinking," said Gail Feirstein, an agent with Coldwell Banker in the Annapolis Plaza office. "The mortgage market has created more of a gap for buyers who want to buy a house. Programs with 100 percent financing are on hold right now, and first-time homebuyers have to stretch more. That makes the whole move up market more difficult."
Earlier this week, a report by the National Association of Realtors predicted that home sales nationally likely will fall 6.8 percent to 6.04 million this year, a five-year low.
"Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable," with a modest upturn expected by the end of the year, predicted Lawrence Yun, a senior economist with the Realtor's association, in the report.
Prices have been falling across the nation, said Celia Chen, director of housing economics for Moody's Economy.com.
"Baltimore prices are holding up a little better," she said. "There's certainly weakness all over the country. It's getting more difficult to get financing for homes, particularly for those buyers who don't have very good credit ratings. The subprime segment has obviously collapsed, and very few lenders are now originating loans for subprime borrowers."
Subprime loans are made at higher interest rates to borrowers with poor credit.
"The fact that fewer of those mortgages are being written is behind, in large part, the declining number of sales of homes," Chen said.
Though prices barely budged from a year earlier in metropolitan Baltimore, the number of home sales has been sliding by double digits each month since April.
The number of homes sold in Baltimore and the five surrounding counties fell 12.36 percent to 2,921 in July, compared with 3,333 homes in July 2006, said MRIS, the multiple-listing service.
With listings at a record 19,985, homes took an average of 80 days to sell, compared with an average of 55 days in July 2006 when inventory was 16,749, the statistics showed.
Some price ranges are faring better than others, real estate agents said. High-end suburban houses - $3 million and up - are selling well, sometimes even within a month, said Marc Witman, a partner at Yerman Witman Gaines & Garceau Realty.
But Baltimore's downtown housing market has an abundance of homes in the $300,000 to $500,000 price range.
"There is such a supply of housing in that price range, they all start to run together," Witman said. "Buyers are becoming more deliberate and are taking their time to select the properties they want to view because there are just so many, and you don't have time to go through them all."
To compete, sellers are having to rethink asking prices and stay on top of repairs and maintenance, real estate agents said.
"Some houses have been on the market for so long that people have lost interest in keeping them up," said Tina Marine, an agent with Coldwell Banker in Annapolis. "They're grungy. The beds get stopped being made. ... People just give up."
David Schreiber and Stacey Wooden are not giving up on selling their renovated, five-bedroom, century-old house in Mount Washington. The family plans to relocate to the Chapel Hill-Durham-Raleigh, N.C., triangle for his job, which has an office in Raleigh.
They have cut their initial price of $769,000, set in April, twice to its current $699,999. The couple had hoped to move over the summer to enroll their two sons in school in North Carolina by fall. But despite several open houses, they have had just one offer.
"We're trying to be pragmatic about things," Schreiber said. "There don't seem to be a lot of variables we have control over in the housing market." (baltimoresun.com)
Home prices flattened in July in metropolitan Baltimore, as unsold houses swelled to a record and buyers faced tightening credit from a distressed mortgage industry.
The average price of a home in the region rose less than half a percent to $331,053 last month from $329,855 in July 2006, according to Metropolitan Regional Information Systems Inc., a Rockville multiple-listing service.
Average prices rose as much as 4.2 percent in Carroll County and 3.5 percent in Baltimore City, but were down slightly in Anne Arundel, Baltimore and Harford counties and flat in Howard County.
As the number of homes on the market mounted, buyers were being forced to cut prices to make a sale happen.
At the same time, buyers - some with good credit - are finding their home loan options more limited as lenders pull back in light of problems in the subprime market.
"The pool of buyers has been shrinking," said Gail Feirstein, an agent with Coldwell Banker in the Annapolis Plaza office. "The mortgage market has created more of a gap for buyers who want to buy a house. Programs with 100 percent financing are on hold right now, and first-time homebuyers have to stretch more. That makes the whole move up market more difficult."
Earlier this week, a report by the National Association of Realtors predicted that home sales nationally likely will fall 6.8 percent to 6.04 million this year, a five-year low.
"Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable," with a modest upturn expected by the end of the year, predicted Lawrence Yun, a senior economist with the Realtor's association, in the report.
Prices have been falling across the nation, said Celia Chen, director of housing economics for Moody's Economy.com.
"Baltimore prices are holding up a little better," she said. "There's certainly weakness all over the country. It's getting more difficult to get financing for homes, particularly for those buyers who don't have very good credit ratings. The subprime segment has obviously collapsed, and very few lenders are now originating loans for subprime borrowers."
Subprime loans are made at higher interest rates to borrowers with poor credit.
"The fact that fewer of those mortgages are being written is behind, in large part, the declining number of sales of homes," Chen said.
Though prices barely budged from a year earlier in metropolitan Baltimore, the number of home sales has been sliding by double digits each month since April.
The number of homes sold in Baltimore and the five surrounding counties fell 12.36 percent to 2,921 in July, compared with 3,333 homes in July 2006, said MRIS, the multiple-listing service.
With listings at a record 19,985, homes took an average of 80 days to sell, compared with an average of 55 days in July 2006 when inventory was 16,749, the statistics showed.
Some price ranges are faring better than others, real estate agents said. High-end suburban houses - $3 million and up - are selling well, sometimes even within a month, said Marc Witman, a partner at Yerman Witman Gaines & Garceau Realty.
But Baltimore's downtown housing market has an abundance of homes in the $300,000 to $500,000 price range.
"There is such a supply of housing in that price range, they all start to run together," Witman said. "Buyers are becoming more deliberate and are taking their time to select the properties they want to view because there are just so many, and you don't have time to go through them all."
To compete, sellers are having to rethink asking prices and stay on top of repairs and maintenance, real estate agents said.
"Some houses have been on the market for so long that people have lost interest in keeping them up," said Tina Marine, an agent with Coldwell Banker in Annapolis. "They're grungy. The beds get stopped being made. ... People just give up."
David Schreiber and Stacey Wooden are not giving up on selling their renovated, five-bedroom, century-old house in Mount Washington. The family plans to relocate to the Chapel Hill-Durham-Raleigh, N.C., triangle for his job, which has an office in Raleigh.
They have cut their initial price of $769,000, set in April, twice to its current $699,999. The couple had hoped to move over the summer to enroll their two sons in school in North Carolina by fall. But despite several open houses, they have had just one offer.
"We're trying to be pragmatic about things," Schreiber said. "There don't seem to be a lot of variables we have control over in the housing market." (baltimoresun.com)
Thursday, August 9, 2007
Housing official aims to enforce rehab rules
Baltimore's housing department is stepping up enforcement of a program used to sell city-owned property to ensure that buyers who purchase homes from the city follow through on promised renovations, the city's housing commissioner told a City Council committee on Aug 1st.
City Housing Commissioner Paul T. Graziano told the City Council's Taxation and Finance Committee that the city is using housing inspectors to check up on properties sold through the city's SCOPE program to make sure the properties are being renovated within 18 months, instead of sitting vacant.
"We're tracking it more closely with our inspectors to make sure the work is actually being done," Graziano said.
SCOPE, which stands for Selling City Owned Properties Efficiently, has come under scrutiny in recent months. Officials said 186 properties have been sold under SCOPE, compared with thousands of derelict properties in Baltimore that are owned by the city.
The city has the ability to take back properties where development has not taken place, but has not yet done so in any instance, Graziano said. (Baltimore Sun)
City Housing Commissioner Paul T. Graziano told the City Council's Taxation and Finance Committee that the city is using housing inspectors to check up on properties sold through the city's SCOPE program to make sure the properties are being renovated within 18 months, instead of sitting vacant.
"We're tracking it more closely with our inspectors to make sure the work is actually being done," Graziano said.
SCOPE, which stands for Selling City Owned Properties Efficiently, has come under scrutiny in recent months. Officials said 186 properties have been sold under SCOPE, compared with thousands of derelict properties in Baltimore that are owned by the city.
The city has the ability to take back properties where development has not taken place, but has not yet done so in any instance, Graziano said. (Baltimore Sun)
Monday, August 6, 2007
Program to stave off foreclosures
Homeowners fearful of losing their homes because of looming defaults and foreclosures could get help through a new state initiative.
Called Homeowners Preserving Equity, the HOPE program offers a commitment of $100 million in private capital to help about 500 homeowners to refinance and switch adjustable-rate mortgages to fixed-rate mortgages.
The state also plans to use $10 million from the state's mortgage insurance program as an incentive to encourage lenders to provide another $200 million to refinance another 1,000 homeowners.
The goal is to prevent an expected wave of foreclosures due to the recent proliferation of "exotic" loans which include adjustable rate, balloon payment and negative amortization loans.
"The HOPE initiative is an innovative package of foreclosure prevention measures, combining refinancing, mortgage insurance, incentives and homeownership counseling to make sure Maryland families can preserve the equity they have built up in their homes," said Ray Skinner, secretary of the state Department of Housing and Community Development, in a statement after a June 13 press conference in Dundalk.
"It is a proactive approach to address rising foreclosure in Maryland due to sub-prime loans before it becomes a crisis," he said. "We're working to protect Marylanders' greatest asset -- their homes."
The state Department of Housing and Community Development has approved more than 40 lenders to participate in the program, including several with branches or headquarters in Baltimore County.
Included are American Home Mortgage Corp., BB&T, Bradford Bank, Capital Mortgage Finance Corp., Carrollton Bank, Chesapeake Bank of Maryland, Chevy Chase Bank, Citizens Trust Financial Group, Equitable Trust Mortgage Corp., First Equity Mortgage, First Home Mortgage, First Preference Mortgage Corp., M&T Bank and Metrocities Mortgage.
Refinancing is not the only feature of the program.
The Maryland Affordable Housing Trust, administered by the Department of Housing and Community Development, is offering $1 million in competitive grants to nonprofits that provide counseling services to homebuyers.
The one-year awards cannot exceed $100,000 per organization.
In addition, Gov. Martin O'Malley has created a task force to analyze homeownership data and also possibly recommend changes in foreclosure procedures. The task force will report to O'Malley in October before the 2008 General Assembly session begins in January.
The secretaries of the Department of Housing and Community Development and the Department of Labor, Licensing and Regulation will head the task force, which will also include representatives from the mortgage industry, state agencies and housing advocates.
As of June 21, officials had not picked the members.
For more information about the HOPE program, call 1-877-462-7555 or go to www.dhcd.state.md.us.
For complaints about lending practices, call the Department of Labor, Licensing and Regulation at 888-784-0136. (Arbutus Times)
Called Homeowners Preserving Equity, the HOPE program offers a commitment of $100 million in private capital to help about 500 homeowners to refinance and switch adjustable-rate mortgages to fixed-rate mortgages.
The state also plans to use $10 million from the state's mortgage insurance program as an incentive to encourage lenders to provide another $200 million to refinance another 1,000 homeowners.
The goal is to prevent an expected wave of foreclosures due to the recent proliferation of "exotic" loans which include adjustable rate, balloon payment and negative amortization loans.
"The HOPE initiative is an innovative package of foreclosure prevention measures, combining refinancing, mortgage insurance, incentives and homeownership counseling to make sure Maryland families can preserve the equity they have built up in their homes," said Ray Skinner, secretary of the state Department of Housing and Community Development, in a statement after a June 13 press conference in Dundalk.
"It is a proactive approach to address rising foreclosure in Maryland due to sub-prime loans before it becomes a crisis," he said. "We're working to protect Marylanders' greatest asset -- their homes."
The state Department of Housing and Community Development has approved more than 40 lenders to participate in the program, including several with branches or headquarters in Baltimore County.
Included are American Home Mortgage Corp., BB&T, Bradford Bank, Capital Mortgage Finance Corp., Carrollton Bank, Chesapeake Bank of Maryland, Chevy Chase Bank, Citizens Trust Financial Group, Equitable Trust Mortgage Corp., First Equity Mortgage, First Home Mortgage, First Preference Mortgage Corp., M&T Bank and Metrocities Mortgage.
Refinancing is not the only feature of the program.
The Maryland Affordable Housing Trust, administered by the Department of Housing and Community Development, is offering $1 million in competitive grants to nonprofits that provide counseling services to homebuyers.
The one-year awards cannot exceed $100,000 per organization.
In addition, Gov. Martin O'Malley has created a task force to analyze homeownership data and also possibly recommend changes in foreclosure procedures. The task force will report to O'Malley in October before the 2008 General Assembly session begins in January.
The secretaries of the Department of Housing and Community Development and the Department of Labor, Licensing and Regulation will head the task force, which will also include representatives from the mortgage industry, state agencies and housing advocates.
As of June 21, officials had not picked the members.
For more information about the HOPE program, call 1-877-462-7555 or go to www.dhcd.state.md.us.
For complaints about lending practices, call the Department of Labor, Licensing and Regulation at 888-784-0136. (Arbutus Times)
Thursday, August 2, 2007
Biotech park upsets residents. East Baltimore plan brings worry about affordable homes
A plan to build a sprawling $800 million biotechnology park adjacent to Johns Hopkins Hospital has some East Baltimore residents worried that they will not be able to afford to buy new homes in the area despite the roughly $150,000 they will receive for homes that will be demolished to make way for offices, shops and residences.
East Baltimore Development Inc., a nonprofit organization created by the city to manage the project, has promised to come up with money from an equity fund and specially tailored mortgage loans to help residents buy new houses, which are expected to have a starting price of $250,000.
But some homeowners say the price of the new houses will be so steep that they will not be able to purchase homes in the upscale neighborhood without going into debt.
"We want to make sure that we can get a house for a house," said Donald Gresham, a 20-year homeowner and chairman of the Save Middle East Action Committee. "No one wants to take on any more debt."
The disgruntled property owners are rallying behind a "House for a House" slogan and will meet today at the EBDI offices, 1809 Ashland Ave., to discuss alternate plans with development officials.
Gresham and other residents wrote a memorandum to East Baltimore Development Inc. officials this month in which they clearly stated their opposition to the equity/mortgage plan.
"[This plan] can lead to a plantation where people are not the true masters of their own homes," the July 3 memo said. "And frankly, if asked, our recommendation [to residents and others] would be: 'Look into it. But you will want to be very, very careful about it.' Let the buyer beware."
The equity fund has been "seeded" with $6 million in city and private funds, but it is unclear who would manage it. When residents sell their homes, the fund would receive the value of the original loan plus a percentage of the increase in the property's value. EBDI officials say the fund is a cutting-edge financial tool that could be used to help future families become homeowners in the neighborhood.
They argue that old housing investment models, including publicly subsidized construction and tax incentives to developers to build low-income housing, will not work as effectively.
"This is something that is critically important to ensure that what is delivered here works not just for a few years but for the course of decades as well," said Jack Shannon, president and chief executive officer of EBDI.
"We don't want to undercut a developing real estate market," Shannon said.
EBDI officials say they are responding to residents' concerns. They are talking with developers about building lower-priced homes sooner, as well as building more of them. Shannon said that he and his staff are also looking into ways to renovate existing rowhouses within the revitalization area, which could provide houses in a price range that would be affordable to residents, some of whom make less than $12,000 a year.
Shannon said some of the existing homeowners could move into senior apartments or to houses in other parts of the city. As part of the project, some residents are receiving additional training and education so that they can get jobs at the new biotech park and perhaps increase their household income.
Residents who are leasing houses or apartments also are receiving education on the benefits of homeownership, as well as other financial advice.
"If we are going to deliver this project, we are going to have to take new approaches," Shannon said, referring to the sweeping project, which calls for the creation of thousands of jobs and the transformation of one of the most decayed and crime-ridden areas of the city.
The 88-acre biotech project is about to enter its second phase. In the initial phase, covering 30 acres north of the Johns Hopkins medical campus, 916 properties, 278 of which were occupied, were demolished and 396 families had to be relocated. Shannon said that a senior apartment complex is near completion and that 27 of the 74 units have been leased to East Baltimore residents. Residents, whether homeowners or renters, have dibs on housing in the revitalization area.
Shannon said that about the same number of properties will be demolished or renovated as part of phase two, which covers more than 50 acres. In the end, five life sciences buildings will be constructed, as well as a mix of housing, including "work force" apartment lofts for social workers, teachers and police officers. There will also be housing for biotech professionals that will be priced at market rate, with some units going for $300,000 or more.
"There is a lot of resistance to the equity fund owning a piece of people's houses," said Nathan Sooy, executive director of the Save Middle East Action Committee. "People don't like the idea. There is a visceral resistance to someone else owning part of the house."
Sooy said that many residents own their homes outright because deeds were passed down by parents or other relatives. Such residents are not willing to take on new debt to purchase new houses. Sooy said residents also don't like the mortgage deal proposed by EBDI. Under the plan, mortgage payments would be tied to a homeowner's monthly income and would represent 30 percent of the total sum.
"It seems like a lot of money to people," Sooy said. "And as we were discussing it with residents, we really couldn't find anyone who really wanted to do this."
Sooy and others say that EBDI is quietly trying to move low-income residents out to make way for future employees of Johns Hopkins, which will use about one-third of the office space in the new biotech park.
"Remember, the whole thing here is to serve the business interest of Johns Hopkins University," said Sooy. "And a lot of the vision has to do with having places for people who work in the biotech industry to live."
Shannon denied that plan calls for displacing area residents to make way for workers at the biotech park. A spokesman for the Johns Hopkins University declined to answer questions about the project.
"There is a level of mistrust and in some cases cynicism, in large part because there have been lots of past projects and promises and the results have not mirrored the commitments that were made," said Shannon, who acknowledged that EBDI had been slow in informing residents about more affordable housing options. He promised to be more communicative.
Shannon said residents and development officials had sparred before, but the two sides had struck a more cooperative chord recently. "We are past opposition to the entire plan," said Shannon, "but we are still trying to figure out the best way to move forward and that is not easy." (baltimoresun.com)
East Baltimore Development Inc., a nonprofit organization created by the city to manage the project, has promised to come up with money from an equity fund and specially tailored mortgage loans to help residents buy new houses, which are expected to have a starting price of $250,000.
But some homeowners say the price of the new houses will be so steep that they will not be able to purchase homes in the upscale neighborhood without going into debt.
"We want to make sure that we can get a house for a house," said Donald Gresham, a 20-year homeowner and chairman of the Save Middle East Action Committee. "No one wants to take on any more debt."
The disgruntled property owners are rallying behind a "House for a House" slogan and will meet today at the EBDI offices, 1809 Ashland Ave., to discuss alternate plans with development officials.
Gresham and other residents wrote a memorandum to East Baltimore Development Inc. officials this month in which they clearly stated their opposition to the equity/mortgage plan.
"[This plan] can lead to a plantation where people are not the true masters of their own homes," the July 3 memo said. "And frankly, if asked, our recommendation [to residents and others] would be: 'Look into it. But you will want to be very, very careful about it.' Let the buyer beware."
The equity fund has been "seeded" with $6 million in city and private funds, but it is unclear who would manage it. When residents sell their homes, the fund would receive the value of the original loan plus a percentage of the increase in the property's value. EBDI officials say the fund is a cutting-edge financial tool that could be used to help future families become homeowners in the neighborhood.
They argue that old housing investment models, including publicly subsidized construction and tax incentives to developers to build low-income housing, will not work as effectively.
"This is something that is critically important to ensure that what is delivered here works not just for a few years but for the course of decades as well," said Jack Shannon, president and chief executive officer of EBDI.
"We don't want to undercut a developing real estate market," Shannon said.
EBDI officials say they are responding to residents' concerns. They are talking with developers about building lower-priced homes sooner, as well as building more of them. Shannon said that he and his staff are also looking into ways to renovate existing rowhouses within the revitalization area, which could provide houses in a price range that would be affordable to residents, some of whom make less than $12,000 a year.
Shannon said some of the existing homeowners could move into senior apartments or to houses in other parts of the city. As part of the project, some residents are receiving additional training and education so that they can get jobs at the new biotech park and perhaps increase their household income.
Residents who are leasing houses or apartments also are receiving education on the benefits of homeownership, as well as other financial advice.
"If we are going to deliver this project, we are going to have to take new approaches," Shannon said, referring to the sweeping project, which calls for the creation of thousands of jobs and the transformation of one of the most decayed and crime-ridden areas of the city.
The 88-acre biotech project is about to enter its second phase. In the initial phase, covering 30 acres north of the Johns Hopkins medical campus, 916 properties, 278 of which were occupied, were demolished and 396 families had to be relocated. Shannon said that a senior apartment complex is near completion and that 27 of the 74 units have been leased to East Baltimore residents. Residents, whether homeowners or renters, have dibs on housing in the revitalization area.
Shannon said that about the same number of properties will be demolished or renovated as part of phase two, which covers more than 50 acres. In the end, five life sciences buildings will be constructed, as well as a mix of housing, including "work force" apartment lofts for social workers, teachers and police officers. There will also be housing for biotech professionals that will be priced at market rate, with some units going for $300,000 or more.
"There is a lot of resistance to the equity fund owning a piece of people's houses," said Nathan Sooy, executive director of the Save Middle East Action Committee. "People don't like the idea. There is a visceral resistance to someone else owning part of the house."
Sooy said that many residents own their homes outright because deeds were passed down by parents or other relatives. Such residents are not willing to take on new debt to purchase new houses. Sooy said residents also don't like the mortgage deal proposed by EBDI. Under the plan, mortgage payments would be tied to a homeowner's monthly income and would represent 30 percent of the total sum.
"It seems like a lot of money to people," Sooy said. "And as we were discussing it with residents, we really couldn't find anyone who really wanted to do this."
Sooy and others say that EBDI is quietly trying to move low-income residents out to make way for future employees of Johns Hopkins, which will use about one-third of the office space in the new biotech park.
"Remember, the whole thing here is to serve the business interest of Johns Hopkins University," said Sooy. "And a lot of the vision has to do with having places for people who work in the biotech industry to live."
Shannon denied that plan calls for displacing area residents to make way for workers at the biotech park. A spokesman for the Johns Hopkins University declined to answer questions about the project.
"There is a level of mistrust and in some cases cynicism, in large part because there have been lots of past projects and promises and the results have not mirrored the commitments that were made," said Shannon, who acknowledged that EBDI had been slow in informing residents about more affordable housing options. He promised to be more communicative.
Shannon said residents and development officials had sparred before, but the two sides had struck a more cooperative chord recently. "We are past opposition to the entire plan," said Shannon, "but we are still trying to figure out the best way to move forward and that is not easy." (baltimoresun.com)
Monday, July 16, 2007
For sale by lender
Foreclosed properties make up 10%-15% of local property listings
Thanks to a sharp rise in foreclosures, homebuyers are increasingly likely to encounter bank-owned properties in the housing market - listed for sale, offered at auction or even touted as a "good deal" on lenders' Web sites. But getting a bargain on a foreclosed home is hardly a sure bet.
Amid a housing slump that has pushed home listings to record numbers, lenders, too, are competing to sell homes, often through the multiple-listing service. Borrowers, in many cases, have been hurt in the slowdown by a loss of equity that could have helped them avoid foreclosure.
The increase in bank-owned properties comes as more homeowners, many in the suburbs, find themselves unable to keep up with payments on loans made during the housing boom, a time when low mortgage rates, relaxed lending standards and fast-rising home prices fueled a frenzied market.
Though it's difficult to track how many foreclosed properties are listed for sale, agents who sell homes for lenders estimate they represent 10 percent to 15 percent of active listings in the Baltimore area.
In June, nearly 20,000 homes were on the market in Baltimore and the five surrounding counties, according to statistics from Metropolitan Regional Information Systems Inc.
The number of lender-owned properties is expected to grow as billions of dollars in mortgages reset in coming months, triggering higher payments for homeowners.
Loans in the foreclosure process in Maryland soared nearly 30 percent in the first quarter compared with the first three months of 2006, and the number of borrowers at least 60 days behind on payments rose 20 percent, according to the most recent report by the Mortgage Bankers Association.
While Maryland is faring better than the nation as a whole, that still means about 5,700 Maryland homeowners were in danger of losing their homes in the first quarter.
Rising foreclosures could squeeze home values even more and prolong the slump, economists say.
"Eventually, foreclosures will be returned to the marketplace," said Celia Chen, director of housing economics for Moody's Economy.com. "Lenders have to take them back and sell them and try to sell them as fast as they can. ... It will keep price appreciation weak."
Local home listings, already at a record high, will climb even more, partly because of mounting foreclosures, said economist Anirban Basu, chief executive officer of Sage Policy Group Inc. of Baltimore.
"Inventory has been rising sharply, and it will continue to rise, with the impact of ARMs [adjustable-rate mortgages] resetting and foreclosure activity," Basu said. "I don't think we've begun to see that impact in a major way."
Real estate agents and brokers, too, worry that putting more inventory into an already sluggish market will bring down prices and cause houses to sit longer.
Jennifer Marshall, an agent with Maryland REO real estate brokerage, said she is seeing the number of foreclosure properties soaring in suburban areas.
"With more inventory, it's a buyer's market now," Marshall said. "People aren't going to offer what the house is listed for. ... It's more challenging for agents, and you have to think about different ways to get your properties out there and get them sold."
Banks are increasingly buying foreclosed properties back at auction as other bids fall short of the amount owed. That scenario has become more common as the number of owners with little or no equity - or even negative equity - has grown, particularly in cases of pricier homes with more recent mortgages.
"Because we're seeing more expensive homes, higher-end homes going to foreclosure, logic indicates that less of those are being sold to third parties," or buyers other than the lender," said Donald Miller, national sales director for Express Auctions, of Baltimore. Miller said about 30 percent of the homes sold through his company's foreclosure auctions go back to the lenders, but banks tend to buy back an even greater percentage at foreclosure auctions in general.
"As a general rule, the newer loans have less equity, so there's going to be a higher percentage of buy-ins" by the bank, said Daniel M. Billig, a partner in A.J. Billig and Co., the Baltimore auction house.
Lenders' bigger stakes mean they aren't likely to discount properties they buy back and subsequently list, agents said. And lenders can invest thousands more to repair properties.
As a result, like other sellers, they're looking to get top dollar, said David McIlvaine, an associate broker with Keller Williams in Ellicott City who sells foreclosure properties for lenders.
McIlvaine said when he began listing homes for lenders eight years ago, most of the homes were lower-end properties, typically city rowhouses.
"That's not the case anymore," McIlvaine said. "We're seeing a more representative group of inventory crossing all lines."
That's because borrowers who stretched to qualify for more flexible loans - including adjustable rates, no down payments and interest-only payments - have been added to the categories of borrowers who had lost their homes to foreclosure due to job loss, illness or divorce, experts said.
"You're seeing nicer homes, higher-priced homes," agreed Jeff Rogers, an associate broker with Coldwell Banker who lists homes for lenders, who said some of the borrowers have owned their homes for two years or less. "You sort of saw that coming. [Borrowers] were being set up for failure with some of these mortgages."
Miller, at Express Auctions, one of a handful of auction houses that handles the majority of foreclosure auction sales in the state, said investors continue to buy most auctioned properties that aren't bought back by lenders.
But individual homebuyers are starting to get into the mix, as investor Ed Kowalski has noticed.
"On a few occasions I have been outbid by owner-occupants," said Kowalski, who buys, renovates and resells homes in Baltimore and Baltimore County. "Generally, they'll pay more than I'll pay as an investment."
One homebuyer who came to an Express Auction in May beat out an investor on a three-year-old house in Hampstead, with a winning bid of $567,500. Before the auction, the owners had listed it for sale at $1 million, Miller said.
The buyer of the property got a sprawling five-bedroom house with a master bedroom, sitting room with coffee bar, workout room, library and a three-car garage, in a neighborhood where houses have sold for more than $700,000.
Buying at foreclosure auction is not without hurdles.
Successful bidders often must pay a cash deposit, typically 10 percent of the outstanding loan amount. The new owner must pay off any liens or second mortgages. And properties are sold as is. And an owner or tenant living in the house may or may not be cooperative about moving out.
Sihin Shiferaw, an investor who buys and rehabs homes in Baltimore City and Howard County, mostly at auction, recently took a chance on a bank-owned home listed for sale. After signing a sales contract, she discovered water in the home's basement and backed out of the deal, losing a $2,000 deposit.
Evelyn Ray, a real estate agent with Long and Foster in Bel Air, is hoping the increase in foreclosures might help some of her clients who are struggling to buy a house in the aftermath of a soaring market. Ray said she has begun looking for foreclosure properties to show her clients.
"Now, people just cannot afford the houses that are out there," said Ray. "I have about 30 buyers who are just waiting. They either can't afford the houses they want or are just scared or waiting for prices to come down, or they can't sell."
Cathy Holmes, a single mother of three who works as a biological lab technician at Aberdeen Proving Ground, hopes to find a deal on a foreclosed home as a last resort to finally be able to move from a rental apartment in Whiteford. Ray, her agent, has taken her to see several homes. But so far she hasn't been able to come up with the deposit that would qualify her to bid.
"I've been renting the same apartment for 11 years, it's just impossible to get out," said Holmes, who is looking for a single-family house with some land. "I just want to have a house where I don't have to hear the neighbors' telephones ringing and their conversations. I look and I look and I look. I just can't find anything that I can afford." (baltimoresun.com)
Thanks to a sharp rise in foreclosures, homebuyers are increasingly likely to encounter bank-owned properties in the housing market - listed for sale, offered at auction or even touted as a "good deal" on lenders' Web sites. But getting a bargain on a foreclosed home is hardly a sure bet.
Amid a housing slump that has pushed home listings to record numbers, lenders, too, are competing to sell homes, often through the multiple-listing service. Borrowers, in many cases, have been hurt in the slowdown by a loss of equity that could have helped them avoid foreclosure.
The increase in bank-owned properties comes as more homeowners, many in the suburbs, find themselves unable to keep up with payments on loans made during the housing boom, a time when low mortgage rates, relaxed lending standards and fast-rising home prices fueled a frenzied market.
Though it's difficult to track how many foreclosed properties are listed for sale, agents who sell homes for lenders estimate they represent 10 percent to 15 percent of active listings in the Baltimore area.
In June, nearly 20,000 homes were on the market in Baltimore and the five surrounding counties, according to statistics from Metropolitan Regional Information Systems Inc.
The number of lender-owned properties is expected to grow as billions of dollars in mortgages reset in coming months, triggering higher payments for homeowners.
Loans in the foreclosure process in Maryland soared nearly 30 percent in the first quarter compared with the first three months of 2006, and the number of borrowers at least 60 days behind on payments rose 20 percent, according to the most recent report by the Mortgage Bankers Association.
While Maryland is faring better than the nation as a whole, that still means about 5,700 Maryland homeowners were in danger of losing their homes in the first quarter.
Rising foreclosures could squeeze home values even more and prolong the slump, economists say.
"Eventually, foreclosures will be returned to the marketplace," said Celia Chen, director of housing economics for Moody's Economy.com. "Lenders have to take them back and sell them and try to sell them as fast as they can. ... It will keep price appreciation weak."
Local home listings, already at a record high, will climb even more, partly because of mounting foreclosures, said economist Anirban Basu, chief executive officer of Sage Policy Group Inc. of Baltimore.
"Inventory has been rising sharply, and it will continue to rise, with the impact of ARMs [adjustable-rate mortgages] resetting and foreclosure activity," Basu said. "I don't think we've begun to see that impact in a major way."
Real estate agents and brokers, too, worry that putting more inventory into an already sluggish market will bring down prices and cause houses to sit longer.
Jennifer Marshall, an agent with Maryland REO real estate brokerage, said she is seeing the number of foreclosure properties soaring in suburban areas.
"With more inventory, it's a buyer's market now," Marshall said. "People aren't going to offer what the house is listed for. ... It's more challenging for agents, and you have to think about different ways to get your properties out there and get them sold."
Banks are increasingly buying foreclosed properties back at auction as other bids fall short of the amount owed. That scenario has become more common as the number of owners with little or no equity - or even negative equity - has grown, particularly in cases of pricier homes with more recent mortgages.
"Because we're seeing more expensive homes, higher-end homes going to foreclosure, logic indicates that less of those are being sold to third parties," or buyers other than the lender," said Donald Miller, national sales director for Express Auctions, of Baltimore. Miller said about 30 percent of the homes sold through his company's foreclosure auctions go back to the lenders, but banks tend to buy back an even greater percentage at foreclosure auctions in general.
"As a general rule, the newer loans have less equity, so there's going to be a higher percentage of buy-ins" by the bank, said Daniel M. Billig, a partner in A.J. Billig and Co., the Baltimore auction house.
Lenders' bigger stakes mean they aren't likely to discount properties they buy back and subsequently list, agents said. And lenders can invest thousands more to repair properties.
As a result, like other sellers, they're looking to get top dollar, said David McIlvaine, an associate broker with Keller Williams in Ellicott City who sells foreclosure properties for lenders.
McIlvaine said when he began listing homes for lenders eight years ago, most of the homes were lower-end properties, typically city rowhouses.
"That's not the case anymore," McIlvaine said. "We're seeing a more representative group of inventory crossing all lines."
That's because borrowers who stretched to qualify for more flexible loans - including adjustable rates, no down payments and interest-only payments - have been added to the categories of borrowers who had lost their homes to foreclosure due to job loss, illness or divorce, experts said.
"You're seeing nicer homes, higher-priced homes," agreed Jeff Rogers, an associate broker with Coldwell Banker who lists homes for lenders, who said some of the borrowers have owned their homes for two years or less. "You sort of saw that coming. [Borrowers] were being set up for failure with some of these mortgages."
Miller, at Express Auctions, one of a handful of auction houses that handles the majority of foreclosure auction sales in the state, said investors continue to buy most auctioned properties that aren't bought back by lenders.
But individual homebuyers are starting to get into the mix, as investor Ed Kowalski has noticed.
"On a few occasions I have been outbid by owner-occupants," said Kowalski, who buys, renovates and resells homes in Baltimore and Baltimore County. "Generally, they'll pay more than I'll pay as an investment."
One homebuyer who came to an Express Auction in May beat out an investor on a three-year-old house in Hampstead, with a winning bid of $567,500. Before the auction, the owners had listed it for sale at $1 million, Miller said.
The buyer of the property got a sprawling five-bedroom house with a master bedroom, sitting room with coffee bar, workout room, library and a three-car garage, in a neighborhood where houses have sold for more than $700,000.
Buying at foreclosure auction is not without hurdles.
Successful bidders often must pay a cash deposit, typically 10 percent of the outstanding loan amount. The new owner must pay off any liens or second mortgages. And properties are sold as is. And an owner or tenant living in the house may or may not be cooperative about moving out.
Sihin Shiferaw, an investor who buys and rehabs homes in Baltimore City and Howard County, mostly at auction, recently took a chance on a bank-owned home listed for sale. After signing a sales contract, she discovered water in the home's basement and backed out of the deal, losing a $2,000 deposit.
Evelyn Ray, a real estate agent with Long and Foster in Bel Air, is hoping the increase in foreclosures might help some of her clients who are struggling to buy a house in the aftermath of a soaring market. Ray said she has begun looking for foreclosure properties to show her clients.
"Now, people just cannot afford the houses that are out there," said Ray. "I have about 30 buyers who are just waiting. They either can't afford the houses they want or are just scared or waiting for prices to come down, or they can't sell."
Cathy Holmes, a single mother of three who works as a biological lab technician at Aberdeen Proving Ground, hopes to find a deal on a foreclosed home as a last resort to finally be able to move from a rental apartment in Whiteford. Ray, her agent, has taken her to see several homes. But so far she hasn't been able to come up with the deposit that would qualify her to bid.
"I've been renting the same apartment for 11 years, it's just impossible to get out," said Holmes, who is looking for a single-family house with some land. "I just want to have a house where I don't have to hear the neighbors' telephones ringing and their conversations. I look and I look and I look. I just can't find anything that I can afford." (baltimoresun.com)
Tuesday, July 10, 2007
Code red heat alert issued for city
With temperatures expected to hit the mid-90s and a heat index approaching 100 degrees, the city Health Department has issued a Code Red Heat Alert that will continue through Wednesday.
Five cooling centers operated by the Housing Authority of Baltimore City will open around the city today at 9 a.m. and each will have cool air, water and ice. Three more centers will be opened by the Commission on Aging and Retirement Education and residents also are encouraged to visit city park and recreation centers if they need a respite from the heat.
According to the National Weather Service, high temperatures for today and Tuesday will be in the mid-90s, and lows will be in the mid-70s. A cold front should be moving in mid-week, dropping temperatures down to the mid-80s. However, showers and thunderstorm will develop ahead of that front, bringing first humidity, then showers and scattered thunderstorms Tuesday night and into Wednesday and Thursday.
"With the highs climbing up into the mid-90s and the moisture in air, the combination of heat and humidity will cause heat index values of near 100," today and Tuesday, said Calvin Meadows of the National Weather Service.
That weather can be dangerous for some populations and Meadows said that people should avoid intense activity, wear light-colored clothing and drink plenty of water. Pets should not be left in hot cars, and also should be given plenty of water.
In addition, the Baltimore City Health Department recommends that city residents avoid alcohol and caffeine, wipe skin with cool water as needed, stay inside during the hottest time of day and check on older, sick, or frail people in the community who may need help.
People also should watch out for signs of heat exhaustion and heat stroke, which include confusion, nausea, light-headedness and high body temperature with cool and clammy skin. Anyone experiencing those symptoms should seek help immediately.
City cooling centers are:
Northern Community Action Center, 5225 York Road
Northwest District Community Action Center, 3314 Ayrdale Ave.
Southeast Community Action Center, 3411 Bank St.
Southern Community Action Center, 606 Cherry Hill Road (inside the shopping center, second floor)
Western District Community Action Center, 1133 Pennsylvania Ave.
Oliver Center, 1700 Gay St.
Sandtown-Winchester Center, 1601 Baker St.
Hatton Center, 2825 Fait Avenue.
The Baltimore County Department of Health also opened its three cooling centers today. The centers are open from 10 a.m. to 8 p.m. today and Tuesday. They are:
Essex Senior Center, 600 Dorsey Road, 410-887-0267
Lansdowne Senior Center, 424 Third Ave., 410-887-1443
Parkville Senior Center, 8601 Harford Road, 410-887-5338 (baltimoresun.com)
Five cooling centers operated by the Housing Authority of Baltimore City will open around the city today at 9 a.m. and each will have cool air, water and ice. Three more centers will be opened by the Commission on Aging and Retirement Education and residents also are encouraged to visit city park and recreation centers if they need a respite from the heat.
According to the National Weather Service, high temperatures for today and Tuesday will be in the mid-90s, and lows will be in the mid-70s. A cold front should be moving in mid-week, dropping temperatures down to the mid-80s. However, showers and thunderstorm will develop ahead of that front, bringing first humidity, then showers and scattered thunderstorms Tuesday night and into Wednesday and Thursday.
"With the highs climbing up into the mid-90s and the moisture in air, the combination of heat and humidity will cause heat index values of near 100," today and Tuesday, said Calvin Meadows of the National Weather Service.
That weather can be dangerous for some populations and Meadows said that people should avoid intense activity, wear light-colored clothing and drink plenty of water. Pets should not be left in hot cars, and also should be given plenty of water.
In addition, the Baltimore City Health Department recommends that city residents avoid alcohol and caffeine, wipe skin with cool water as needed, stay inside during the hottest time of day and check on older, sick, or frail people in the community who may need help.
People also should watch out for signs of heat exhaustion and heat stroke, which include confusion, nausea, light-headedness and high body temperature with cool and clammy skin. Anyone experiencing those symptoms should seek help immediately.
City cooling centers are:
Northern Community Action Center, 5225 York Road
Northwest District Community Action Center, 3314 Ayrdale Ave.
Southeast Community Action Center, 3411 Bank St.
Southern Community Action Center, 606 Cherry Hill Road (inside the shopping center, second floor)
Western District Community Action Center, 1133 Pennsylvania Ave.
Oliver Center, 1700 Gay St.
Sandtown-Winchester Center, 1601 Baker St.
Hatton Center, 2825 Fait Avenue.
The Baltimore County Department of Health also opened its three cooling centers today. The centers are open from 10 a.m. to 8 p.m. today and Tuesday. They are:
Essex Senior Center, 600 Dorsey Road, 410-887-0267
Lansdowne Senior Center, 424 Third Ave., 410-887-1443
Parkville Senior Center, 8601 Harford Road, 410-887-5338 (baltimoresun.com)
Monday, July 9, 2007
Mortgage foreclosures are up -- and so are the scams.
Let's say you have received a letter from your mortgage lender advising that if you do not bring your payments current, the lender will have no alternative but to begin foreclosure.
Within days of receiving this notice, you may get a telephone call: "Hi, my name is I.B. Scammer, and I understand that you are delinquent on your mortgage payments. You don't want to lose your beautiful home, and my company can assist you. When can I come over to explain how we operate and how we can help you?"
Hang up immediately. In the trade, these people are often referred to as "bird dogs" -- they'll search for victims and then go after them when they are down.
One large category of mortgage-foreclosure scams is the "rescue" -- when the bad guys prey on the desire of homeowners to be rescued from looming foreclosure. A 2005 report from the National Consumer Law Center highlighted three types of rescues. Even though the report is two years old, its observations are relevant. The types are:
· Phantom help. Here, the "rescuer" will charge the unsuspecting homeowner to do what the owner could have done on his own. For example, the rescuer may make some phone calls or fill out paperwork, but eventually he "abandons the homeowner to a fate that might well have been prevented with better intervention."
· Bailout. The caller tells the consumer that if the homeowner will sign over a deed to the house, the caller will pay off the mortgage and allow the homeowner to stay in the house for at least a year. Then the consumer can repurchase the property, usually for considerably more than the value of the house. "The terms of these deals are almost invariably so onerous that the buyback becomes impossible, the homeowner permanently loses possession, and the 'rescuers' walk off with all or most of the home's equity," the report concluded.
· Bait and switch. The homeowner believes that he or she is merely signing documents for a new loan so that the mortgage can be brought current or paid off. But in reality, the consumer has signed the deed to the house over to the "rescuer."
In 2005, Maryland adopted laws that aim to protect homeowners from these rescue consultants. Similar legislation is under consideration in the District. Recently, Maryland Gov. Martin O'Malley (D) started an initiative that will use $111 million of state funds to help homeowners in financial trouble.
Homeowners who face foreclosure are often desperate for assistance and rely on emotions rather than careful consideration of options. But options are available.
First, talk with your mortgage lender. Most legitimate lenders do not want to foreclose. This is based not on sympathy for the homeowner but on economic reality. If no one buys the house at the foreclosure sale, the lender is stuck with the property and must pay the taxes and insurance until it is sold.
The lender may be able to help in a number of ways. It may defer or reduce monthly payments for a time. It may arrange to refinance your adjustable-rate mortgage so that you will have fixed monthly costs instead of facing escalating payments. It may also allow you to sell your house in what is called a short sale. This means selling for less than you owe, with the lender forgiving some or all of the shortfall.
Second, talk with a consumer counseling service. For example, Maryland homeowners can use several foreclosure counseling services throughout the state. (The full list can be found at http://www.oag.state.md.us/Consumer/foreclose.htm.) Seniors -- especially those with low income -- can contact their local AARP office. The Homeownership Preservation Foundation, a nonprofit sponsored by lenders and others, runs a round-the-clock counseling hotline; call 888-995-HOPE for free advice.
Third, talk with your neighbors. Perhaps they can provide some temporary financial assistance or offer other ideas. After all, if your house is foreclosed on, it may reduce market values in the neighborhood. In the past few months, I've heard of neighbors helping neighbors financially, mostly to protect the values of their own homes.
Fourth, arrange to see a lawyer who specializes in bankruptcy law. Although no one wants to file for bankruptcy protection -- and recent changes in the law make it difficult to do so -- it is an option.
The National Consumer Law Center makes these recommendations on what not to do:
· Don't panic.
· Don't sign a contract under pressure.
· Don't sign any papers without consulting legal counsel.
· Don't rely on the rescuer's translator if you are not conversant in English. All too often, that translator is another bird dog paid by the rescuer to make his case.
· Don't rely on oral statements or promises; get everything in writing.
Consumer protection laws and education are important. But you -- the homeowner -- must protect yourself. Say no to the bird dogs. (washingtonpost.com)
Within days of receiving this notice, you may get a telephone call: "Hi, my name is I.B. Scammer, and I understand that you are delinquent on your mortgage payments. You don't want to lose your beautiful home, and my company can assist you. When can I come over to explain how we operate and how we can help you?"
Hang up immediately. In the trade, these people are often referred to as "bird dogs" -- they'll search for victims and then go after them when they are down.
One large category of mortgage-foreclosure scams is the "rescue" -- when the bad guys prey on the desire of homeowners to be rescued from looming foreclosure. A 2005 report from the National Consumer Law Center highlighted three types of rescues. Even though the report is two years old, its observations are relevant. The types are:
· Phantom help. Here, the "rescuer" will charge the unsuspecting homeowner to do what the owner could have done on his own. For example, the rescuer may make some phone calls or fill out paperwork, but eventually he "abandons the homeowner to a fate that might well have been prevented with better intervention."
· Bailout. The caller tells the consumer that if the homeowner will sign over a deed to the house, the caller will pay off the mortgage and allow the homeowner to stay in the house for at least a year. Then the consumer can repurchase the property, usually for considerably more than the value of the house. "The terms of these deals are almost invariably so onerous that the buyback becomes impossible, the homeowner permanently loses possession, and the 'rescuers' walk off with all or most of the home's equity," the report concluded.
· Bait and switch. The homeowner believes that he or she is merely signing documents for a new loan so that the mortgage can be brought current or paid off. But in reality, the consumer has signed the deed to the house over to the "rescuer."
In 2005, Maryland adopted laws that aim to protect homeowners from these rescue consultants. Similar legislation is under consideration in the District. Recently, Maryland Gov. Martin O'Malley (D) started an initiative that will use $111 million of state funds to help homeowners in financial trouble.
Homeowners who face foreclosure are often desperate for assistance and rely on emotions rather than careful consideration of options. But options are available.
First, talk with your mortgage lender. Most legitimate lenders do not want to foreclose. This is based not on sympathy for the homeowner but on economic reality. If no one buys the house at the foreclosure sale, the lender is stuck with the property and must pay the taxes and insurance until it is sold.
The lender may be able to help in a number of ways. It may defer or reduce monthly payments for a time. It may arrange to refinance your adjustable-rate mortgage so that you will have fixed monthly costs instead of facing escalating payments. It may also allow you to sell your house in what is called a short sale. This means selling for less than you owe, with the lender forgiving some or all of the shortfall.
Second, talk with a consumer counseling service. For example, Maryland homeowners can use several foreclosure counseling services throughout the state. (The full list can be found at http://www.oag.state.md.us/Consumer/foreclose.htm.) Seniors -- especially those with low income -- can contact their local AARP office. The Homeownership Preservation Foundation, a nonprofit sponsored by lenders and others, runs a round-the-clock counseling hotline; call 888-995-HOPE for free advice.
Third, talk with your neighbors. Perhaps they can provide some temporary financial assistance or offer other ideas. After all, if your house is foreclosed on, it may reduce market values in the neighborhood. In the past few months, I've heard of neighbors helping neighbors financially, mostly to protect the values of their own homes.
Fourth, arrange to see a lawyer who specializes in bankruptcy law. Although no one wants to file for bankruptcy protection -- and recent changes in the law make it difficult to do so -- it is an option.
The National Consumer Law Center makes these recommendations on what not to do:
· Don't panic.
· Don't sign a contract under pressure.
· Don't sign any papers without consulting legal counsel.
· Don't rely on the rescuer's translator if you are not conversant in English. All too often, that translator is another bird dog paid by the rescuer to make his case.
· Don't rely on oral statements or promises; get everything in writing.
Consumer protection laws and education are important. But you -- the homeowner -- must protect yourself. Say no to the bird dogs. (washingtonpost.com)
Tuesday, June 19, 2007
A place to live
The bill passed on 06/11/07 by Baltimore's City Council that will require developers to include a percentage of affordable housing units in new developments is a welcome strategy to provide more opportunities for low-income residents to remain in the city. Similar policies have been successfully implemented in Montgomery and other counties.
This major step forward should work in Baltimore - so long as it dovetails with the city's efforts to convert vacant houses into viable places to live.
Like many surrounding areas, Baltimore's housing prices have climbed significantly in recent years. But what constitutes welcome rising property values for some means unaffordable housing for others, and soaring prices have pushed out many low-income residents. City officials, housing advocates, developers and others have tried for about two years to come up with a workable response.
This bill represents a reasonable compromise. By the beginning of 2009, it will require developers who receive tax breaks or discounted land from the city to set aside 20 percent of their units for low- to moderate-income residents. After another 18 months, development projects that benefit from city rezonings would be required to make 10 percent of units affordable. And if overall housing hits high-end prices, 10 percent of all development projects would have to be made affordable.
Providing more affordable housing is critical as Baltimore remains one of the 10 most impoverished areas of the country, while also experiencing tremendous increases in expensive residences, especially in downtown areas around the waterfront. New mixed-income projects contemplated by the bill would be spread throughout the city, a necessary element to help prevent further concentrations of poverty and affluence that make for a divided city.
The legislation should provide additional affordable housing without discouraging developers from undertaking mixed-income projects. But as with many things, the proof will be in the details.
It's unclear whether $2 million designated for the first year of a trust fund that will allow the city to compensate developers for expenses they incur as a result of the required set-asides will be sufficient - or whether it can be expanded and sustained.
The city will also have to ensure coordination of this new program with its ambitious efforts to reclaim and revitalize thousands of vacant houses. It would not make sense to undermine well-intentioned mixed-income development projects with too-slow efforts to deal with vacant and boarded-up houses in the same vicinity. (baltimoresun.com)
This major step forward should work in Baltimore - so long as it dovetails with the city's efforts to convert vacant houses into viable places to live.
Like many surrounding areas, Baltimore's housing prices have climbed significantly in recent years. But what constitutes welcome rising property values for some means unaffordable housing for others, and soaring prices have pushed out many low-income residents. City officials, housing advocates, developers and others have tried for about two years to come up with a workable response.
This bill represents a reasonable compromise. By the beginning of 2009, it will require developers who receive tax breaks or discounted land from the city to set aside 20 percent of their units for low- to moderate-income residents. After another 18 months, development projects that benefit from city rezonings would be required to make 10 percent of units affordable. And if overall housing hits high-end prices, 10 percent of all development projects would have to be made affordable.
Providing more affordable housing is critical as Baltimore remains one of the 10 most impoverished areas of the country, while also experiencing tremendous increases in expensive residences, especially in downtown areas around the waterfront. New mixed-income projects contemplated by the bill would be spread throughout the city, a necessary element to help prevent further concentrations of poverty and affluence that make for a divided city.
The legislation should provide additional affordable housing without discouraging developers from undertaking mixed-income projects. But as with many things, the proof will be in the details.
It's unclear whether $2 million designated for the first year of a trust fund that will allow the city to compensate developers for expenses they incur as a result of the required set-asides will be sufficient - or whether it can be expanded and sustained.
The city will also have to ensure coordination of this new program with its ambitious efforts to reclaim and revitalize thousands of vacant houses. It would not make sense to undermine well-intentioned mixed-income development projects with too-slow efforts to deal with vacant and boarded-up houses in the same vicinity. (baltimoresun.com)
Thursday, June 7, 2007
Baltimore: 4-year low in home sales
Values in Baltimore rise, but pace slows.
Sales of existing homes fell more than expected in April while prices slid for a record ninth consecutive month, indicating further troubles ahead for the housing market.
The National Association of Realtors reported that sales of existing homes dropped by 2.6 percent last month to a seasonally adjusted annual rate of 5.99 million units, the slowest sales pace in nearly four years.
The median price of a home fell to $220,900, an 0.8 percent decline from the median price a year ago. The median is the point at which half the homes are sold for more and half for less.
In the Baltimore region, house values have continued to increase every month, though not at the double-digit rates registered during the height of the boom. The median price last month rose 2.61 percent to $275,000, according to Metropolitan Regional Information Systems.
But, as in the rest of the nation, Baltimore area home sales have been slumping for more than a year.
Last month, sales of homes sold through the multiple listing service sagged 11.23 percent from a year earlier. That was the fewest sold during any April since 2000, according to data from MRIS. Sales in Baltimore and the five surrounding counties have declined in 18 of the past 19 months.
The slide in existing home sales came after a report Thursday that showed a big 16.2 percent surge in sales of new homes in April that occurred as the median price of a new home fell by a record 11.1 percent from the previous month.
Analysts said the disparity in sales of new and existing homes for April reflected in part the decision by builders to aggressively cut prices to unload inventory while homeowners are still reluctant to lower their asking prices.
"The market is lousy," said David Sloan, senior economist with 4Cast, a market research firm in New York. "The overall economy is not growing particularly strong. The Fed is keeping interest rates reasonably high because it's worried about inflation. So I don't think much is going to change in the fundamentals of the housing market."
The supply of existing homes for sale shot up to a record total of 4.2 million in April, an increase of 394,000 from the March supply. Analysts predicted that this big inventory surge would act to further depress prices.
"We're swimming in supply," said Mike Larson, a real estate analyst with Weiss Research, who cited a number of factors for the unsold homes.
"Unrealistic sellers, stuck flippers, stretched borrowers, foreclosures. They're all contributing to a surge in homes on the market," he said. Flippers are investors who bought homes during the boom hoping to resell them for a quick profit only to be caught as the market softened.
Patrick Newport, an economist with Global Insight, said that the inventory bulge was "worrisome, since builders are less likely to start new homes as long as inventories are climbing."
A recovery in housing is being held back by a wave of subprime mortgage defaults, which is throwing homes back onto the market and prompting banks to tighten lending standards for borrowers with poor or limited credit histories.
Curbs on subprime lending "are expected to be a source of some restraint on home purchases and residential investment in coming quarters," Fed Chairman Ben S. Bernanke said May 17. Even so, Bernanke said he doesn't foresee "significant spillovers" from the subprime market to the rest of the economy.
Housing enjoyed an extended surge in which sales of both new and existing homes set records for five straight years until 2006. The Realtors are forecasting that existing home prices could decline by around 2 percent this year, which would be the first setback for an entire year on records that go back four decades.
But Lawrence Yun, senior economist for the Realtors, noted that the expected price decline would be modest in comparison with the 50 percent appreciation in home prices that occurred during the boom period.
It had appeared that housing sales might be hitting a bottom at the end of last year. However, since that time, the troubles in the mortgage market, which has seen many subprime lenders forced to stop operations, has worsened the housing downturn.
"We've been anticipating slower home sales because many subprime loan products are no longer available," Yun said. "Fortunately, a wide availability of conventional mortgage products ... will help stabilize the market going forward."
Yun said the big rise in unsold homes on the market could be an indication that sellers are testing the market in the early spring in hopes of selling their homes and moving up to larger units, which he said would be a positive sign of a rebound in housing.
But other analysts were not so optimistic, expressing concerns that housing could remain under downward pressure for the rest of this year and stage only a modest recovery in 2008.
"The continued decline in existing home sales and the huge rise in inventories put in doubt the hopes that the housing market is stabilizing," said Joel Naroff, chief economist at Naroff Economic Advisors.
The troubles in housing have acted to depress overall economic activity, which slowed to a growth rate of just 1.3 percent in the first three months of this year, the slowest economic growth rate in four years.
For April, sales of existing homes were weak in all parts of the country. The Northeast experienced the biggest decline, a fall of 8.8 percent in April from the March sales pace. Sales were down 1.7 percent in the West, 1.2 percent in the South and 0.7 percent in the Midwest.
Housing accounts for about 23 percent of the U.S. economy, when taking into account purchases of furniture, appliances and other items for new homes, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts. (baltimoresun.com)
Sales of existing homes fell more than expected in April while prices slid for a record ninth consecutive month, indicating further troubles ahead for the housing market.
The National Association of Realtors reported that sales of existing homes dropped by 2.6 percent last month to a seasonally adjusted annual rate of 5.99 million units, the slowest sales pace in nearly four years.
The median price of a home fell to $220,900, an 0.8 percent decline from the median price a year ago. The median is the point at which half the homes are sold for more and half for less.
In the Baltimore region, house values have continued to increase every month, though not at the double-digit rates registered during the height of the boom. The median price last month rose 2.61 percent to $275,000, according to Metropolitan Regional Information Systems.
But, as in the rest of the nation, Baltimore area home sales have been slumping for more than a year.
Last month, sales of homes sold through the multiple listing service sagged 11.23 percent from a year earlier. That was the fewest sold during any April since 2000, according to data from MRIS. Sales in Baltimore and the five surrounding counties have declined in 18 of the past 19 months.
The slide in existing home sales came after a report Thursday that showed a big 16.2 percent surge in sales of new homes in April that occurred as the median price of a new home fell by a record 11.1 percent from the previous month.
Analysts said the disparity in sales of new and existing homes for April reflected in part the decision by builders to aggressively cut prices to unload inventory while homeowners are still reluctant to lower their asking prices.
"The market is lousy," said David Sloan, senior economist with 4Cast, a market research firm in New York. "The overall economy is not growing particularly strong. The Fed is keeping interest rates reasonably high because it's worried about inflation. So I don't think much is going to change in the fundamentals of the housing market."
The supply of existing homes for sale shot up to a record total of 4.2 million in April, an increase of 394,000 from the March supply. Analysts predicted that this big inventory surge would act to further depress prices.
"We're swimming in supply," said Mike Larson, a real estate analyst with Weiss Research, who cited a number of factors for the unsold homes.
"Unrealistic sellers, stuck flippers, stretched borrowers, foreclosures. They're all contributing to a surge in homes on the market," he said. Flippers are investors who bought homes during the boom hoping to resell them for a quick profit only to be caught as the market softened.
Patrick Newport, an economist with Global Insight, said that the inventory bulge was "worrisome, since builders are less likely to start new homes as long as inventories are climbing."
A recovery in housing is being held back by a wave of subprime mortgage defaults, which is throwing homes back onto the market and prompting banks to tighten lending standards for borrowers with poor or limited credit histories.
Curbs on subprime lending "are expected to be a source of some restraint on home purchases and residential investment in coming quarters," Fed Chairman Ben S. Bernanke said May 17. Even so, Bernanke said he doesn't foresee "significant spillovers" from the subprime market to the rest of the economy.
Housing enjoyed an extended surge in which sales of both new and existing homes set records for five straight years until 2006. The Realtors are forecasting that existing home prices could decline by around 2 percent this year, which would be the first setback for an entire year on records that go back four decades.
But Lawrence Yun, senior economist for the Realtors, noted that the expected price decline would be modest in comparison with the 50 percent appreciation in home prices that occurred during the boom period.
It had appeared that housing sales might be hitting a bottom at the end of last year. However, since that time, the troubles in the mortgage market, which has seen many subprime lenders forced to stop operations, has worsened the housing downturn.
"We've been anticipating slower home sales because many subprime loan products are no longer available," Yun said. "Fortunately, a wide availability of conventional mortgage products ... will help stabilize the market going forward."
Yun said the big rise in unsold homes on the market could be an indication that sellers are testing the market in the early spring in hopes of selling their homes and moving up to larger units, which he said would be a positive sign of a rebound in housing.
But other analysts were not so optimistic, expressing concerns that housing could remain under downward pressure for the rest of this year and stage only a modest recovery in 2008.
"The continued decline in existing home sales and the huge rise in inventories put in doubt the hopes that the housing market is stabilizing," said Joel Naroff, chief economist at Naroff Economic Advisors.
The troubles in housing have acted to depress overall economic activity, which slowed to a growth rate of just 1.3 percent in the first three months of this year, the slowest economic growth rate in four years.
For April, sales of existing homes were weak in all parts of the country. The Northeast experienced the biggest decline, a fall of 8.8 percent in April from the March sales pace. Sales were down 1.7 percent in the West, 1.2 percent in the South and 0.7 percent in the Midwest.
Housing accounts for about 23 percent of the U.S. economy, when taking into account purchases of furniture, appliances and other items for new homes, according to the Joint Center for Housing Studies at Harvard University in Cambridge, Massachusetts. (baltimoresun.com)
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