A better balance

If you are a tenant down on your luck and unable to pay your rent, Baltimore is not a great place to be. You may or may not receive notice that you are about to be evicted, and the landlord can toss all your belongings onto the street. City Council member Kenneth N. Harris Sr. and Mayor Sheila Dixon have done a service by bringing landlords and tenants together and pushing legislation - introduced in the City Council yesterday - that strikes a better balance.
The changes are welcome and long overdue.

About 50 percent of Baltimore families were renters in 2006, and many use so much of their monthly income to keep a roof over their heads that any crisis or emergency leaves them behind in rent payments. The result: about 7,000 evictions a year, with no formal requirement for notice to the tenant of when the eviction will take place.

Sometimes a tenant leaves things in the dwelling while trying desperately to scrounge up back rent money, and sometimes the tenant intentionally abandons unwanted items. In either case, the landlord may be left to dispose of the items. And while many landlords are responsible enough to take them to a storage facility or to the dump, many others simply junk them on city streets.

For a tenant who is trying to comply, it's a slap in the face and an affront to basic dignity. The 2,900 tons of furniture, clothing and other belongings tossed outside are also major eyesores that blight many neighborhoods. In addition, it costs the city's Department of Public Works more than $800,000 a year for proper pick-up and disposal - money that could be used more productively to achieve Mayor Dixon's goal of a "cleaner, greener" city. Those are among the reasons the mayor's office worked with Mr. Harris to come up with the new bill.

The bill would give tenants more formal notice of when the eviction would take effect and would prohibit landlords from dumping the evicted tenants' possessions on city streets. Tenants would also have three days in which to reclaim their belongings.

Many other major cities provide storage for seven to 60 days; Baltimore would better serve all its residents by following those examples.

In a city where the median income for renters is less than $25,000 and a two-bedroom unit typically rents for more than $1,000 a month, the larger solution is more affordable housing. But offering a little more protection for tenants' belongings while keeping city streets cleaner is at least one step in the right direction.(baltimoresun.com)

HUD to seek ban on mortgage 'aid'

WASHINGTON // The Department of Housing and Urban Development plans to seek a ban on a certain type of down payment assistance that has grown sevenfold this decade and contributed to a surge in foreclosures of government-backed mortgages.
Nonprofit groups, such as Nehemiah Corp. of America and AmeriDream Inc. of Gaithersburg, Md., provide the down payment help and are then reimbursed by the seller. The programs are "a contributing factor of increased risk in our portfolio" of loans, HUD spokesman Lemar Wooley said in an e-mail.

HUD plans to propose the ban this month for public comment, possibly as early as this week, Wooley said. More than 100,000 low- and moderate-income consumers bought homes using such programs last year.

The percentage of foreclosures on these homes is more than double that on other loans sponsored by the Federal Housing Administration, according to agency audits.

Once HUD issues its rule proposal, industry and consumer groups will have 60 days to submit comments.

In 1999, HUD proposed a similar ban and withdrew it in 2001 after industry opposition.

Foreclosures rose last year in the Baltimore metropolitan area - particularly the suburbs - as problematic loans and a housing market slowdown buffeted new owners with little equity.

But FHA loans weren't part of the problem. HUD records show a significant drop in FHA foreclosures, the result of aggressive efforts to stem the fallout from illegal flipping in the late 1990s.

Vincent P. Quayle, executive director of the St. Ambrose Housing Aid Center, a Baltimore nonprofit that does not offer seller-financed assistance, believes fewer local homebuyers have turned to such programs in the past few years because they can obtain assistance through the city and the state.

But he's still pleased to hear HUD is trying for a ban on seller-financed help. He said buyers paid for that help, literally: "The seller would just raise the price."

Under the program, groups including Sacramento, Calif., Nehemiah and AmeriDream give buyers an average of about $3,400 for a down payment.

They are then reimbursed by sellers of the house, who also pay a service fee. The arrangement was designed to circumvent U.S. rules that bar sellers from giving direct assistance.

Sellers have tried to recover the cost of the fee they pay nonprofits by raising the price of the house an average of 3 percent, a 2005 study by Congress' nonpartisan Government Accountability Office found.

The number of FHA-backed homes purchased with nonprofit assistance has risen to 102,921 in 2006 from 14,603 in 2000, HUD data show. While these payments accounted for just 2 percent of all FHA loans in 2000, they soared to 33 percent of the loans last year.

The Internal Revenue Service held last year that groups providing down payment assistance did not quality for tax exemptions and said it was examining the practices of 185 nonprofits. AmeriDream and Nehemiah said they are in talks with the IRS.

(Bloomberg News, baltimoresun.com)