Town ranks among the top county communities dealing with housing crisis
Capitol Heights is a reflection of the severity of the county's housing crisis, ranking among the top communities in the state facing a large number of foreclosures.
According to a state Department of Housing and Community Development report released in August, "Property Foreclosures in Maryland Second Quarter 2008" Capitol Heights is deemed a foreclosure "hot spot," an area that had more than 49 foreclosures in July. Based on individual ZIP codes, Capitol Heights had the highest number of foreclosures with 222. Following behind were Upper Marlboro with 219 and Fort Washington with 201.
Prince George's County accounted for about one-third of state foreclosure activity, at 32 percent, with Montgomery County at 14.7 percent and Baltimore City at 11.1 percent.
Mary Dade, a housing counseling program manager for Capitol Heights-based nonprofit United Communities Against Poverty, said 70 to 80 percent of clients in Capitol Heights seeking help were not victims of adjustable rate mortgages whose interest rates skyrocketed but had "regular old mortgages."
Dade said these were residents who refinanced their homes but continued to rack up debt. UCAP holds monthly foreclosure counseling workshops to educate residents.
Dade said she can understand why other areas such as Fort Washington and Upper Marlboro with $100,000 incomes were hard hit.
"They bought more house than they could afford," Dade said. "They bought $500,000 to $600,000 homes when their income really can't support more than [$350,000] at the max."
Residents are further impacted by a weak economy and higher cost of living, Dade said.
"Food's higher," Dade said. "Gas is off the charts. Energy. People are just having a hard time trying to live and that fixed income does not go as far as it used to. We've got a lot of societal issues and economic issues impacting on this mortgage crisis."
Lloyd Baskin, manager of the Department of Housing and Community Development's Homeownership Center, said the Capitol Heights area was likely hit hard because lenders targeted black senior homeowners whose home values increased by double-digit percentages in the 1990s and that homeowners, using a home equity line of credit and second mortgages, "cashed out" the equity on their homes.
Baskin said they could not predict how many more foreclosures the area could face.
"Suddenly one life-changing incident, like a family member losing their job or divorce, can cause folks to lose their homes," Baskin said.
Baskin said the county plans to partner with groups such as Coalition For Homeownership Preservation in Prince George's County and Prince George's Community College to hone in on problem areas such as Capitol Heights, Fort Washington and Bowie to give homeowners financial literacy training.
Baskin said programs such as the Prince George's County Mortgage Refinance Program and "Bridge to HOPE," where residents can borrow up to $15,000 to repay after a house is sold or refinanced, are available for families to get back on their feet.
Town of Capitol Heights Town Administrator James Booth said the incorporated town does not have a program in place to help residents in danger of losing their homes.
The following ZIP codes have the highest number of foreclosures in the state:
Capitol Heights (20743) – 222
Upper Marlboro (20774) - 219
Fort Washington (20744) - 201
Upper Marlboro (20772) - 167
Clinton (20735) - 152 (by Natalie McGill, www.gazette.net)
Showing posts with label foreclosures. Show all posts
Showing posts with label foreclosures. Show all posts
Monday, September 8, 2008
Monday, August 4, 2008
To help the homeowners
The Maryland State Bar Association had published the brochure that covers the basics of foreclosure proceeding in Maryland. It is accessible from Bar's website: http://tinyurl.com/68pydd
Tuesday, June 24, 2008
How-to Monday: Finding foreclosures
The more you hear about foreclosures piling up, the more you may be tempted to buy one. There's a lot to consider if you do -- but first things first: how to find them.
A foreclosure becomes a foreclosure when the home goes to auction. Frequently, the buyer is the lender -- that's what happens when there's no one else willing to bid at least as much as the lender wants. If you think there's a deal to be had, you can be that bidder.
You'll find ads for impending auctions in the newspapers. Or you can see listings online. Alex Cooper Auctioneers, for instance, keeps a tally of scheduled foreclosure auctions -- typically on courthouse steps. Express Real Estate Auction Services has foreclosure auctions listed as well, as does Tidewater Auctions. Harvey West Auctioneers doesn't separate its foreclosure listings from its regular auctions, but you can see the full list HERE.
Then there are companies you can pay for pre-foreclosure and foreclosure information, such as ForeclosureS.com and RealtyTrac. (Paul R. Cooper, a vice president with Alex Cooper, pooh-poohs the idea of paying. If you're willing to do your own homework, "all the information's free," he said.)
Remember: You have to come prepared to make an immediate deposit if you're going to bid at an auction. Alex Cooper expects cash, a cashier's check or a certified check.
If auctions worry you, there's another option: Buy from the bank afterward.
Some lenders keep a list of their post-auction properties -- known as "Real Estate Owned," or REO -- on their websites. Countrywide, last I checked, had more than 250 in Maryland. Others with lists include Chase Mortgage, Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (which oversees FHA-insured loans).
Or ask a real estate agent. Realtors often market foreclosed properties for lenders, so they'll be listed for sale. (Agents can, if they choose, note on Metropolitan Regional Information Systems' multiple listing service whether a property is a foreclosure.) You can look for agents who take a lot of foreclosure listings or those who work with a lot of buyers interested in foreclosures.
A note of caution before you rush off to buy: While a foreclosed home could be a great value, seasoned real estate investors say there's no guarantee. The asking price or starting bid could be more than the house is really worth, particularly if the previous owner started with a small down payment. Or the house might need more repair work than you can afford.
That's where research and due diligence come in. You might, for instance, start by looking up the property's assessment record -- click on "property sales" to see recent sales prices elsewhere on the same street -- and by checking out the loan history. ( by Jamie Smith Hopkins, Baltimore Sun)
A foreclosure becomes a foreclosure when the home goes to auction. Frequently, the buyer is the lender -- that's what happens when there's no one else willing to bid at least as much as the lender wants. If you think there's a deal to be had, you can be that bidder.
You'll find ads for impending auctions in the newspapers. Or you can see listings online. Alex Cooper Auctioneers, for instance, keeps a tally of scheduled foreclosure auctions -- typically on courthouse steps. Express Real Estate Auction Services has foreclosure auctions listed as well, as does Tidewater Auctions. Harvey West Auctioneers doesn't separate its foreclosure listings from its regular auctions, but you can see the full list HERE.
Then there are companies you can pay for pre-foreclosure and foreclosure information, such as ForeclosureS.com and RealtyTrac. (Paul R. Cooper, a vice president with Alex Cooper, pooh-poohs the idea of paying. If you're willing to do your own homework, "all the information's free," he said.)
Remember: You have to come prepared to make an immediate deposit if you're going to bid at an auction. Alex Cooper expects cash, a cashier's check or a certified check.
If auctions worry you, there's another option: Buy from the bank afterward.
Some lenders keep a list of their post-auction properties -- known as "Real Estate Owned," or REO -- on their websites. Countrywide, last I checked, had more than 250 in Maryland. Others with lists include Chase Mortgage, Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development (which oversees FHA-insured loans).
Or ask a real estate agent. Realtors often market foreclosed properties for lenders, so they'll be listed for sale. (Agents can, if they choose, note on Metropolitan Regional Information Systems' multiple listing service whether a property is a foreclosure.) You can look for agents who take a lot of foreclosure listings or those who work with a lot of buyers interested in foreclosures.
A note of caution before you rush off to buy: While a foreclosed home could be a great value, seasoned real estate investors say there's no guarantee. The asking price or starting bid could be more than the house is really worth, particularly if the previous owner started with a small down payment. Or the house might need more repair work than you can afford.
That's where research and due diligence come in. You might, for instance, start by looking up the property's assessment record -- click on "property sales" to see recent sales prices elsewhere on the same street -- and by checking out the loan history. ( by Jamie Smith Hopkins, Baltimore Sun)
Wednesday, June 11, 2008
Despite Interest Rate Cuts, Foreclosures Hit Record High
Even though lower interest rates have made many adjustable-rate mortgages more affordable, foreclosures continue to reach new heights as more than 1 million homeowners face losing their home, according to industry figures released yesterday.
That's because what began as a mortgage crisis focused largely on subprime borrowers has spread and is being fed by the slowing economy it helped create. Borrowers once considered the most creditworthy have been hamstrung by declining home prices, making it difficult to refinance their home to dodge a financial crunch.
About 2.47 percent of home mortgages were in foreclosure during the first quarter of the year, up from 1.28 percent during the comparable period last year and the highest point since the Mortgage Bankers Association began compiling figures in 1979. Another 6.35 percent of home mortgages were delinquent but not yet in foreclosure, up from 4.84 percent last year, the survey found. Taken together, that means that almost 9 percent of mortgages nationally were in trouble, even though sharp Federal Reserve interest rate cuts have cushioned payment increases for some homeowners.
More than 60 percent of the loans entering foreclosure are adjustable-rate mortgages, but the problem does not appear to be the "rate shocks" widely forecast about a year ago. Many of "the loans went bad before any of the resets took place, which is why talking about carving out solutions for just ARM reset problems is misplaced," said Guy Cecala, publisher of Inside Mortgage Finance.
A borrower with a typical-size subprime ARM could expect payments to increase about $70 a month if it reset now, compared with about $450 a month if it had reset in December, according to the American Securitization Forum, a financial industry group.
"So we're not going to see rate shocks causing defaults," said Christopher Mayer, real estate professor at Columbia Business School.
Also, while delinquency rates among subprime borrowers continue to rise, prime borrowers are a growing part of the problem, Mayer said. During the first quarter, the number of prime loans that began foreclosure increased faster than subprime loans, according to the Mortgage Bankers Association.
"The recent increases have been coming from the safer group of borrowers. They are the next shoe to come down," Mayer said.
And although the Fed's interest rate decreases have helped some homeowners with adjustable-rate mortgages, those with artificially low teaser or introductory rates are still experiencing significant increases, said Mark Goldman, a real estate finance lecturer at San Diego State University. "Most of the adjustable-rate loans are resetting to very modest rates, but it can still be a big shock," he said.
Even a slight increase in payments, compounded by rising food and fuel prices, can push homeowners to the financial edge, analysts said. "There is no question: The softening economy, gas prices, all that is just throwing more lighter fluid on an already inflamed situation," Cecala said.
For instance, a growing percentage of troubled borrowers who contact the Consumer Credit Counseling Service of Greater Atlanta have reduced income, having lost overtime pay or a second job, according to data collected by the group. Last year, 22 percent of homeowners listed reduced income as the reason they are in distress. So far this year, it is about 28 percent.
In April, clients spent an average of $335 a month on groceries, up from $291 during the comparable period last year. They spent $242 on gasoline this year, up from $181 in April 2007.
Many clients have adjustable-rate mortgages, but that is not necessarily what caused their problem, said Scott Scredon, a spokesman for the counseling service. "Their rate is going up, plus they lost their job. . . . Then you throw in the rising costs of fuel and food, and it takes away more and more of their disposable income," he said.
The intensity of the foreclosure problem, which is expected to worsen, varies across the country. In the District, 2.39 percent of loans included in the survey were seriously delinquent or in foreclosure in the first quarter, according to the Mortgage Bankers Association. That is up from 1.09 percent during the same period last year. In Maryland, 3.02 percent of mortgages were in trouble, compared with 1.21 percent. And in Virginia, the rate rose to 2.52 percent from 1.99 percent.
The bulk of the problem remains in California and Florida, which reported, respectively, that 9.24 percent and 8.25 percent of subprime ARMs were entering foreclosure, said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association. "Clearly things in California and Florida are going to get worse before they get better," he said. (By Renae Merle, Washington Post Staff Writer. Friday, June 6, 2008)
That's because what began as a mortgage crisis focused largely on subprime borrowers has spread and is being fed by the slowing economy it helped create. Borrowers once considered the most creditworthy have been hamstrung by declining home prices, making it difficult to refinance their home to dodge a financial crunch.
About 2.47 percent of home mortgages were in foreclosure during the first quarter of the year, up from 1.28 percent during the comparable period last year and the highest point since the Mortgage Bankers Association began compiling figures in 1979. Another 6.35 percent of home mortgages were delinquent but not yet in foreclosure, up from 4.84 percent last year, the survey found. Taken together, that means that almost 9 percent of mortgages nationally were in trouble, even though sharp Federal Reserve interest rate cuts have cushioned payment increases for some homeowners.
More than 60 percent of the loans entering foreclosure are adjustable-rate mortgages, but the problem does not appear to be the "rate shocks" widely forecast about a year ago. Many of "the loans went bad before any of the resets took place, which is why talking about carving out solutions for just ARM reset problems is misplaced," said Guy Cecala, publisher of Inside Mortgage Finance.
A borrower with a typical-size subprime ARM could expect payments to increase about $70 a month if it reset now, compared with about $450 a month if it had reset in December, according to the American Securitization Forum, a financial industry group.
"So we're not going to see rate shocks causing defaults," said Christopher Mayer, real estate professor at Columbia Business School.
Also, while delinquency rates among subprime borrowers continue to rise, prime borrowers are a growing part of the problem, Mayer said. During the first quarter, the number of prime loans that began foreclosure increased faster than subprime loans, according to the Mortgage Bankers Association.
"The recent increases have been coming from the safer group of borrowers. They are the next shoe to come down," Mayer said.
And although the Fed's interest rate decreases have helped some homeowners with adjustable-rate mortgages, those with artificially low teaser or introductory rates are still experiencing significant increases, said Mark Goldman, a real estate finance lecturer at San Diego State University. "Most of the adjustable-rate loans are resetting to very modest rates, but it can still be a big shock," he said.
Even a slight increase in payments, compounded by rising food and fuel prices, can push homeowners to the financial edge, analysts said. "There is no question: The softening economy, gas prices, all that is just throwing more lighter fluid on an already inflamed situation," Cecala said.
For instance, a growing percentage of troubled borrowers who contact the Consumer Credit Counseling Service of Greater Atlanta have reduced income, having lost overtime pay or a second job, according to data collected by the group. Last year, 22 percent of homeowners listed reduced income as the reason they are in distress. So far this year, it is about 28 percent.
In April, clients spent an average of $335 a month on groceries, up from $291 during the comparable period last year. They spent $242 on gasoline this year, up from $181 in April 2007.
Many clients have adjustable-rate mortgages, but that is not necessarily what caused their problem, said Scott Scredon, a spokesman for the counseling service. "Their rate is going up, plus they lost their job. . . . Then you throw in the rising costs of fuel and food, and it takes away more and more of their disposable income," he said.
The intensity of the foreclosure problem, which is expected to worsen, varies across the country. In the District, 2.39 percent of loans included in the survey were seriously delinquent or in foreclosure in the first quarter, according to the Mortgage Bankers Association. That is up from 1.09 percent during the same period last year. In Maryland, 3.02 percent of mortgages were in trouble, compared with 1.21 percent. And in Virginia, the rate rose to 2.52 percent from 1.99 percent.
The bulk of the problem remains in California and Florida, which reported, respectively, that 9.24 percent and 8.25 percent of subprime ARMs were entering foreclosure, said Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association. "Clearly things in California and Florida are going to get worse before they get better," he said. (By Renae Merle, Washington Post Staff Writer. Friday, June 6, 2008)
Thursday, June 5, 2008
A Growing Problem: Overgrown Lawns At Foreclosed Homes
The number of foreclosures has skyrocketed around Maryland, jumping a whopping 40 percent between April and May. While there isn't always a foreclosure sign in front of the home, there's a very good chance the grass hasn't been mowed.
The foreclosure crisis is affecting more than just people; it's affecting lawns.
Frederick city officials tell NBC25 they simply can’t keep up. They’re getting an explosion of calls from residents complaining about out-of-control lawns in their neighborhoods.
"The foreclosing market has tripled our complaint basis," said Michael Blank, who works in code enforcement for the city.
Grass and weeds above 10 inches tall are violating the City of Frederick's rules. That's when officials step in to do something about it.
"Anything over 10 inches get a notice for them to remove and cut the grass within five days," Blank said.
But since the foreclosed homes are vacant, no one's there to clean up. That's when the city hires people to mow and manicure the lawn for a pretty penny.
Blank says the average bill runs around $200 per cut.
It could be even higher, depending on how much there is to clean up.
The city doesn't just absorb the costs. They forward the bills to the last known owner, or to the mortgage company.
It's not just a city issue; Frederick County officials are getting a lot of complaints, too.
There's not much the county can do about it though because they don't have a lawn ordinance.
"There's really no advice that we can give to them that will in fact, provide a remedy for them," said Larry Smith, a Frederick County zoning administrator.
Frederick city officials are considering assigning someone full-time to do grass, weed and trash inspections on foreclosed homes. (www.your4state.com)
The foreclosure crisis is affecting more than just people; it's affecting lawns.
Frederick city officials tell NBC25 they simply can’t keep up. They’re getting an explosion of calls from residents complaining about out-of-control lawns in their neighborhoods.
"The foreclosing market has tripled our complaint basis," said Michael Blank, who works in code enforcement for the city.
Grass and weeds above 10 inches tall are violating the City of Frederick's rules. That's when officials step in to do something about it.
"Anything over 10 inches get a notice for them to remove and cut the grass within five days," Blank said.
But since the foreclosed homes are vacant, no one's there to clean up. That's when the city hires people to mow and manicure the lawn for a pretty penny.
Blank says the average bill runs around $200 per cut.
It could be even higher, depending on how much there is to clean up.
The city doesn't just absorb the costs. They forward the bills to the last known owner, or to the mortgage company.
It's not just a city issue; Frederick County officials are getting a lot of complaints, too.
There's not much the county can do about it though because they don't have a lawn ordinance.
"There's really no advice that we can give to them that will in fact, provide a remedy for them," said Larry Smith, a Frederick County zoning administrator.
Frederick city officials are considering assigning someone full-time to do grass, weed and trash inspections on foreclosed homes. (www.your4state.com)
Tuesday, May 6, 2008
MD Comptroller: foreclosures will hit local budgets hard
The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official.
And recent emergency legislation passed by the Maryland General Assembly, will have little effect on Maryland's tide of foreclosures. Now, the state's hands are tied, said Comptroller Peter Franchot.
Franchot said he applauds efforts by Gov. Martin O'Malley and the legislature, but that it is too little too late.
"It's not their fault," Franchot said during a recent visit to The Frederick News-Post. "The responsibility for the foreclosure crisis rests with Washington. The last several years of Washington have been like the Wild West. Anything goes. And that lack of regulation has a price that we're going to pay for years to come."
The bill O'Malley signed will lengthen the foreclosure process from 15 to 150 days, and require a lender to wait 90 days before filing a foreclosure action. It also strengthens prohibitions on mortgage fraud
According to the governor's office, in the fourth quarter of 2007, Prince George's, Montgomery, Washington and Worcester counties saw foreclosures double from previous quarter.
In other counties, such as Kent, Garrett and Somerset, numbers almost tripled.
Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.
Local revenue will be particularly hit in 2009 and 2010, Franchot said.
"We're in a real mess," he said.
Copyright 2008 The Frederick News-Post. All rights reserved.
The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official.
And recent emergency legislation passed by the Maryland General Assembly, will have little effect on Maryland's tide of foreclosures. Now, the state's hands are tied, said Comptroller Peter Franchot.
Franchot said he applauds efforts by Gov. Martin O'Malley and the legislature, but that it is too little too late.
"It's not their fault," Franchot said during a recent visit to The Frederick News-Post. "The responsibility for the foreclosure crisis rests with Washington. The last several years of Washington have been like the Wild West. Anything goes. And that lack of regulation has a price that we're going to pay for years to come."
The bill O'Malley signed will lengthen the foreclosure process from 15 to 150 days, and require a lender to wait 90 days before filing a foreclosure action. It also strengthens prohibitions on mortgage fraud
According to the governor's office, in the fourth quarter of 2007, Prince George's, Montgomery, Washington and Worcester counties saw foreclosures double from previous quarter.
In other counties, such as Kent, Garrett and Somerset, numbers almost tripled.
Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.
Local revenue will be particularly hit in 2009 and 2010, Franchot said.
"We're in a real mess," he said. (The Frederick News-Post. All rights reserved)
And recent emergency legislation passed by the Maryland General Assembly, will have little effect on Maryland's tide of foreclosures. Now, the state's hands are tied, said Comptroller Peter Franchot.
Franchot said he applauds efforts by Gov. Martin O'Malley and the legislature, but that it is too little too late.
"It's not their fault," Franchot said during a recent visit to The Frederick News-Post. "The responsibility for the foreclosure crisis rests with Washington. The last several years of Washington have been like the Wild West. Anything goes. And that lack of regulation has a price that we're going to pay for years to come."
The bill O'Malley signed will lengthen the foreclosure process from 15 to 150 days, and require a lender to wait 90 days before filing a foreclosure action. It also strengthens prohibitions on mortgage fraud
According to the governor's office, in the fourth quarter of 2007, Prince George's, Montgomery, Washington and Worcester counties saw foreclosures double from previous quarter.
In other counties, such as Kent, Garrett and Somerset, numbers almost tripled.
Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.
Local revenue will be particularly hit in 2009 and 2010, Franchot said.
"We're in a real mess," he said.
Copyright 2008 The Frederick News-Post. All rights reserved.
The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official.
And recent emergency legislation passed by the Maryland General Assembly, will have little effect on Maryland's tide of foreclosures. Now, the state's hands are tied, said Comptroller Peter Franchot.
Franchot said he applauds efforts by Gov. Martin O'Malley and the legislature, but that it is too little too late.
"It's not their fault," Franchot said during a recent visit to The Frederick News-Post. "The responsibility for the foreclosure crisis rests with Washington. The last several years of Washington have been like the Wild West. Anything goes. And that lack of regulation has a price that we're going to pay for years to come."
The bill O'Malley signed will lengthen the foreclosure process from 15 to 150 days, and require a lender to wait 90 days before filing a foreclosure action. It also strengthens prohibitions on mortgage fraud
According to the governor's office, in the fourth quarter of 2007, Prince George's, Montgomery, Washington and Worcester counties saw foreclosures double from previous quarter.
In other counties, such as Kent, Garrett and Somerset, numbers almost tripled.
Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.
Local revenue will be particularly hit in 2009 and 2010, Franchot said.
"We're in a real mess," he said. (The Frederick News-Post. All rights reserved)
Monday, April 14, 2008
Bills seek to ease crisis in housing
Gov. Martin O'Malley held his first bill signing of the year yesterday to enact a number of emergency bills designed to address the foreclosure crisis gripping the state.
The Democratic governor approved three bills to lengthen the minimum length of foreclosure proceedings from 15 days to more than four months, to enact tougher criminal sanctions against mortgage fraud and to crack down on foreclosure-rescue scams in which troubled borrowers are duped into losing title to their homes.
O'Malley and legislative leaders said they wanted the bills signed as soon as possible because, as emergency legislation, they become law immediately. State officials cited a worsening housing crisis in which more than 13,000 homeowners in Maryland were in foreclosure at the end of last year, a 150 percent increase from the previous year.
A group of homeowners who have lost their homes to foreclosure or who are faced with the prospect of losing their homes joined the ceremony. "I hope that you can see we are trying, and that we're all in this together," O'Malley told the crowd. (baltimoresun.com)
The Democratic governor approved three bills to lengthen the minimum length of foreclosure proceedings from 15 days to more than four months, to enact tougher criminal sanctions against mortgage fraud and to crack down on foreclosure-rescue scams in which troubled borrowers are duped into losing title to their homes.
O'Malley and legislative leaders said they wanted the bills signed as soon as possible because, as emergency legislation, they become law immediately. State officials cited a worsening housing crisis in which more than 13,000 homeowners in Maryland were in foreclosure at the end of last year, a 150 percent increase from the previous year.
A group of homeowners who have lost their homes to foreclosure or who are faced with the prospect of losing their homes joined the ceremony. "I hope that you can see we are trying, and that we're all in this together," O'Malley told the crowd. (baltimoresun.com)
Tuesday, January 15, 2008
Loan crisis in Prince George's
Home mortgage foreclosures soar
The mortgage crisis roiling communities across the country is being acutely felt in Prince George's County, where thousands of residents -- many lured in recent years by relatively affordable real estate prices -- are in danger of losing their homes.
Middle-class homebuyers flocked to the county in the early part of this decade as prices in other Washington-area suburbs surged. Now, scores of families face the threat of foreclosure, throwing one of the nation's wealthiest majority-black suburbs into what state and local officials who gathered here yesterday called an emergency.
Prince George's had twice as many home foreclosures in the first nine months of 2007 as any other Maryland locality, according to data compiled by the firm RealtyTrac Inc. and released yesterday by state officials. The firm reported that Baltimore City, Baltimore County and Montgomery County, which had the next-highest numbers of foreclosures, each had half as many as Prince George's.
Officials are alarmed by the trend -- the number of foreclosures is expected to increase drastically in coming months, as many adjustable-rate mortgage rates jump.
"Prince George's County is ground zero in Maryland's foreclosure challenge," said Thomas Perez, secretary of the state Department of Labor, Licensing and Regulation and co-chairman of the governor's foreclosure task force. "There are a disproportionate number of residents in Prince George's County who have subprime loans. Regrettably, there is a racial correlation."
At Henry Wise Jr. High School, several dozen people -- including legislators, state officials and County Council members -- discussed ways to head off the crisis. Participants proposed holding night community meetings to reach out to distressed homeowners, providing counseling and creating a county fund that would allow subprime homeowners to qualify for state aid programs.
Mortgage problems nationwide stem from factors such as people buying homes they could not afford, being deceived by unscrupulous lenders and taking out exotic loans whose interest rates have skyrocketed.
Prince George's, which sits northeast of Washington and is the state's second-largest jurisdiction with 840,000 residents, has long been a destination for African-Americans, who make up two-thirds of the population. In recent years, the county has also seen an influx of immigrants. The county's median household income -- $65,850, according to a 2006 survey -- exceeds the national average.
State officials cited data yesterday from RealtyTrac Inc., a California-based provider of foreclosure information that concedes that its numbers might be imprecise because of the difficulty in collecting foreclosure data in Maryland. But no one denies that Prince George's County has been particularly hard hit. Through the first nine months of 2007, there were more than 3,300 foreclosures, the firm says.
Stephen Fuller, an economist at George Mason University in Fairfax, Va., attributes the crisis in Prince George's to several factors, including the general affordability of the county's housing stock.
"You think of that as a strength, but it also attracted buyers who were marginally financially capable of supporting the mortgage," Fuller said.
Many people who bought homes in the county during the boom were first-time homebuyers and young families with children -- and many were so-called subprime borrowers, those with weaker-than-average credit scores. As a result, they took on adjustable-rate mortgages whose interest rates have increased beyond what they can afford.
Compounding the problem was a construction boom in the county where, unlike other areas in the Washington region, vast tracts of land had remained largely undeveloped, Fuller said.
"They just couldn't stop it," Fuller said of construction there.
Because of the sheer number of homes sold in the county this decade, the high number of foreclosures is not surprising, Fuller said.
One homeowner in danger of losing his home is Samuel Moore, a 37-year-old youth development specialist for a D.C. nonprofit.
Moore was a D.C. renter when he started looking for a home in 2006. A real estate agent suggested a four-bedroom house in the Prince George's town of Clinton, and he paid $283,000 for the house that November.
Within weeks, he said, the ceiling in the dining room caved in, pipes burst and the toilet in the main bathroom crumbled. After spending his entire savings on repairs, Moore said, he could no longer afford the house. "It turned into a money pit," he said.
He put the home on the market early last year, and so far, four potential buyers have expressed interest to his real estate agent. But he said none qualified for a mortgage.
Moore said he has not been able to find a renter and will not be able to make this month's payment.
"I thought I had enough foresight" to avoid buying a house with so many problems, he said. "I wind up exhausting all of my savings."
Caprise Coppedge, a housing counselor for United Communities Against Poverty in Capitol Heights, said an average of 10 homeowners daily seek her counseling, though she has time for only one. She said she was counseling one homeowner a week in 2006.
She said the common theme among her clients is "lack of financial literacy."
"They don't quite understand the lending process, and they're not understanding what type of mortgage they're getting," she said.
Gov. Martin O'Malley announced an initiative last summer aimed at preventing home foreclosures through credit counseling, enforcement of lending practice standards and refinancing assistance to stop what he said is a rising threat to the state's middle class.
Officials said yesterday that they must do all they can to help homeowners now because in March, a wave of homeowners will be hit with adjusted rates.
"I wish I could tell you the problem has bottomed out and things are going to get better," Perez said. (BaltimoreSun.com)
The mortgage crisis roiling communities across the country is being acutely felt in Prince George's County, where thousands of residents -- many lured in recent years by relatively affordable real estate prices -- are in danger of losing their homes.
Middle-class homebuyers flocked to the county in the early part of this decade as prices in other Washington-area suburbs surged. Now, scores of families face the threat of foreclosure, throwing one of the nation's wealthiest majority-black suburbs into what state and local officials who gathered here yesterday called an emergency.
Prince George's had twice as many home foreclosures in the first nine months of 2007 as any other Maryland locality, according to data compiled by the firm RealtyTrac Inc. and released yesterday by state officials. The firm reported that Baltimore City, Baltimore County and Montgomery County, which had the next-highest numbers of foreclosures, each had half as many as Prince George's.
Officials are alarmed by the trend -- the number of foreclosures is expected to increase drastically in coming months, as many adjustable-rate mortgage rates jump.
"Prince George's County is ground zero in Maryland's foreclosure challenge," said Thomas Perez, secretary of the state Department of Labor, Licensing and Regulation and co-chairman of the governor's foreclosure task force. "There are a disproportionate number of residents in Prince George's County who have subprime loans. Regrettably, there is a racial correlation."
At Henry Wise Jr. High School, several dozen people -- including legislators, state officials and County Council members -- discussed ways to head off the crisis. Participants proposed holding night community meetings to reach out to distressed homeowners, providing counseling and creating a county fund that would allow subprime homeowners to qualify for state aid programs.
Mortgage problems nationwide stem from factors such as people buying homes they could not afford, being deceived by unscrupulous lenders and taking out exotic loans whose interest rates have skyrocketed.
Prince George's, which sits northeast of Washington and is the state's second-largest jurisdiction with 840,000 residents, has long been a destination for African-Americans, who make up two-thirds of the population. In recent years, the county has also seen an influx of immigrants. The county's median household income -- $65,850, according to a 2006 survey -- exceeds the national average.
State officials cited data yesterday from RealtyTrac Inc., a California-based provider of foreclosure information that concedes that its numbers might be imprecise because of the difficulty in collecting foreclosure data in Maryland. But no one denies that Prince George's County has been particularly hard hit. Through the first nine months of 2007, there were more than 3,300 foreclosures, the firm says.
Stephen Fuller, an economist at George Mason University in Fairfax, Va., attributes the crisis in Prince George's to several factors, including the general affordability of the county's housing stock.
"You think of that as a strength, but it also attracted buyers who were marginally financially capable of supporting the mortgage," Fuller said.
Many people who bought homes in the county during the boom were first-time homebuyers and young families with children -- and many were so-called subprime borrowers, those with weaker-than-average credit scores. As a result, they took on adjustable-rate mortgages whose interest rates have increased beyond what they can afford.
Compounding the problem was a construction boom in the county where, unlike other areas in the Washington region, vast tracts of land had remained largely undeveloped, Fuller said.
"They just couldn't stop it," Fuller said of construction there.
Because of the sheer number of homes sold in the county this decade, the high number of foreclosures is not surprising, Fuller said.
One homeowner in danger of losing his home is Samuel Moore, a 37-year-old youth development specialist for a D.C. nonprofit.
Moore was a D.C. renter when he started looking for a home in 2006. A real estate agent suggested a four-bedroom house in the Prince George's town of Clinton, and he paid $283,000 for the house that November.
Within weeks, he said, the ceiling in the dining room caved in, pipes burst and the toilet in the main bathroom crumbled. After spending his entire savings on repairs, Moore said, he could no longer afford the house. "It turned into a money pit," he said.
He put the home on the market early last year, and so far, four potential buyers have expressed interest to his real estate agent. But he said none qualified for a mortgage.
Moore said he has not been able to find a renter and will not be able to make this month's payment.
"I thought I had enough foresight" to avoid buying a house with so many problems, he said. "I wind up exhausting all of my savings."
Caprise Coppedge, a housing counselor for United Communities Against Poverty in Capitol Heights, said an average of 10 homeowners daily seek her counseling, though she has time for only one. She said she was counseling one homeowner a week in 2006.
She said the common theme among her clients is "lack of financial literacy."
"They don't quite understand the lending process, and they're not understanding what type of mortgage they're getting," she said.
Gov. Martin O'Malley announced an initiative last summer aimed at preventing home foreclosures through credit counseling, enforcement of lending practice standards and refinancing assistance to stop what he said is a rising threat to the state's middle class.
Officials said yesterday that they must do all they can to help homeowners now because in March, a wave of homeowners will be hit with adjusted rates.
"I wish I could tell you the problem has bottomed out and things are going to get better," Perez said. (BaltimoreSun.com)
Tuesday, December 18, 2007
Md. foreclosures spike; new laws, aid advised
Maryland needs to change its mortgage laws, improve outreach to vulnerable borrowers and create emergency funds for families in mortgage trouble if it is going to stem a rising foreclosure rate, a task force said yesterday.
The report by the Homeownership Preservation Task Force comes as Maryland's foreclosure rate shot up 370 percent from June 2006 to June 2007, moving the state from 40th in the nation to 15th for foreclosures.
"The foreclosure spike is a national phenomenon, and Maryland has not escaped the challenges," said Tom Perez, secretary of the Department of Labor, Licensing and Regulation, who co-chaired the task force.
RealtyTrac, a national foreclosure tracking company, estimates that there was one foreclosure for every 806 households in Maryland over the past year. While the state's rate grew 370 percent, the national rate was up 87 percent, RealtyTrac reported.
"Today, we're 15th," Perez said. "Our goal is to be 50th. We're moving in the wrong direction."
In June, Gov. Martin O'Malley established the task force and charged it with finding ways to curb the growing foreclosure problem. The task force report to the governor yesterday suggested stronger underwriting and lending standards, as well as more oversight for the mortgage industry.
It also called for better education to help homeowners avoid predatory lenders, and more access to better financial products for people purchasing or refinancing homes.
Perez said the immediate issue is homeowners on the verge of or facing foreclosure. One task force suggestion is the creation of a fund to provide case-by-case interventions to prevent foreclosure, allowing more stable monthly payments or time for a property sale to troubled owners.
Some of the recommendations to the governor will require changes in Maryland law "to rein in bad players and practices," according to the report. The report also recommends a regulatory change to increase the time between default and foreclosure to 90 days from 15 days.
"What you're not seeing in there perhaps are some specifics in terms of what it might cost to fund some of the programs" recommended in the report, said Jacqueline Lampell, spokeswoman for the Department of Housing and Community Development. "That's because we don't really even know what the full impact of foreclosure will be."
Foreclosures disproportionately result from subprime loans, those offered to borrowers who have less than optimal credit and have difficulty getting a traditional loan. Such loans tend to have higher interest rates and options such as adjustable and teaser rates, according to the report.
A Maryland Bankers Association survey showed that adjustable-rate mortgages in the state grew from 1.6 percent of the total mortgages in 2000 to 11.7 percent in 2007. (by Capital News Service)
The report by the Homeownership Preservation Task Force comes as Maryland's foreclosure rate shot up 370 percent from June 2006 to June 2007, moving the state from 40th in the nation to 15th for foreclosures.
"The foreclosure spike is a national phenomenon, and Maryland has not escaped the challenges," said Tom Perez, secretary of the Department of Labor, Licensing and Regulation, who co-chaired the task force.
RealtyTrac, a national foreclosure tracking company, estimates that there was one foreclosure for every 806 households in Maryland over the past year. While the state's rate grew 370 percent, the national rate was up 87 percent, RealtyTrac reported.
"Today, we're 15th," Perez said. "Our goal is to be 50th. We're moving in the wrong direction."
In June, Gov. Martin O'Malley established the task force and charged it with finding ways to curb the growing foreclosure problem. The task force report to the governor yesterday suggested stronger underwriting and lending standards, as well as more oversight for the mortgage industry.
It also called for better education to help homeowners avoid predatory lenders, and more access to better financial products for people purchasing or refinancing homes.
Perez said the immediate issue is homeowners on the verge of or facing foreclosure. One task force suggestion is the creation of a fund to provide case-by-case interventions to prevent foreclosure, allowing more stable monthly payments or time for a property sale to troubled owners.
Some of the recommendations to the governor will require changes in Maryland law "to rein in bad players and practices," according to the report. The report also recommends a regulatory change to increase the time between default and foreclosure to 90 days from 15 days.
"What you're not seeing in there perhaps are some specifics in terms of what it might cost to fund some of the programs" recommended in the report, said Jacqueline Lampell, spokeswoman for the Department of Housing and Community Development. "That's because we don't really even know what the full impact of foreclosure will be."
Foreclosures disproportionately result from subprime loans, those offered to borrowers who have less than optimal credit and have difficulty getting a traditional loan. Such loans tend to have higher interest rates and options such as adjustable and teaser rates, according to the report.
A Maryland Bankers Association survey showed that adjustable-rate mortgages in the state grew from 1.6 percent of the total mortgages in 2000 to 11.7 percent in 2007. (by Capital News Service)
Friday, December 7, 2007
Foreclosure victim seeks relief from Maryland Court of Appeals
Kwaku Atta Poku and his family lost their townhouse to foreclosure after he could not prove he had paid off a mortgage.
A lawyer for Kwaku Atta Poku, the Columbia cab owner from Ghana who lost his house to foreclosure although he had made every mortgage payment, tried yesterday to convince skeptical Maryland Court of Appeals judges that they can grant him a legal way to recoup his financial losses without undermining the state's real estate system.
Attorney Scott C. Borison said his task was to show the judges on the state's highest court that Atta Poku had been placed in a "Kafkaesque" situation through no fault of his own, and that they could open a way for him to pursue a negligence claim.
Under current law, he said, a foreclosure can go through in 15 days, although it could take 30 days to get a ruling to stop it. If the court decides in Atta Poku's favor, it could change the rules governing foreclosures in Maryland.
Kenneth MacFayden, the attorney arguing for Washington Mutual Inc., the mortgage firm that took Atta Poku's townhouse and resold it more than two years ago, suggested such a ruling would reverse a legal foreclosure and affect an owner's ability to sell a property with a foreclosure in its history.
"How will I ever be able to transfer title and get title insurance again?" MacFayden asked the judges.
"What do I do about the fact that the property was sold? What do I do?" Judge Alan M. Wilner asked Borison.
Borison later agreed that, "the sale has occurred. The house is gone. There's nothing to get back."
Borison said he was trying to allow Atta Poku a way to recoup his financial losses - a dim prospect if the foreclosure is judged legal.
"My claim is real simple. Mr. Atta Poku went to these people to refinance. He didn't take any money out of the transaction," Borison said, noting that Washington Mutual or its sister companies held the original mortgage and also did the refinancing.
"They were taking money from one pocket and putting it in another," he said.
No one representing Washington Mutual has accused Atta Poku of causing the foreclosure. Shane Winn, the company's spokesman, has said Washington Mutual never received the settlement check satisfying the first mortgage after the refinancing. Atta Poku could not prove they received it because several key documents, including the settlement check itself, were lost by financial institutions.
Judge Dale R. Cathell noted another difficult aspect of the case.
"You're asking us to do something we haven't done before," he told Borison.
Later Cathell said, "I don't mean to say there's not been a wrong done," he said. "How is it corrected? I just don't know how to do it. I can't for the life of me understand how do you ratify a sale, and not ratify a sale?"
Judge Irma S. Raker asked MacFayden: "How could Mr. Atta Poku have avoided all this once this train started moving?"
MacFayden said Atta Poku could have sought an injunction to stop the foreclosure, and filed lawsuits against the settlement company, its agent, and the bank involved. MacFayden said he suspects the money was embezzled. But Borison said Atta Poku didn't get a lawyer licensed to practice in Maryland until after the foreclosure and the sale - a period of a few weeks.
Atta Poku sat in the court's front row, watching as the opposing lawyers answered questions from the seven red-robed judges.
After the nearly one-hour hearing in Annapolis, he said he had expected to hear more about the human side of his predicament.
"I'm just hoping all these technicalities will be resolved," he said. "If the law keeps all these technicalities - then justice will be stampeded."
After the hearing, J. Preston Turner, a Towson lawyer also representing the mortgage company, approached Atta Poku and offered to discuss the possibility of a settlement. Borison said he's more likely to wait for the high court's decision. (By Larry Carson |Baltimore Sun)
A lawyer for Kwaku Atta Poku, the Columbia cab owner from Ghana who lost his house to foreclosure although he had made every mortgage payment, tried yesterday to convince skeptical Maryland Court of Appeals judges that they can grant him a legal way to recoup his financial losses without undermining the state's real estate system.
Attorney Scott C. Borison said his task was to show the judges on the state's highest court that Atta Poku had been placed in a "Kafkaesque" situation through no fault of his own, and that they could open a way for him to pursue a negligence claim.
Under current law, he said, a foreclosure can go through in 15 days, although it could take 30 days to get a ruling to stop it. If the court decides in Atta Poku's favor, it could change the rules governing foreclosures in Maryland.
Kenneth MacFayden, the attorney arguing for Washington Mutual Inc., the mortgage firm that took Atta Poku's townhouse and resold it more than two years ago, suggested such a ruling would reverse a legal foreclosure and affect an owner's ability to sell a property with a foreclosure in its history.
"How will I ever be able to transfer title and get title insurance again?" MacFayden asked the judges.
"What do I do about the fact that the property was sold? What do I do?" Judge Alan M. Wilner asked Borison.
Borison later agreed that, "the sale has occurred. The house is gone. There's nothing to get back."
Borison said he was trying to allow Atta Poku a way to recoup his financial losses - a dim prospect if the foreclosure is judged legal.
"My claim is real simple. Mr. Atta Poku went to these people to refinance. He didn't take any money out of the transaction," Borison said, noting that Washington Mutual or its sister companies held the original mortgage and also did the refinancing.
"They were taking money from one pocket and putting it in another," he said.
No one representing Washington Mutual has accused Atta Poku of causing the foreclosure. Shane Winn, the company's spokesman, has said Washington Mutual never received the settlement check satisfying the first mortgage after the refinancing. Atta Poku could not prove they received it because several key documents, including the settlement check itself, were lost by financial institutions.
Judge Dale R. Cathell noted another difficult aspect of the case.
"You're asking us to do something we haven't done before," he told Borison.
Later Cathell said, "I don't mean to say there's not been a wrong done," he said. "How is it corrected? I just don't know how to do it. I can't for the life of me understand how do you ratify a sale, and not ratify a sale?"
Judge Irma S. Raker asked MacFayden: "How could Mr. Atta Poku have avoided all this once this train started moving?"
MacFayden said Atta Poku could have sought an injunction to stop the foreclosure, and filed lawsuits against the settlement company, its agent, and the bank involved. MacFayden said he suspects the money was embezzled. But Borison said Atta Poku didn't get a lawyer licensed to practice in Maryland until after the foreclosure and the sale - a period of a few weeks.
Atta Poku sat in the court's front row, watching as the opposing lawyers answered questions from the seven red-robed judges.
After the nearly one-hour hearing in Annapolis, he said he had expected to hear more about the human side of his predicament.
"I'm just hoping all these technicalities will be resolved," he said. "If the law keeps all these technicalities - then justice will be stampeded."
After the hearing, J. Preston Turner, a Towson lawyer also representing the mortgage company, approached Atta Poku and offered to discuss the possibility of a settlement. Borison said he's more likely to wait for the high court's decision. (By Larry Carson |Baltimore Sun)
Monday, November 26, 2007
Ripple effect is feared from foreclosures
Neighboring houses likely to lose billions
Foreclosures on subprime home loans made to borrowers toward the end of the housing bubble will erase billions of dollars in value from neighboring properties, according to a report released yesterday by a nonprofit group.
The Center for Responsible Lending used its findings to call for Congress to enact stronger protections for borrowers facing foreclosure - such as giving bankruptcy courts the authority to allow borrowers to continue making payments - and to take steps to prevent predatory lending practices.
The center's report estimates about a third of homes nationwide - or 44.5 million homes - will see property values drop by an average $5,000 two to three years after the foreclosures of loans originated in 2005 or 2006. It estimates the total loss at $223 billion, with the greatest impact in neighborhoods with high concentrations of minority residents, who tended to be steered into subprime loans in greater numbers.
The study ranked Maryland sixth worst in the nation, with some 1.43 million properties - more than half the state's total - expected to lose $8 billion in value. California was ranked No. 1.
The estimate for Maryland was much higher than that issued last month by the Joint Economic Committee of Congress.
The committee estimated the total loss of state property values at $2.7 billion, of which about $1.1 billion was the ripple effect on nearby homes. That report forecast subprime foreclosures from the middle of this year through the end of 2009.
The Center for Responsible Lending's study projects more than 329,000 homes will lose value because of their neighbors' subprime woes in an area that includes mostly Baltimore City, with some spillover of properties in Baltimore and Anne Arundel counties. In the metropolitan area's five surrounding counties, nearly 483,000 homes will lose value, the study said.
Maryland homes will lose an average $5,597 in value, it said, ranging from an average of $9,366 in Prince George's County to an average of just under $1,000 in Allegany.
"Subprime foreclosures continue to spread throughout the country like a disease epidemic, and the losses are affecting more and more families who've lost their homes, and these losses extend to the neighbors," said Martin Eakes, the center's chief executive officer during a conference call yesterday.
Eakes blamed lenders who pushed borrowers into subprime loans, generally given to people with weak credit who then pay higher fees or interest.
Joanna Smith-Ramani, co-chair of the Baltimore Homeownership Preservation Coalition, said the number of homes the center predicts will be negatively affected is "frightening." She fears that rising foreclosures might "paralyze" revitalization efforts in the city.
Jay Brinkman, a financial economist with the Mortgage Bankers Association, which represents prime and subprime lenders, said he found flaws in the report. Price declines typically lead to more foreclosures, not the other way around, he said.
"The idea of associating price declines with foreclosures is not a valid argument, the way they have done it here," said Jay Brinkman, a financial economist with bankers association. "The way they attempted to reach out and apply it over 44 million homes is not valid."
Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, said rising foreclosures and falling property values both are consequences of the popping of the housing bubble, not cause and effect.
"As the bubble bursts, property values fall," Clinch said.
Thomas E. Perez, co-chair of the Maryland Homeownership Preservation Task Force, said he can't comment on the center's figures but agrees with the premise that the effects of foreclosure reach far beyond the people losing their homes.
"The impacts are so wide-ranging," said Perez, the state's secretary of labor, licensing and regulation. "The ripple's really what we talk about. That is why it's so critical to get a handle on it."
Phillip Robinson, executive director of Civil Justice Inc., which has a network of attorneys who help clients with foreclosures, said the study may be a wake-up call for homeowners who've never had a subprime loan and expect their homes will always rise in value. (By Lorraine Mirabella and Jamie Smith Hopkins | Baltimore Sun)
Foreclosures on subprime home loans made to borrowers toward the end of the housing bubble will erase billions of dollars in value from neighboring properties, according to a report released yesterday by a nonprofit group.
The Center for Responsible Lending used its findings to call for Congress to enact stronger protections for borrowers facing foreclosure - such as giving bankruptcy courts the authority to allow borrowers to continue making payments - and to take steps to prevent predatory lending practices.
The center's report estimates about a third of homes nationwide - or 44.5 million homes - will see property values drop by an average $5,000 two to three years after the foreclosures of loans originated in 2005 or 2006. It estimates the total loss at $223 billion, with the greatest impact in neighborhoods with high concentrations of minority residents, who tended to be steered into subprime loans in greater numbers.
The study ranked Maryland sixth worst in the nation, with some 1.43 million properties - more than half the state's total - expected to lose $8 billion in value. California was ranked No. 1.
The estimate for Maryland was much higher than that issued last month by the Joint Economic Committee of Congress.
The committee estimated the total loss of state property values at $2.7 billion, of which about $1.1 billion was the ripple effect on nearby homes. That report forecast subprime foreclosures from the middle of this year through the end of 2009.
The Center for Responsible Lending's study projects more than 329,000 homes will lose value because of their neighbors' subprime woes in an area that includes mostly Baltimore City, with some spillover of properties in Baltimore and Anne Arundel counties. In the metropolitan area's five surrounding counties, nearly 483,000 homes will lose value, the study said.
Maryland homes will lose an average $5,597 in value, it said, ranging from an average of $9,366 in Prince George's County to an average of just under $1,000 in Allegany.
"Subprime foreclosures continue to spread throughout the country like a disease epidemic, and the losses are affecting more and more families who've lost their homes, and these losses extend to the neighbors," said Martin Eakes, the center's chief executive officer during a conference call yesterday.
Eakes blamed lenders who pushed borrowers into subprime loans, generally given to people with weak credit who then pay higher fees or interest.
Joanna Smith-Ramani, co-chair of the Baltimore Homeownership Preservation Coalition, said the number of homes the center predicts will be negatively affected is "frightening." She fears that rising foreclosures might "paralyze" revitalization efforts in the city.
Jay Brinkman, a financial economist with the Mortgage Bankers Association, which represents prime and subprime lenders, said he found flaws in the report. Price declines typically lead to more foreclosures, not the other way around, he said.
"The idea of associating price declines with foreclosures is not a valid argument, the way they have done it here," said Jay Brinkman, a financial economist with bankers association. "The way they attempted to reach out and apply it over 44 million homes is not valid."
Richard P. Clinch, director of economic research at the University of Baltimore's Jacob France Institute, said rising foreclosures and falling property values both are consequences of the popping of the housing bubble, not cause and effect.
"As the bubble bursts, property values fall," Clinch said.
Thomas E. Perez, co-chair of the Maryland Homeownership Preservation Task Force, said he can't comment on the center's figures but agrees with the premise that the effects of foreclosure reach far beyond the people losing their homes.
"The impacts are so wide-ranging," said Perez, the state's secretary of labor, licensing and regulation. "The ripple's really what we talk about. That is why it's so critical to get a handle on it."
Phillip Robinson, executive director of Civil Justice Inc., which has a network of attorneys who help clients with foreclosures, said the study may be a wake-up call for homeowners who've never had a subprime loan and expect their homes will always rise in value. (By Lorraine Mirabella and Jamie Smith Hopkins | Baltimore Sun)
Tuesday, October 30, 2007
MD Officials Try To Slow Foreclosures
Maryland officials are trying to slow foreclosures. The Secretary of Licensing and Regulation suggested Tuesday that lawmakers could extend the period between a borrower's default and the legal start of foreclosure actions. That period is currently 15-days, a Governor's Task Force says it should be at least 90.
About 7000 residents lost their homes in this year's third quarter, compared to less than 1600 in the first quarter. (By Katherine Amenta, WMDT)
About 7000 residents lost their homes in this year's third quarter, compared to less than 1600 in the first quarter. (By Katherine Amenta, WMDT)
Wednesday, September 19, 2007
Group to offer weekly workshops on foreclosures
Sessions planned as county leads state in foreclosures
A new group of lenders, government officials and community advocates in Prince George’s County plans to kick off a set of weekly workshops Sept. 13 in Hyattsville to counsel residents on foreclosures and help stem a problem that is worse in the county than anywhere in Maryland.
Prince George’s County recorded more foreclosures in the first seven months of this year than any other Maryland county. The 2,800 foreclosures were more than triple the number during the same period last year, according to data company RealtyTrac. The increase accompanied a statewide and nationwide surge in foreclosures.
‘‘There are so many people being foreclosed on that the counselors can’t see them,” said Mosi Harrington, a member of the Prince George’s County Coalition for Homeownership Preservation.
The homeownership coalition, which includes the Prince George’s Housing Department, was formed this spring to educate residents on how to negotiate with lenders before they lose their homes, Harrington said. She said many residents never even try to negotiate.
Through its new program, the coalition will sponsor a two-hour workshop hosted by a different nonprofit counseling organization every week through November. The set of meetings starts at 7 p.m. today at the Hyattsville Municipal Building located at 4310 Gallatin St. Residents should call 301-883-5570 to reserve a seat.
The free workshops are targeting residents who are behind on mortgage payments or expect to be soon.
‘‘Prince George’s County has been one of the hardest hit counties in the state,” Harrington said. ‘‘People can barely turn around and their houses are gone.”
Cora Ganzglass, an attorney with Legal Aid, a Prince George’s group that gives free legal service to low-income residents, said part of the problem here and across the country is ‘‘exotic mortgages.” For homebuyers who signed on to adjustable rate mortgages a few years ago at low teaser rates, those rates are resetting now, making them less affordable.
‘‘People were given loans that they could never afford,” said Ganzglass, who is coordinating the workshops.
Donna Badgett Hurley, coalition member and director of the Oxon Hill-based counseling group Housing Options and Planning Enterprises, said the workshops will probably continue into next year, even though only nine have been put on the calendar.
‘‘The whole idea is to be proactive, because the ... earlier you start the process, the more options you have,” she said. ‘‘[Lenders] really don’t want that foreclosure ... because they lose money.”
The local workshops will coach residents in danger of foreclosure on how to keep their homes, but will also tell them how to avoid scams aimed at desperate homeowners.
Thomas Perez, secretary of the Maryland Department of Labor, Licensing and Regulation, has launched 127 investigations this year into questionable mortgage cases.
The labor department last month announced the first ‘‘foreclosure rescue scam” conviction in state history.
Prince George’s State’s Attorney Glenn F. Ivey’s office prosecuted defendant Perver Lee Taylor, who pleaded guilty in Circuit Court to a felony theft charge in connection with a foreclosure rescue scam and was sentenced to 10 years in jail, with all but 12 weeks suspended. Taylor was required to repay $40,000 stolen from a victim, whom Taylor made transfer ownership of her home. Investigators found Taylor tried to take the home, evict the victim and sell the property.
A report released over the summer by the Association of Community Organizations for Reform Now also showed that foreclosures are highest in the central and southwestern parts of Prince George’s County. The study urged local governments to provide funding for borrowers about to lose their homes and for housing counseling programs.
Harrington said the new coalition is not funded, but that the individual organizations participating in the program have applied for funding from a state task force on homeownership preservation.
What: Foreclosure counseling workshops
When: Weekly, beginning 7 p.m. today
Where: Hyattsville Municipal Building, 4310 Gallatin St.
Contact: 301-883-5570
Admission: Free
Reservations required
For a complete schedule of the foreclosure workshops, see www.gazette.net⁄links.
A new group of lenders, government officials and community advocates in Prince George’s County plans to kick off a set of weekly workshops Sept. 13 in Hyattsville to counsel residents on foreclosures and help stem a problem that is worse in the county than anywhere in Maryland.
Prince George’s County recorded more foreclosures in the first seven months of this year than any other Maryland county. The 2,800 foreclosures were more than triple the number during the same period last year, according to data company RealtyTrac. The increase accompanied a statewide and nationwide surge in foreclosures.
‘‘There are so many people being foreclosed on that the counselors can’t see them,” said Mosi Harrington, a member of the Prince George’s County Coalition for Homeownership Preservation.
The homeownership coalition, which includes the Prince George’s Housing Department, was formed this spring to educate residents on how to negotiate with lenders before they lose their homes, Harrington said. She said many residents never even try to negotiate.
Through its new program, the coalition will sponsor a two-hour workshop hosted by a different nonprofit counseling organization every week through November. The set of meetings starts at 7 p.m. today at the Hyattsville Municipal Building located at 4310 Gallatin St. Residents should call 301-883-5570 to reserve a seat.
The free workshops are targeting residents who are behind on mortgage payments or expect to be soon.
‘‘Prince George’s County has been one of the hardest hit counties in the state,” Harrington said. ‘‘People can barely turn around and their houses are gone.”
Cora Ganzglass, an attorney with Legal Aid, a Prince George’s group that gives free legal service to low-income residents, said part of the problem here and across the country is ‘‘exotic mortgages.” For homebuyers who signed on to adjustable rate mortgages a few years ago at low teaser rates, those rates are resetting now, making them less affordable.
‘‘People were given loans that they could never afford,” said Ganzglass, who is coordinating the workshops.
Donna Badgett Hurley, coalition member and director of the Oxon Hill-based counseling group Housing Options and Planning Enterprises, said the workshops will probably continue into next year, even though only nine have been put on the calendar.
‘‘The whole idea is to be proactive, because the ... earlier you start the process, the more options you have,” she said. ‘‘[Lenders] really don’t want that foreclosure ... because they lose money.”
The local workshops will coach residents in danger of foreclosure on how to keep their homes, but will also tell them how to avoid scams aimed at desperate homeowners.
Thomas Perez, secretary of the Maryland Department of Labor, Licensing and Regulation, has launched 127 investigations this year into questionable mortgage cases.
The labor department last month announced the first ‘‘foreclosure rescue scam” conviction in state history.
Prince George’s State’s Attorney Glenn F. Ivey’s office prosecuted defendant Perver Lee Taylor, who pleaded guilty in Circuit Court to a felony theft charge in connection with a foreclosure rescue scam and was sentenced to 10 years in jail, with all but 12 weeks suspended. Taylor was required to repay $40,000 stolen from a victim, whom Taylor made transfer ownership of her home. Investigators found Taylor tried to take the home, evict the victim and sell the property.
A report released over the summer by the Association of Community Organizations for Reform Now also showed that foreclosures are highest in the central and southwestern parts of Prince George’s County. The study urged local governments to provide funding for borrowers about to lose their homes and for housing counseling programs.
Harrington said the new coalition is not funded, but that the individual organizations participating in the program have applied for funding from a state task force on homeownership preservation.
What: Foreclosure counseling workshops
When: Weekly, beginning 7 p.m. today
Where: Hyattsville Municipal Building, 4310 Gallatin St.
Contact: 301-883-5570
Admission: Free
Reservations required
For a complete schedule of the foreclosure workshops, see www.gazette.net⁄links.
Friday, September 14, 2007
Foreclosure rates climb
Marylanders better off than nation overall as variable mortgages reset
As homeowners struggled to make higher payments on adjustable mortgages, the rate of new foreclosures this spring soared to its highest level in the nearly three decades that records have been kept. Maryland, however, had a smaller rate of new foreclosures than many states.
The handful of large states feeling the brunt of the credit crisis helped to push new foreclosures in the second quarter to 0.65 percent, or 65 for every 10,000 loans, the Mortgage Bankers Association said yesterday. The rate of residential loans considered delinquent (at least three months past due) jumped to more than 5 percent of the nation's 44 million loans, up from 4.37 percent of loans in spring 2006.
Maryland, which has faced a less severe housing downturn than other states, had a lower rate of loans entering foreclosure -- 0.36 percent. Of the just over 1 million loans being serviced in the state, about 3,750 were sent foreclosure notices in the second quarter, the bankers association said. The MBA figures for states are not seasonally adjusted. On a nonadjusted basis, the U.S. had new foreclosures at a rate of 0.59 percent.
In Maryland, though the percentage of new foreclosures was small, it has grown rapidly. In the second quarter of 2006, Maryland's rate was 0.19 percent, having nearly doubled. That is still less than rates as recently as several years ago, when Maryland's rate often topped 0.50.
Delinquencies and foreclosures are rising primarily because of homeowners falling behind on payments as adjustable rates have reset, said Doug Duncan, the banking association's chief economist. Many borrowers took out adjustable loans with lower introductory rates as a way to afford homes that soared in value during the real estate boom.
The adjustable loans make up a big share of mortgages in states such as California, Florida, Nevada and Arizona, where investors were especially active and contributed to soaring real estate values that have since fallen, the MBA data showed.
"They are seeing declining house prices, which makes refinancing these ARMs difficult," Duncan said.
"The same forces at work nationally are at work in Maryland; they just haven't had as severe an impact," said Anirban Basu, chief executive of the Baltimore economic consulting firm Sage Policy Group Inc.
"Many people took on adjustable-rate mortgages, and many of those mortgages are still in the process of resetting, and there still are people finding they cannot afford those mortgages," Basu added. "Housing appreciation has slowed in Maryland ... and that is conducive to higher levels of foreclosure."
Phillip R. Robinson, executive director of Civil Justice Inc., a public interest law group in Maryland that helps victims of predatory real estate practices, said much of the data on foreclosure and delinquency rates appears to be conflicting.
But he said it is clear from the deluge of borrowers turning to his group for help that the number of homeowners in danger of losing their homes to foreclosure is increasing steadily.
"There's a dramatic increase and shift in the kind of homeowner calling us," Robinson said. Previously, his group saw mostly "a homeowner who's had a devastating life event and is not able to make payments."
But now, he continued, "We're seeing a huge increase of very-good-credit borrowers who got mortgage loans that were unsuitable for them in the first place. The professional they relied on steered them to the highest-cost loan in which the professional could make a profit. They've gotten themselves in over their head. These are prime borrowers in subprime loans."
Still, Maryland has fared better than many states and the nation as a whole.
"Housing prices in Maryland have by and large held up pretty well," Basu said. "There is no part of the state where housing prices have fallen substantially ... so as a result when people fall behind on their mortgages, they don't go into foreclosure. They can sell their home."
Delinquency rates in the United States rose from the second quarter of 2006 for both prime loans and subprime, which are loans made to borrowers with weak credit, according to the MBA report, a survey of about 120 mortgage bankers, commercial banks and thrifts.
Duncan, of the MBA, said turmoil that has emerged in the credit markets since the end of the second quarter has further limited borrowing options for homeowners wanting to refinance high-cost loans.
And that means, he said, more increases in delinquencies and foreclosures before those rates hit a peak.
The upward trend, Duncan predicted, probably will continue more than the one to three economic quarters previously forecast.
(By Lorraine Mirabella, Baltimore Sun reporter)
As homeowners struggled to make higher payments on adjustable mortgages, the rate of new foreclosures this spring soared to its highest level in the nearly three decades that records have been kept. Maryland, however, had a smaller rate of new foreclosures than many states.
The handful of large states feeling the brunt of the credit crisis helped to push new foreclosures in the second quarter to 0.65 percent, or 65 for every 10,000 loans, the Mortgage Bankers Association said yesterday. The rate of residential loans considered delinquent (at least three months past due) jumped to more than 5 percent of the nation's 44 million loans, up from 4.37 percent of loans in spring 2006.
Maryland, which has faced a less severe housing downturn than other states, had a lower rate of loans entering foreclosure -- 0.36 percent. Of the just over 1 million loans being serviced in the state, about 3,750 were sent foreclosure notices in the second quarter, the bankers association said. The MBA figures for states are not seasonally adjusted. On a nonadjusted basis, the U.S. had new foreclosures at a rate of 0.59 percent.
In Maryland, though the percentage of new foreclosures was small, it has grown rapidly. In the second quarter of 2006, Maryland's rate was 0.19 percent, having nearly doubled. That is still less than rates as recently as several years ago, when Maryland's rate often topped 0.50.
Delinquencies and foreclosures are rising primarily because of homeowners falling behind on payments as adjustable rates have reset, said Doug Duncan, the banking association's chief economist. Many borrowers took out adjustable loans with lower introductory rates as a way to afford homes that soared in value during the real estate boom.
The adjustable loans make up a big share of mortgages in states such as California, Florida, Nevada and Arizona, where investors were especially active and contributed to soaring real estate values that have since fallen, the MBA data showed.
"They are seeing declining house prices, which makes refinancing these ARMs difficult," Duncan said.
"The same forces at work nationally are at work in Maryland; they just haven't had as severe an impact," said Anirban Basu, chief executive of the Baltimore economic consulting firm Sage Policy Group Inc.
"Many people took on adjustable-rate mortgages, and many of those mortgages are still in the process of resetting, and there still are people finding they cannot afford those mortgages," Basu added. "Housing appreciation has slowed in Maryland ... and that is conducive to higher levels of foreclosure."
Phillip R. Robinson, executive director of Civil Justice Inc., a public interest law group in Maryland that helps victims of predatory real estate practices, said much of the data on foreclosure and delinquency rates appears to be conflicting.
But he said it is clear from the deluge of borrowers turning to his group for help that the number of homeowners in danger of losing their homes to foreclosure is increasing steadily.
"There's a dramatic increase and shift in the kind of homeowner calling us," Robinson said. Previously, his group saw mostly "a homeowner who's had a devastating life event and is not able to make payments."
But now, he continued, "We're seeing a huge increase of very-good-credit borrowers who got mortgage loans that were unsuitable for them in the first place. The professional they relied on steered them to the highest-cost loan in which the professional could make a profit. They've gotten themselves in over their head. These are prime borrowers in subprime loans."
Still, Maryland has fared better than many states and the nation as a whole.
"Housing prices in Maryland have by and large held up pretty well," Basu said. "There is no part of the state where housing prices have fallen substantially ... so as a result when people fall behind on their mortgages, they don't go into foreclosure. They can sell their home."
Delinquency rates in the United States rose from the second quarter of 2006 for both prime loans and subprime, which are loans made to borrowers with weak credit, according to the MBA report, a survey of about 120 mortgage bankers, commercial banks and thrifts.
Duncan, of the MBA, said turmoil that has emerged in the credit markets since the end of the second quarter has further limited borrowing options for homeowners wanting to refinance high-cost loans.
And that means, he said, more increases in delinquencies and foreclosures before those rates hit a peak.
The upward trend, Duncan predicted, probably will continue more than the one to three economic quarters previously forecast.
(By Lorraine Mirabella, Baltimore Sun reporter)
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)
Tuesday, July 17, 2007
Oregon foreclosures rise
Foreclosures in Oregon are up 23 percent in the second quarter compared with the first quarter, according to Bargain Network.
The state listed 5,208 foreclosures in the quarter, the 17th highest among all states. Percentage-wise, only Maryland, New Jersey, Hawaii and Arizona had higher foreclosure rates.
Nationwide, the number of foreclosures rose 2 percent to 422,300, or one foreclosure filing for every 877 households.
The state of Maryland recorded the highest percentage increase at 41 percent. States with the biggest declines are Louisiana, with a drop of 38 percent, and North Dakota, with a drop of 33 percent.
The complete report is at bargainnetwork.com. Bargain Network is a Santa Barbara, Calif.-based online provider of real estate foreclosures, pre-foreclosures and for-sale-by-owner property listings. (Portland Business Journal)
The state listed 5,208 foreclosures in the quarter, the 17th highest among all states. Percentage-wise, only Maryland, New Jersey, Hawaii and Arizona had higher foreclosure rates.
Nationwide, the number of foreclosures rose 2 percent to 422,300, or one foreclosure filing for every 877 households.
The state of Maryland recorded the highest percentage increase at 41 percent. States with the biggest declines are Louisiana, with a drop of 38 percent, and North Dakota, with a drop of 33 percent.
The complete report is at bargainnetwork.com. Bargain Network is a Santa Barbara, Calif.-based online provider of real estate foreclosures, pre-foreclosures and for-sale-by-owner property listings. (Portland Business Journal)
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)
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)
Thursday, June 7, 2007
Economist: Record Foreclosures Could Hit Maryland
BALTIMORE - Maryland's foreclosure rates have been among the lowest in the country, but a local economist says the worst is still to come.
Anirban Basu warns of increased "blood in the water" as the impact of the housing downturn hits the state.
"Thus far the rate of foreclosures in Maryland has not had an effect overall because we have not yet seen a period of elevated foreclosure rates," said Basu, chief executive of Sage Policy Group, an economic consulting company in Baltimore. "However they are rising fast and the worst period is in front of us, not behind."
So far, Maryland has avoided the record foreclosures on both the prime and subprime markets in other parts of the country.
"Maryland's foreclosure inventory rate of .5 percent and new foreclosure rate of .31 percent are well below the national rates of 1.19 percent and .57 percent," said Doug Duncan, chief economist and senior vice president of research at the Mortgage Bankers Association.
Basu told The Baltimore Examiner that the increase in housing stock in Maryland is due to "the resettling of adjustable mortgage rates and the fact that people can't make those high interest payments. In addition, people over did it on the amount of debt they took on, not only with homes, but car and credit card debt and loans with has translated into increased delinquencies, and sadly, involuntary (foreclosure) home sales."
The Maryland Bankers Association says that while nearly 70 percent of Americans own their own homes, many that qualified did so with adjustable rate loans or subprime loans whose high interest rates borrowers can no longer afford.
"The regulatory environment is shifting," said Basu. "Borrowers who could have accessed credit in 2002-2003 can't anymore. The subprime market is virtually shutdown. If the state's economy falters and unemployment rises there will be increased blood in the water in respect to foreclosures." (www.examiner.com)
Anirban Basu warns of increased "blood in the water" as the impact of the housing downturn hits the state.
"Thus far the rate of foreclosures in Maryland has not had an effect overall because we have not yet seen a period of elevated foreclosure rates," said Basu, chief executive of Sage Policy Group, an economic consulting company in Baltimore. "However they are rising fast and the worst period is in front of us, not behind."
So far, Maryland has avoided the record foreclosures on both the prime and subprime markets in other parts of the country.
"Maryland's foreclosure inventory rate of .5 percent and new foreclosure rate of .31 percent are well below the national rates of 1.19 percent and .57 percent," said Doug Duncan, chief economist and senior vice president of research at the Mortgage Bankers Association.
Basu told The Baltimore Examiner that the increase in housing stock in Maryland is due to "the resettling of adjustable mortgage rates and the fact that people can't make those high interest payments. In addition, people over did it on the amount of debt they took on, not only with homes, but car and credit card debt and loans with has translated into increased delinquencies, and sadly, involuntary (foreclosure) home sales."
The Maryland Bankers Association says that while nearly 70 percent of Americans own their own homes, many that qualified did so with adjustable rate loans or subprime loans whose high interest rates borrowers can no longer afford.
"The regulatory environment is shifting," said Basu. "Borrowers who could have accessed credit in 2002-2003 can't anymore. The subprime market is virtually shutdown. If the state's economy falters and unemployment rises there will be increased blood in the water in respect to foreclosures." (www.examiner.com)
First-time homebuyers, just say no to foreclosures
Q:I am a first-time homebuyer and I want to buy a foreclosure property. Do you think this is a good idea? And can I get a mortgage for a foreclosure property? Thanks! Lyle T.
A: Dear Mr. T:
Something is telling me that this could be a big mistake, but you and I may be thinking of two different things. If you are asking about buying a pre-foreclosure property, listed by an agent or for sale by owner ("FSBO", pronounced "fizzbo" in common usage) that you can see in advance and have inspected and appraised, then fine. The process is the same for buying a pre-foreclosure property as it is for buying any other property.
If you are talking about buying a foreclosure property at auction, then I do not recommend it for a first-time home buyer. Auctions are interesting. It is a unique group of people that show up to bid on properties.
Generally speaking, investors bid on properties, often sight-unseen, and they accept a great deal of risk in doing so. What is the condition of the property? Will it be delivered vacant or will they have to evict the former owners? There are no guarantees. This type of investor is generally pretty battle-hardened, has rehabbed properties before, and has some extra capital to carry the property and pay attorney's fees if any legal issues arise after the purchase.
And sometimes the properties are sold at or above market value and are not the instant bargain that people think they are. If you are thinking of buying your first home at auction, please think again.
As for financing, you can obtain a mortgage to buy a foreclosure property. The lender has to know that the property is in foreclosure, but you can get pre-approved for a mortgage subject to a ratified contract, appraisal and title work.
People who buy at a foreclosure auction are seeking instant equity over everything else - location, (think school districts and your commute to work), the number of bedrooms and bathrooms, recent renovations, upgraded systems, etc. But today's market is already a buyer's market. There is so much more to enjoying living in your first home than how much instant equity you have in your property.
You should interview three realtors or buyers agents that specialize in working with first-time home buyers. Pick the one that you feel listens to you and understands your concerns the best. Have your agent help you articulate your goals and prioritize a list of must-haves for your home. If you are not already pre-qualified for a home loan, get pre-qualified as soon as possible so your real estate agent knows your purchasing power. (http://media.www.districtchronicles.com)
A: Dear Mr. T:
Something is telling me that this could be a big mistake, but you and I may be thinking of two different things. If you are asking about buying a pre-foreclosure property, listed by an agent or for sale by owner ("FSBO", pronounced "fizzbo" in common usage) that you can see in advance and have inspected and appraised, then fine. The process is the same for buying a pre-foreclosure property as it is for buying any other property.
If you are talking about buying a foreclosure property at auction, then I do not recommend it for a first-time home buyer. Auctions are interesting. It is a unique group of people that show up to bid on properties.
Generally speaking, investors bid on properties, often sight-unseen, and they accept a great deal of risk in doing so. What is the condition of the property? Will it be delivered vacant or will they have to evict the former owners? There are no guarantees. This type of investor is generally pretty battle-hardened, has rehabbed properties before, and has some extra capital to carry the property and pay attorney's fees if any legal issues arise after the purchase.
And sometimes the properties are sold at or above market value and are not the instant bargain that people think they are. If you are thinking of buying your first home at auction, please think again.
As for financing, you can obtain a mortgage to buy a foreclosure property. The lender has to know that the property is in foreclosure, but you can get pre-approved for a mortgage subject to a ratified contract, appraisal and title work.
People who buy at a foreclosure auction are seeking instant equity over everything else - location, (think school districts and your commute to work), the number of bedrooms and bathrooms, recent renovations, upgraded systems, etc. But today's market is already a buyer's market. There is so much more to enjoying living in your first home than how much instant equity you have in your property.
You should interview three realtors or buyers agents that specialize in working with first-time home buyers. Pick the one that you feel listens to you and understands your concerns the best. Have your agent help you articulate your goals and prioritize a list of must-haves for your home. If you are not already pre-qualified for a home loan, get pre-qualified as soon as possible so your real estate agent knows your purchasing power. (http://media.www.districtchronicles.com)
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