12,340 customers in state are eligible for restitution of several hundred dollars
Marylanders who got home loans from Ameriquest Mortgage Co. can begin to claim their share of a $325 million settlement reached with the subprime lender that was accused of preying upon borrowers nationwide with deceptive practices.
Douglas F. Gansler, Maryland's attorney general, announced yesterday that his agency and the Maryland commissioner of financial regulation sent letters and claim forms this week to 12,340 Ameriquest customers in Maryland who are eligible for $7.8 million in restitution.
Depending on how they were harmed, borrowers could receive hundreds, and in some cases thousands, of dollars.
Ameriquest, a subsidiary of ACC Capital Holdings in Orange, Calif., agreed in January 2006 to settle the case brought by 49 states, including Maryland, after a two-year investigation. Under the agreement, the company has been paying into a settlement fund in installments.
"It's a very, very large amount of money, so we allowed them to pay quarterly, rather than come up with the entire amount all at once," said V. Scott Bailey, a Maryland assistant attorney general. "That would have put them out of business, and in that case it would have been questionable how much we could have collected for consumers."
Regulators said the lender, which consented to changing its lending practices but didn't admit any wrongdoing, misrepresented the terms of home loans, such as whether it carried a fixed or an adjustable rate.
The lender and its affiliates also charged excessive loan origination fees and prepayment penalties; refinanced borrowers into inappropriate loans, and inflated appraisals used to qualify borrowers for loans, regulators said. Ameriquest has been retrenching along with the subprime industry, which has been roiled by losses from rising foreclosures. Subprime loans are made to borrowers with bad credit histories or heavy debt.
The mortgages often charge higher interest rates to compensate for the greater risk of default.
Dozens of subprime mortgage companies have declared bankruptcy, shuttered operations or been sold in recent months. Ameriquest, which was one of the largest, closed more than 200 branch offices last year and consolidated operations into four call centers.This year the company moved those operations into one call center in Orange, spokesman Chris Orlando said.
The National Association for the Advancement of Colored People sued Ameriquest and other lenders this week. The civil rights group alleges that the lenders discriminated against black borrowers by steering them into higher-interest subprime loans while giving more favorable loan terms to whites.
As for the multistate settlement, Orlando called the restitution "an important final step." The settlement covers customers of Ameriquest, Town and Country Credit Corp., and AMC Mortgage Services, formerly known as Bedford Home Loans, from January 1999 through December 2005.
Consumers owed restitution will be paid out under two tiers depending on how they were allegedly deceived. One will pay out an average of $756; the other an average of $569.
The forms mailed to eligible borrowers indicate a minimum payment they can expect to receive, though that figure could grow if fewer borrowers decide to take part in the settlement.
Consumers who do opt for the settlement give up their right to sue Ameriquest over the loans that are covered; they would not be giving up any claim they could otherwise raise if their homes go into foreclosure.
Gansler's office encouraged consumers to consult a private attorney or seek subsidized legal services. They must mail competed and signed forms to the settlement administrator by Sept. 10. (baltimoresun.com)
Showing posts with label homeownership. Show all posts
Showing posts with label homeownership. Show all posts
Tuesday, July 17, 2007
Monday, June 4, 2007
Selling short. For many facing foreclosure, it's the only way out
Danielle Merriweather added up all the numbers and they didn't look good. The mortgage was $1,162 a month. The winter gas bills ran $500 a month. There were four children to care for. And there was little money coming in after the young mother lost her job as a medical biller.
"It's not easy to come up with that kind of money when you don't have a job," said Merriweather, 29, who bought her home on Detroit's west side two years ago. "I was just like, 'Oh my God, I can't afford this house.' "
Merriweather hasn't made a mortgage payment since December. But instead of joining the 16,351 Detroiters whose properties were foreclosed on during the first quarter of the year, Merriweather began to work with her lender and agreed to sell her property in what's called a short sale. That's when the lender agrees to accept a lower price for a property than what the seller owes.
A short sale differs from a so-called upside-down sale, which happens when the homeowner is not at risk of foreclosure but must pay the difference between the purchase price and the principal owed at settlement.
Merriweather's situation illustrates the painful, yet simple math many homeowners face. She paid $140,000 for the house and owes roughly $127,000. The house is on the market for $125,000 and probably will sell for even less.
In a short sale, the buyer negotiates directly with the mortgage company through a real estate agent. The lender typically requires an appraisal and proof of hardship before allowing a short sale.
Sellers lose all equity, but they walk away without a foreclosure to mar their credit rating. The late payments will still be reported.
What many short-sale sellers don't realize is that they face income tax liabilities, too. Banks report the canceled debt as income for the seller to the Internal Revenue Service (though Congress is considering a bill that would amend the tax code to forgive the tax debt).
Banks on board
Real estate agents said they're advising more sellers who've fallen behind on payments to look at short sales as a way to avoid foreclosure and, increasingly, banks are willing to work with them.
Michigan has the 10th-highest foreclosure rate in the country -- with 29,467 foreclosures in the first quarter of the year, according to RealtyTrac, an Irvine, Calif., firm that publishes foreclosure data.
"The worst thing possible for a bank is to foreclose," said Eric Burgoon, group senior vice president of LaSalle Bank, based in Troy. Burgoon advises homeowners unable to pay their mortgage to contact the lender before missing a payment. Some may be able to refinance the mortgage at a lower interest rate or change the monthly payments.
"It's the last thing we want to do," Burgoon said. "It doesn't help the customer and it's the worst thing for us."
Many expect the number of short sales to grow. Property values have tanked in the state's overcrowded real estate market as unemployment rates have soared, leaving owners unable to sell their homes for what they owe on the mortgage.
The ranks of financially strapped homeowners also likely will increase as those with adjustable-rate mortgages find themselves unable to handle the higher monthly payments.
"I'm getting calls every day," said real estate agent Venesha Harris of the Loft Warehouse in Royal Oak. Homeowners "ask, 'What can I do?' It's desperate times out there."
Double jeopardy
Angela Armstrong agreed to a short sale on her Southfield property this year. Armstrong, who was laid off as a finance manager for Oak Park Schools in 2005, moved to Maryland soon after and placed her house on the market.
When it didn't sell, she leased it in May 2006 to a tenant for $1,000 a month, $237 short of the mortgage payment. The tenant has bounced five checks since then and a few months ago stopped paying rent altogether. Hoping to preserve her credit score, Armstrong struggled for a while to cover living expenses in both states.
"We were eating peanut butter," Armstrong said. Her home is now on the market for $105,000. She paid $137,000 for it in 2004. "We were tapped. We were always on the brink of losing everything."
There's a potential buyer for the property, and last week Armstrong evicted her nonpaying tenant and is hoping for a quick sale.
The main downside to the short sale, Armstrong said, is that she will lose the equity in the home.
"I just kind of walk away," she said. "I get nothing."
Still, if not for the short sale, "I probably would have been in foreclosure," she added. "I got to a point that I was either going to have a heart attack or let it go."
Getting a bank to agree to a short sale isn't always easy. Real estate agent Denise Consiglio said she worked for four weeks to try to get a lender to accept a short sale offer on a client's listing. By the time the bank agreed, the buyer was gone.
"They say we're willing to work with you, but their system is outdated," said Consiglio, who works for Real Estate One in Fraser. "If I told you," as a buyer, "it was going to take four weeks, what would you do?"
Consiglio and other agents say they will take reduced commissions to get banks to accept short-sale offers.
Even when lenders agree to a short sale, some may not be willing to take much below what they are owned, said Mandy Melone, a Realtor with Added Value Reality in Livonia.
But in some cases, lenders "are taking 50 cents on the dollar of what's owed them," said Melone, who has three short-sale listings and closed on 12 others in recent months.
Merriweather is hoping to put her short sale behind her. She plans to move to a home owned by her mother in Troy, rebuild her credit and eventually purchase another house.
"I'm going to try to build my money back up," Merriweather said. "We've got to do what we got to do until I get myself back together." (www.freep.com)
"It's not easy to come up with that kind of money when you don't have a job," said Merriweather, 29, who bought her home on Detroit's west side two years ago. "I was just like, 'Oh my God, I can't afford this house.' "
Merriweather hasn't made a mortgage payment since December. But instead of joining the 16,351 Detroiters whose properties were foreclosed on during the first quarter of the year, Merriweather began to work with her lender and agreed to sell her property in what's called a short sale. That's when the lender agrees to accept a lower price for a property than what the seller owes.
A short sale differs from a so-called upside-down sale, which happens when the homeowner is not at risk of foreclosure but must pay the difference between the purchase price and the principal owed at settlement.
Merriweather's situation illustrates the painful, yet simple math many homeowners face. She paid $140,000 for the house and owes roughly $127,000. The house is on the market for $125,000 and probably will sell for even less.
In a short sale, the buyer negotiates directly with the mortgage company through a real estate agent. The lender typically requires an appraisal and proof of hardship before allowing a short sale.
Sellers lose all equity, but they walk away without a foreclosure to mar their credit rating. The late payments will still be reported.
What many short-sale sellers don't realize is that they face income tax liabilities, too. Banks report the canceled debt as income for the seller to the Internal Revenue Service (though Congress is considering a bill that would amend the tax code to forgive the tax debt).
Banks on board
Real estate agents said they're advising more sellers who've fallen behind on payments to look at short sales as a way to avoid foreclosure and, increasingly, banks are willing to work with them.
Michigan has the 10th-highest foreclosure rate in the country -- with 29,467 foreclosures in the first quarter of the year, according to RealtyTrac, an Irvine, Calif., firm that publishes foreclosure data.
"The worst thing possible for a bank is to foreclose," said Eric Burgoon, group senior vice president of LaSalle Bank, based in Troy. Burgoon advises homeowners unable to pay their mortgage to contact the lender before missing a payment. Some may be able to refinance the mortgage at a lower interest rate or change the monthly payments.
"It's the last thing we want to do," Burgoon said. "It doesn't help the customer and it's the worst thing for us."
Many expect the number of short sales to grow. Property values have tanked in the state's overcrowded real estate market as unemployment rates have soared, leaving owners unable to sell their homes for what they owe on the mortgage.
The ranks of financially strapped homeowners also likely will increase as those with adjustable-rate mortgages find themselves unable to handle the higher monthly payments.
"I'm getting calls every day," said real estate agent Venesha Harris of the Loft Warehouse in Royal Oak. Homeowners "ask, 'What can I do?' It's desperate times out there."
Double jeopardy
Angela Armstrong agreed to a short sale on her Southfield property this year. Armstrong, who was laid off as a finance manager for Oak Park Schools in 2005, moved to Maryland soon after and placed her house on the market.
When it didn't sell, she leased it in May 2006 to a tenant for $1,000 a month, $237 short of the mortgage payment. The tenant has bounced five checks since then and a few months ago stopped paying rent altogether. Hoping to preserve her credit score, Armstrong struggled for a while to cover living expenses in both states.
"We were eating peanut butter," Armstrong said. Her home is now on the market for $105,000. She paid $137,000 for it in 2004. "We were tapped. We were always on the brink of losing everything."
There's a potential buyer for the property, and last week Armstrong evicted her nonpaying tenant and is hoping for a quick sale.
The main downside to the short sale, Armstrong said, is that she will lose the equity in the home.
"I just kind of walk away," she said. "I get nothing."
Still, if not for the short sale, "I probably would have been in foreclosure," she added. "I got to a point that I was either going to have a heart attack or let it go."
Getting a bank to agree to a short sale isn't always easy. Real estate agent Denise Consiglio said she worked for four weeks to try to get a lender to accept a short sale offer on a client's listing. By the time the bank agreed, the buyer was gone.
"They say we're willing to work with you, but their system is outdated," said Consiglio, who works for Real Estate One in Fraser. "If I told you," as a buyer, "it was going to take four weeks, what would you do?"
Consiglio and other agents say they will take reduced commissions to get banks to accept short-sale offers.
Even when lenders agree to a short sale, some may not be willing to take much below what they are owned, said Mandy Melone, a Realtor with Added Value Reality in Livonia.
But in some cases, lenders "are taking 50 cents on the dollar of what's owed them," said Melone, who has three short-sale listings and closed on 12 others in recent months.
Merriweather is hoping to put her short sale behind her. She plans to move to a home owned by her mother in Troy, rebuild her credit and eventually purchase another house.
"I'm going to try to build my money back up," Merriweather said. "We've got to do what we got to do until I get myself back together." (www.freep.com)
Friday, May 18, 2007
A better balance
If you are a tenant down on your luck and unable to pay your rent, Baltimore is not a great place to be. You may or may not receive notice that you are about to be evicted, and the landlord can toss all your belongings onto the street. City Council member Kenneth N. Harris Sr. and Mayor Sheila Dixon have done a service by bringing landlords and tenants together and pushing legislation - introduced in the City Council yesterday - that strikes a better balance.
The changes are welcome and long overdue.
About 50 percent of Baltimore families were renters in 2006, and many use so much of their monthly income to keep a roof over their heads that any crisis or emergency leaves them behind in rent payments. The result: about 7,000 evictions a year, with no formal requirement for notice to the tenant of when the eviction will take place.
Sometimes a tenant leaves things in the dwelling while trying desperately to scrounge up back rent money, and sometimes the tenant intentionally abandons unwanted items. In either case, the landlord may be left to dispose of the items. And while many landlords are responsible enough to take them to a storage facility or to the dump, many others simply junk them on city streets.
For a tenant who is trying to comply, it's a slap in the face and an affront to basic dignity. The 2,900 tons of furniture, clothing and other belongings tossed outside are also major eyesores that blight many neighborhoods. In addition, it costs the city's Department of Public Works more than $800,000 a year for proper pick-up and disposal - money that could be used more productively to achieve Mayor Dixon's goal of a "cleaner, greener" city. Those are among the reasons the mayor's office worked with Mr. Harris to come up with the new bill.
The bill would give tenants more formal notice of when the eviction would take effect and would prohibit landlords from dumping the evicted tenants' possessions on city streets. Tenants would also have three days in which to reclaim their belongings.
Many other major cities provide storage for seven to 60 days; Baltimore would better serve all its residents by following those examples.
In a city where the median income for renters is less than $25,000 and a two-bedroom unit typically rents for more than $1,000 a month, the larger solution is more affordable housing. But offering a little more protection for tenants' belongings while keeping city streets cleaner is at least one step in the right direction.(baltimoresun.com)
The changes are welcome and long overdue.
About 50 percent of Baltimore families were renters in 2006, and many use so much of their monthly income to keep a roof over their heads that any crisis or emergency leaves them behind in rent payments. The result: about 7,000 evictions a year, with no formal requirement for notice to the tenant of when the eviction will take place.
Sometimes a tenant leaves things in the dwelling while trying desperately to scrounge up back rent money, and sometimes the tenant intentionally abandons unwanted items. In either case, the landlord may be left to dispose of the items. And while many landlords are responsible enough to take them to a storage facility or to the dump, many others simply junk them on city streets.
For a tenant who is trying to comply, it's a slap in the face and an affront to basic dignity. The 2,900 tons of furniture, clothing and other belongings tossed outside are also major eyesores that blight many neighborhoods. In addition, it costs the city's Department of Public Works more than $800,000 a year for proper pick-up and disposal - money that could be used more productively to achieve Mayor Dixon's goal of a "cleaner, greener" city. Those are among the reasons the mayor's office worked with Mr. Harris to come up with the new bill.
The bill would give tenants more formal notice of when the eviction would take effect and would prohibit landlords from dumping the evicted tenants' possessions on city streets. Tenants would also have three days in which to reclaim their belongings.
Many other major cities provide storage for seven to 60 days; Baltimore would better serve all its residents by following those examples.
In a city where the median income for renters is less than $25,000 and a two-bedroom unit typically rents for more than $1,000 a month, the larger solution is more affordable housing. But offering a little more protection for tenants' belongings while keeping city streets cleaner is at least one step in the right direction.(baltimoresun.com)
All Bets Are Off for Housing Sector Recovery
Housing Slide Continues in April as Inventory Remains High and Demand Soft
The U.S. housing market continues to search for a bottom. The latest housing figures for April show prices, sales, building permits, housing completions and industry confidence all continuing to deteriorate. The continued weakening also has analysts and economists adjusting their forecasts for the rest of the year downward - again.
The national median existing single-family home price fell to $212,300 in the first quarter, down 1.8% from a year ago when the median price was $216,100, according to the National Association of Realtors.
Total existing-home sales were down 6.6% in the first quarter compared to a year ago.
Privately-owned housing units authorized by building permits in April were down 8.9% from March and 28.1% from a year ago.
Privately-owned housing completions in April were down 5.8% from March and 26% a year ago.
While the NAR points out that 82 of 145 metros showed price increases from a year ago, the organization also notes that the largest single-family home price increase were in out of the way areas or severely depressed markets. For example in the Cumberland area of Maryland and West Virginia, the median price of $100,000 was 17.1% higher than a year earlier. Next was Beaumont-Port Arthur, TX, at $115,800, up 16.5% from the first quarter of 2006, followed by the Gulfport-Biloxi area of Mississippi, where the first quarter median price increased 15.7% to $153,700.
More typical of the major housing markets is what has been occurring in Florida.
Statewide, sales of single-family existing homes totaled 33,748 during the three-month period, a decrease of 26% compared to the same time a year earlier, according to the Florida Association of Realtors.
The statewide existing-home median sales price was $237,000 in the first quarter; a year ago, it was $243,500 for a decrease of 3%.
"The bottom line for housing is that it has had a significant depressing effect on real GDP growth over the past six months or so," said Janet L. Yellen, president and CEO of the Federal Reserve Bank of San Francisco. "While I wouldn't be surprised to see it begin to turn around in the latter half of this year, I also wouldn't want to bet on it. In other words, housing remains a significant drag on the economy."
Residential investment contracted at a 17% annual rate in the first quarter, knocking off about 1 percentage point from annualized real GDP growth, according to the San Francisco Fed. In the fourth quarter of last year, residential construction fell at a rate of more than 19%, trimming overall growth by about 1.25 percentage points.
There is still the risk that residential investment will slip further given the sizeable overhang of inventories of unsold new single-family homes, the rise in the homeowner vacancy rate, the still weak demand for single-family houses, and the tightening of credit conditions for home mortgage borrowers, the San Francisco Fed said.
As a consequence this week, the National Association of Realtors revised its housing forecast for the year, saying it expected it to be "somewhat lower," due in part to stricter lending standards and the evaporation of subprime mortgage origination.
Existing-home sales are now projected to total 6.29 million this year and 6.49 million in 2008, compared with 6.48 million last year. New-home sales are projected at 864,000 in 2007 and 936,000 next year, lower than the 1.05 million in 2006. Housing starts should total 1.46 million units this year and 1.52 million in 2008, down from 1.8 million last year.
The 30-year fixed-rate mortgage should rise slowly to 6.5% by the fourth quarter. Last week, Freddie Mac reported the 30-year rate was 6.16%.
Ongoing concerns about subprime-related problems in the mortgage market have also caused builder confidence about the state of housing demand to erode, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The index is at its lowest level in its current cycle, which was previously hit in September of 2006.
"Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead," said Brian Catalde, NAHB president and a homebuilder from El Segundo, CA.
"The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated," added David Seiders, NAHB chief economist. "We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market."
More telling perhaps are the adjustments homebuilders are making to their original forecasts.
"Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets, said Robert I. Toll, chairman and CEO of Toll Brothers Inc. "Although there is variation among markets, our traffic this quarter on average has been flat on a gross basis and down approximately 20% on a per community, same-store basis, compared to last year's second quarter."
"Given the current state of the market, we no longer expect to achieve the most recent guidance we provided when we announced first quarter earnings," Toll added.
Going into the year, Toll Brothers estimated it would take about $60 million in impairment charges this year. It will blow way through that before midyear.
"While we have not yet finalized our analysis, we estimate that write-downs pretax in the second quarter will be between $90 million and $130 million, nearly all of which are impairments on communities we already own," Toll said. (costar.com)
The U.S. housing market continues to search for a bottom. The latest housing figures for April show prices, sales, building permits, housing completions and industry confidence all continuing to deteriorate. The continued weakening also has analysts and economists adjusting their forecasts for the rest of the year downward - again.
The national median existing single-family home price fell to $212,300 in the first quarter, down 1.8% from a year ago when the median price was $216,100, according to the National Association of Realtors.
Total existing-home sales were down 6.6% in the first quarter compared to a year ago.
Privately-owned housing units authorized by building permits in April were down 8.9% from March and 28.1% from a year ago.
Privately-owned housing completions in April were down 5.8% from March and 26% a year ago.
While the NAR points out that 82 of 145 metros showed price increases from a year ago, the organization also notes that the largest single-family home price increase were in out of the way areas or severely depressed markets. For example in the Cumberland area of Maryland and West Virginia, the median price of $100,000 was 17.1% higher than a year earlier. Next was Beaumont-Port Arthur, TX, at $115,800, up 16.5% from the first quarter of 2006, followed by the Gulfport-Biloxi area of Mississippi, where the first quarter median price increased 15.7% to $153,700.
More typical of the major housing markets is what has been occurring in Florida.
Statewide, sales of single-family existing homes totaled 33,748 during the three-month period, a decrease of 26% compared to the same time a year earlier, according to the Florida Association of Realtors.
The statewide existing-home median sales price was $237,000 in the first quarter; a year ago, it was $243,500 for a decrease of 3%.
"The bottom line for housing is that it has had a significant depressing effect on real GDP growth over the past six months or so," said Janet L. Yellen, president and CEO of the Federal Reserve Bank of San Francisco. "While I wouldn't be surprised to see it begin to turn around in the latter half of this year, I also wouldn't want to bet on it. In other words, housing remains a significant drag on the economy."
Residential investment contracted at a 17% annual rate in the first quarter, knocking off about 1 percentage point from annualized real GDP growth, according to the San Francisco Fed. In the fourth quarter of last year, residential construction fell at a rate of more than 19%, trimming overall growth by about 1.25 percentage points.
There is still the risk that residential investment will slip further given the sizeable overhang of inventories of unsold new single-family homes, the rise in the homeowner vacancy rate, the still weak demand for single-family houses, and the tightening of credit conditions for home mortgage borrowers, the San Francisco Fed said.
As a consequence this week, the National Association of Realtors revised its housing forecast for the year, saying it expected it to be "somewhat lower," due in part to stricter lending standards and the evaporation of subprime mortgage origination.
Existing-home sales are now projected to total 6.29 million this year and 6.49 million in 2008, compared with 6.48 million last year. New-home sales are projected at 864,000 in 2007 and 936,000 next year, lower than the 1.05 million in 2006. Housing starts should total 1.46 million units this year and 1.52 million in 2008, down from 1.8 million last year.
The 30-year fixed-rate mortgage should rise slowly to 6.5% by the fourth quarter. Last week, Freddie Mac reported the 30-year rate was 6.16%.
Ongoing concerns about subprime-related problems in the mortgage market have also caused builder confidence about the state of housing demand to erode, according to the National Association of Home Builders/Wells Fargo Housing Market Index.
The index is at its lowest level in its current cycle, which was previously hit in September of 2006.
"Builders are feeling the impacts of tighter lending standards on current home sales as well as cancellations, and they are bracing for continued challenges ahead," said Brian Catalde, NAHB president and a homebuilder from El Segundo, CA.
"The crisis in the subprime sector has infected other parts of the mortgage market as well as consumer psychology, and as a result the housing outlook has deteriorated," added David Seiders, NAHB chief economist. "We're now projecting that home sales and housing production will not begin improving until late this year, and we're expecting the early stages of the subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to the subprime crisis that is having widespread effects throughout the mortgage market."
More telling perhaps are the adjustments homebuilders are making to their original forecasts.
"Twenty months into this housing downturn, we continue to face difficult conditions in most of our markets, said Robert I. Toll, chairman and CEO of Toll Brothers Inc. "Although there is variation among markets, our traffic this quarter on average has been flat on a gross basis and down approximately 20% on a per community, same-store basis, compared to last year's second quarter."
"Given the current state of the market, we no longer expect to achieve the most recent guidance we provided when we announced first quarter earnings," Toll added.
Going into the year, Toll Brothers estimated it would take about $60 million in impairment charges this year. It will blow way through that before midyear.
"While we have not yet finalized our analysis, we estimate that write-downs pretax in the second quarter will be between $90 million and $130 million, nearly all of which are impairments on communities we already own," Toll said. (costar.com)
Thursday, May 17, 2007
HUD to seek ban on mortgage 'aid'
WASHINGTON // The Department of Housing and Urban Development plans to seek a ban on a certain type of down payment assistance that has grown sevenfold this decade and contributed to a surge in foreclosures of government-backed mortgages.
Nonprofit groups, such as Nehemiah Corp. of America and AmeriDream Inc. of Gaithersburg, Md., provide the down payment help and are then reimbursed by the seller. The programs are "a contributing factor of increased risk in our portfolio" of loans, HUD spokesman Lemar Wooley said in an e-mail.
HUD plans to propose the ban this month for public comment, possibly as early as this week, Wooley said. More than 100,000 low- and moderate-income consumers bought homes using such programs last year.
The percentage of foreclosures on these homes is more than double that on other loans sponsored by the Federal Housing Administration, according to agency audits.
Once HUD issues its rule proposal, industry and consumer groups will have 60 days to submit comments.
In 1999, HUD proposed a similar ban and withdrew it in 2001 after industry opposition.
Foreclosures rose last year in the Baltimore metropolitan area - particularly the suburbs - as problematic loans and a housing market slowdown buffeted new owners with little equity.
But FHA loans weren't part of the problem. HUD records show a significant drop in FHA foreclosures, the result of aggressive efforts to stem the fallout from illegal flipping in the late 1990s.
Vincent P. Quayle, executive director of the St. Ambrose Housing Aid Center, a Baltimore nonprofit that does not offer seller-financed assistance, believes fewer local homebuyers have turned to such programs in the past few years because they can obtain assistance through the city and the state.
But he's still pleased to hear HUD is trying for a ban on seller-financed help. He said buyers paid for that help, literally: "The seller would just raise the price."
Under the program, groups including Sacramento, Calif., Nehemiah and AmeriDream give buyers an average of about $3,400 for a down payment.
They are then reimbursed by sellers of the house, who also pay a service fee. The arrangement was designed to circumvent U.S. rules that bar sellers from giving direct assistance.
Sellers have tried to recover the cost of the fee they pay nonprofits by raising the price of the house an average of 3 percent, a 2005 study by Congress' nonpartisan Government Accountability Office found.
The number of FHA-backed homes purchased with nonprofit assistance has risen to 102,921 in 2006 from 14,603 in 2000, HUD data show. While these payments accounted for just 2 percent of all FHA loans in 2000, they soared to 33 percent of the loans last year.
The Internal Revenue Service held last year that groups providing down payment assistance did not quality for tax exemptions and said it was examining the practices of 185 nonprofits. AmeriDream and Nehemiah said they are in talks with the IRS.
(Bloomberg News, baltimoresun.com)
Nonprofit groups, such as Nehemiah Corp. of America and AmeriDream Inc. of Gaithersburg, Md., provide the down payment help and are then reimbursed by the seller. The programs are "a contributing factor of increased risk in our portfolio" of loans, HUD spokesman Lemar Wooley said in an e-mail.
HUD plans to propose the ban this month for public comment, possibly as early as this week, Wooley said. More than 100,000 low- and moderate-income consumers bought homes using such programs last year.
The percentage of foreclosures on these homes is more than double that on other loans sponsored by the Federal Housing Administration, according to agency audits.
Once HUD issues its rule proposal, industry and consumer groups will have 60 days to submit comments.
In 1999, HUD proposed a similar ban and withdrew it in 2001 after industry opposition.
Foreclosures rose last year in the Baltimore metropolitan area - particularly the suburbs - as problematic loans and a housing market slowdown buffeted new owners with little equity.
But FHA loans weren't part of the problem. HUD records show a significant drop in FHA foreclosures, the result of aggressive efforts to stem the fallout from illegal flipping in the late 1990s.
Vincent P. Quayle, executive director of the St. Ambrose Housing Aid Center, a Baltimore nonprofit that does not offer seller-financed assistance, believes fewer local homebuyers have turned to such programs in the past few years because they can obtain assistance through the city and the state.
But he's still pleased to hear HUD is trying for a ban on seller-financed help. He said buyers paid for that help, literally: "The seller would just raise the price."
Under the program, groups including Sacramento, Calif., Nehemiah and AmeriDream give buyers an average of about $3,400 for a down payment.
They are then reimbursed by sellers of the house, who also pay a service fee. The arrangement was designed to circumvent U.S. rules that bar sellers from giving direct assistance.
Sellers have tried to recover the cost of the fee they pay nonprofits by raising the price of the house an average of 3 percent, a 2005 study by Congress' nonpartisan Government Accountability Office found.
The number of FHA-backed homes purchased with nonprofit assistance has risen to 102,921 in 2006 from 14,603 in 2000, HUD data show. While these payments accounted for just 2 percent of all FHA loans in 2000, they soared to 33 percent of the loans last year.
The Internal Revenue Service held last year that groups providing down payment assistance did not quality for tax exemptions and said it was examining the practices of 185 nonprofits. AmeriDream and Nehemiah said they are in talks with the IRS.
(Bloomberg News, baltimoresun.com)
Wednesday, May 16, 2007
Baltimore City: Affordable housing at a premium
The Baltimore region lacks a supply of affordable housing, a local housing official said. BALTIMORE (Map, News) - Work force housing is a key to the future of Baltimore-area real estate. For the housing market to be successful, it must create a system to support people moving from low-income housing to moderate- and then high-income homes, Ilene Kessler, president of the Maryland Association of Realtors, told The Examiner.
Work force housing is at the core of that cycle, creating stable, affordable options for local hardworking residents, she said.
With an influx of middle-class and blue-collar workers coming to the area as a result of the Base Realignment and Closure initiative, finding and identifying housing to meet their needs will be key, Kessler said.
“This is something [everyone working together] has to address and can’t say another community will handle it,” Kessler said. “It affects all of us and is a pressing issue.”
People who read this also read:
Kettler buys Pentagon City parcel for $220M
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Housing Slump Continues in April
Richardson holds stock in oil refinery firm
In the Baltimore region, March statistics by Metropolitan Regional Information Systems have houses selling for an average of $306,588. Locally, Anne Arundel County, where Fort Meade is, has homes going for an average of $395,037, while nearby Baltimore City remains more affordable at $178,019. In Harford County, where the Aberdeen Proving Ground is, homes are selling for an average of $296,432.
“The region lacks an adequate supply of housing in decent condition that is available to a wide range of low- and moderate-income households,” said Tania Baker, acting director of communications for Baltimore Housing.
About 28,000 new households will soon move to the area, with about 24,000 of these being homebuyers, the Maryland BRAC study conducted by the Maryland Department of Business and Economic Development found.
With the Mortgage Bankers Association reporting that Maryland had a 12.39 percent increase in subprime loans for the last quarter, Kessler said it was important that people in the housing market work together to keep these potential buyers in their homes.
(examiner.com)
Work force housing is at the core of that cycle, creating stable, affordable options for local hardworking residents, she said.
With an influx of middle-class and blue-collar workers coming to the area as a result of the Base Realignment and Closure initiative, finding and identifying housing to meet their needs will be key, Kessler said.
“This is something [everyone working together] has to address and can’t say another community will handle it,” Kessler said. “It affects all of us and is a pressing issue.”
People who read this also read:
Kettler buys Pentagon City parcel for $220M
Potential neighbors to relocated clubs to get $3.6M in road improvements
Tanker driver in fiery crash was carrying ethanol
Housing Slump Continues in April
Richardson holds stock in oil refinery firm
In the Baltimore region, March statistics by Metropolitan Regional Information Systems have houses selling for an average of $306,588. Locally, Anne Arundel County, where Fort Meade is, has homes going for an average of $395,037, while nearby Baltimore City remains more affordable at $178,019. In Harford County, where the Aberdeen Proving Ground is, homes are selling for an average of $296,432.
“The region lacks an adequate supply of housing in decent condition that is available to a wide range of low- and moderate-income households,” said Tania Baker, acting director of communications for Baltimore Housing.
About 28,000 new households will soon move to the area, with about 24,000 of these being homebuyers, the Maryland BRAC study conducted by the Maryland Department of Business and Economic Development found.
With the Mortgage Bankers Association reporting that Maryland had a 12.39 percent increase in subprime loans for the last quarter, Kessler said it was important that people in the housing market work together to keep these potential buyers in their homes.
(examiner.com)
NovaStar accused of redlining Baltimore row houses
Subprime lender NovaStar Financial Inc. has been hit with a Fair Housing Act lawsuit charging that it refused to make mortgage loans for purchases of row houses in Baltimore.
The lawsuit, filed Wednesday by the National Community Reinvestment Coalition (NCRC), also alleges that NovaStar had a written policy instructing loan officers to reject mortgage applications involving property on American Indian reservations or homes used for adult foster care.
A NovaStar spokesman did not immediately return a call from Inman News, but reportedly called the claims without merit and said NovaStar will fight them.
In its complaint, NCRC said that on two occasions in 2006 it used a "tester" to call NovaStar about obtaining a loan on a row house in Baltimore.
In the first call in January 2006, "After the tester stated that the house was a row house, the agent stated that the company had stopped financing row houses a few months before the tester's call," the complaint alleged. "The agent asked where the house was located, and ... after looking up the address, the agent informed the tester that 'we don't do row houses in Baltimore.' "
A call the following month produced similar results, and the complaint alleges that "NovaStar has continued to enforce this policy up to the present time."
The policy is discriminatory because of the high concentration of African Americans and Latinos in Baltimore, the suit alleges.
"A loan applicant in Baltimore with a row house, despite having substantial assets, a strong FICO score, a low LTV (loan-to-value) and or/DTI (debt-to-income) ratio, and steady income, would not qualify for a loan of any size," NCRC alleged.
The suit said NCRC filed a complaint with the U.S. Department of Housing and Urban Development on March 16, 2006, alleging that NovaStar's no-row-house policy violated the Fair Housing Act, which HUD has not acted on.
NCRC -- a coalition of 640 nonprofit organizations that promotes the investment of private capital in underserved communities -- was awarded $500,000 in September after filing a similar complaint with HUD about the lending practices of SouthStar Funding LLC. HUD negotiated a settlement in which SouthStar agreed to fund NCRC programs over a four-year period, including training seminars for housing counselors.
As part of its lawsuit against NovaStar, NCRC cited as evidence a manual issued to company employees that listed "unacceptable property types" for loans, including "properties located on Indian reservations" and "properties used for adult foster care."
NCRC said the alleged "no Indian reservation policy" has "the purpose and effect of limiting access to capital for Native Americans," noting that Native Americans make up more than half the population of reservations nationwide. The alleged policy against financing properties used for adult foster care "excludes homes typically licensed for people with disabilities" resulting in an "adverse impact on loan applicants associated with, or living with, persons with disabilities."
The lawsuit seeks an injunction against NovaStar forcing it to halt its alleged discriminatory practices, and also seeks compensatory and punitive damages
The lawsuit, filed Wednesday by the National Community Reinvestment Coalition (NCRC), also alleges that NovaStar had a written policy instructing loan officers to reject mortgage applications involving property on American Indian reservations or homes used for adult foster care.
A NovaStar spokesman did not immediately return a call from Inman News, but reportedly called the claims without merit and said NovaStar will fight them.
In its complaint, NCRC said that on two occasions in 2006 it used a "tester" to call NovaStar about obtaining a loan on a row house in Baltimore.
In the first call in January 2006, "After the tester stated that the house was a row house, the agent stated that the company had stopped financing row houses a few months before the tester's call," the complaint alleged. "The agent asked where the house was located, and ... after looking up the address, the agent informed the tester that 'we don't do row houses in Baltimore.' "
A call the following month produced similar results, and the complaint alleges that "NovaStar has continued to enforce this policy up to the present time."
The policy is discriminatory because of the high concentration of African Americans and Latinos in Baltimore, the suit alleges.
"A loan applicant in Baltimore with a row house, despite having substantial assets, a strong FICO score, a low LTV (loan-to-value) and or/DTI (debt-to-income) ratio, and steady income, would not qualify for a loan of any size," NCRC alleged.
The suit said NCRC filed a complaint with the U.S. Department of Housing and Urban Development on March 16, 2006, alleging that NovaStar's no-row-house policy violated the Fair Housing Act, which HUD has not acted on.
NCRC -- a coalition of 640 nonprofit organizations that promotes the investment of private capital in underserved communities -- was awarded $500,000 in September after filing a similar complaint with HUD about the lending practices of SouthStar Funding LLC. HUD negotiated a settlement in which SouthStar agreed to fund NCRC programs over a four-year period, including training seminars for housing counselors.
As part of its lawsuit against NovaStar, NCRC cited as evidence a manual issued to company employees that listed "unacceptable property types" for loans, including "properties located on Indian reservations" and "properties used for adult foster care."
NCRC said the alleged "no Indian reservation policy" has "the purpose and effect of limiting access to capital for Native Americans," noting that Native Americans make up more than half the population of reservations nationwide. The alleged policy against financing properties used for adult foster care "excludes homes typically licensed for people with disabilities" resulting in an "adverse impact on loan applicants associated with, or living with, persons with disabilities."
The lawsuit seeks an injunction against NovaStar forcing it to halt its alleged discriminatory practices, and also seeks compensatory and punitive damages
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