The real estate slump in Baltimore County could drag through 2008 and pull more house prices down with it, local market-watchers warn.
The number of houses sold across the county this June fell 17 percent below sales in June 2006, according to statistics released by Metropolitan Regional Information Systems, a Rockville firm that tracks real estate sales.
The total dollar value of homes sold dropped 14 percent below June 2006 sales while the time it took to sell a house jumped 71 percent from 42 days to 72 days, the firm reported.
The average price of houses sold in Baltimore County, however, increased 3.5 percent to $326,744.
But county real estate agents warn buyers not to hang their hopes on that thin, silver lining. Around the county, some house prices have already dropped.
Prices in northwest Baltimore County have been flat since last summer and now "prices definitely are coming down, but they're not plunging," said Nnaemeka Chima, broker with the Pikesville-based real estate company Chima Group. The average time to sell a house in the northwestern part of the county, he added, now tops three months.
Marc Witman, a former president of the Greater Baltimore Board of Realtors and a principle with Yerman Witman Gaines & Garceau Realty in Baltimore, said he sees particular weakness in Pikesville and Owings Mills, where a large inventory of houses is on the market and many of those houses are similar or nearly identical.
It's a dilemma with which Owings Mills homeowner Jonathan Redley is all too familiar.
When he put his Pleasant Walk town house in Owings Mills on the market April 1, Redley knew not to anticipate a quick sale. But he wasn't expecting to go four full months without a single offer.
"The house shows beautifully. We get great compliments after every showing and we have two to three showings every week," he said.
Redley and his wife have cut their asking price from $265,000 to $260,000, sweetened the pot with a home warranty and are now considering offering to cover some of the buyer's closing costs. But there are six other nearly identical town houses up for sale in Pleasant Walk and dozens more town houses on the market just in Owings Mills.
"So buyers can afford to be very choosy," Redley said.
Sometimes a buyer's choice, he said, is determined by such fine points as which house has the nicer bathtub.
Across the county, more than 4,200 homes were up for sale at the end of June.
Several factors have created a tougher market for house sellers. Double-digit price hikes in recent years placed many houses outside the average buyer's price range. Meanwhile, this year's wave of foreclosures has prompted some lending institutions to stop offering subprime mortgages and other unconventional loans that had enabled moderate-income buyers to purchase a house.
Those factors could force more sellers to trim their asking price, Chima and Witman said.
"This is economics 101. Sellers for the most part have not yet gotten the idea that they need to be more price-sensitive because buyers are very much more price-sensitive and value-oriented than they have been in the last few years," Witman said.
Many sellers are having difficulty realizing they can't follow a recent practice of pricing their house several thousand dollars above the most recent sale in the neighborhood, Chima said.
"It can be very humbling when you realize the boom is over and you've missed it," he said.
Chima says the region's current real estate market is a normal, stable market. Unique and top-quality houses are still selling quickly for high prices. Chima added, however, that he doesn't expect to see prices rise again until the summer of 2009.
But Redley said there is an upside to the current market.
When Redley and his wife bought their Pleasant Walk town house in the hot market of 2005, they had to jump at the opportunity and offer above asking price to beat out competing bidders.
Now the couple, who are expecting their first baby, are shopping for a single-family home. They've found three or four Owings Mills houses they like, and those properties aren't selling either. So when they're ready to make an offer, Redley said, he expects he'll be able to go back to the same homes and have the luxury of negotiating a good price. (owingsmillstimes.com)
Showing posts with label real estate. Show all posts
Showing posts with label real estate. Show all posts
Tuesday, August 14, 2007
Thursday, August 9, 2007
Housing official aims to enforce rehab rules
Baltimore's housing department is stepping up enforcement of a program used to sell city-owned property to ensure that buyers who purchase homes from the city follow through on promised renovations, the city's housing commissioner told a City Council committee on Aug 1st.
City Housing Commissioner Paul T. Graziano told the City Council's Taxation and Finance Committee that the city is using housing inspectors to check up on properties sold through the city's SCOPE program to make sure the properties are being renovated within 18 months, instead of sitting vacant.
"We're tracking it more closely with our inspectors to make sure the work is actually being done," Graziano said.
SCOPE, which stands for Selling City Owned Properties Efficiently, has come under scrutiny in recent months. Officials said 186 properties have been sold under SCOPE, compared with thousands of derelict properties in Baltimore that are owned by the city.
The city has the ability to take back properties where development has not taken place, but has not yet done so in any instance, Graziano said. (Baltimore Sun)
City Housing Commissioner Paul T. Graziano told the City Council's Taxation and Finance Committee that the city is using housing inspectors to check up on properties sold through the city's SCOPE program to make sure the properties are being renovated within 18 months, instead of sitting vacant.
"We're tracking it more closely with our inspectors to make sure the work is actually being done," Graziano said.
SCOPE, which stands for Selling City Owned Properties Efficiently, has come under scrutiny in recent months. Officials said 186 properties have been sold under SCOPE, compared with thousands of derelict properties in Baltimore that are owned by the city.
The city has the ability to take back properties where development has not taken place, but has not yet done so in any instance, Graziano said. (Baltimore Sun)
Thursday, August 2, 2007
Md. bubble economy feels chill wind from nation's credit crisis
There are still reasons to believe the housing heartache won't badly hurt the rest of the economy, but not as many as a few days ago.
Countrywide Financial Corp., which handles nearly a fifth of all U.S. mortgages, reported soaring delinquencies, falling profits and increased default risk last week. Baltimore's First Mariner Bancorp disclosed similar problems.
Sales of existing homes fell for the fourth month in a row, and more than expected. New-home sales were even worse. Homebuilders also reported worse-than-predicted results as sales plunged and assets depreciated.
And the stock market, one proxy for the larger economy, had its worst week in nearly five years.
"To this point we have not seen significant spillovers from the housing sector into other parts of the economy," Federal Reserve Chairman Ben S. Bernanke told Congress nine days ago.
Wonder what he thinks now?
Nobody expected the home and mortgage businesses to thrive anytime soon. But nobody expected Countrywide chief executive Angelo R. Mozilo to start comparing the current environment with that of the Great Depression. Nobody figured on a spike in soured loans to homeowners with good credit ratings.
Nobody expected the collapse of two New York hedge funds investing in subprime mortgages to kick up dust in Baltimore. Nobody expected a bunch of First Mariner's mortgages in Northern Virginia to go bad less than three months after they were issued.
"I've never had anything like this happen to me," First Mariner Chief Executive Officer Edwin F. Hale Sr. said last week.
This from a guy who has been wheeling and dealing for decades and became chairman of the Bank of Baltimore after it had to foreclose on 13 hotel projects in the early 1990s. Hale took control of the bank through a proxy fight and sold it before starting First Mariner.
Until very recently, economic optimists had comforted themselves with the notion that housing problems were "contained."
The biggest were confined to Florida, California and maybe a few Midwestern states, they said. Only the worst combinations of upward-adjusting interest rates and poorly qualified borrowers would cause defaults. Homebuilder stocks were still a good long-term bet.
Unemployment was still low, implying plenty of personal income to pay mortgages. Things would pick up in the spring home-buying season, people figured.
But there was no season, it is now apparent. At least not enough of one to prevent a downward spiral in states such as Nevada, Arizona, Illinois, Ohio, Indiana, Maryland and Virginia.
The salve of federal money that has protected the Baltimore-Washington region from economic pain is losing its effectiveness. Half of First Mariner's problem loans were in Northern Virginia, home of a defense-spending spree since 2001. The rest were in several other states.
First Mariner had sold the loans to New York investment house Bear Stearns Cos., but it was required to repurchase them when borrowers began missing payments. This month Bear Stearns disclosed that two of its subprime mortgage investment pools called hedge funds were all but worthless.
Hale thinks some of the mortgages may have been issued to "flippers" seeking a quick buck, violating contract terms requiring the money to be applied to a primary residence.
Even so, the delinquencies don't speak well of the Northern Virginia economy or, by implication, Maryland's, which has been operating in the same federal bubble.
Now even mortgages issued to well-qualified borrowers are at risk. The Mortgage Bankers Association had already reported an uptick in soured "prime" loans for the first quarter. Foreclosure rates in Indiana, Ohio and Michigan exceeded those in Texas during the oil bust in the 1980s, the association said.
Last week Countrywide said more borrowers with good credit records were missing payments - and not just on loans whose low "teaser" rates were adjusting upward. Some were delinquent because of unemployment, which suggests an economywide problem. And the crescendo of adjusting loans continues; plenty of three-year adjustables issued in recent years have yet to reset to market rates and ding family finances.
Homebuilder stocks are revisiting lows of last summer, and now trauma has spread across the securities spectrum.
It wasn't just most stocks that sold off last week. Corporate bonds took a header, too, which could presage a credit crunch and slower growth.
All this occurs on an economic foundation that wasn't solid to begin with. National employment growth has slowed from last year, and so has Maryland's.
The metro-Baltimore economy "has taken a sharp hit in the past six months, with job growth coming in well below the national pace thus far this year," Economy.com's Rakesh Shankar wrote recently. "This is a marked deviation from the previous five years."
It's not hopeless. The low dollar will boost U.S. exports. Interest rates should fall (it's time to start now, Chairman Bernanke), which will help. Maryland is getting tens of thousands of defense-related jobs, which will help even more. We won't see a recession.
But we will see even slower growth, and the housing industry will be the chief ball and chain. (baltimoresun.com)
Countrywide Financial Corp., which handles nearly a fifth of all U.S. mortgages, reported soaring delinquencies, falling profits and increased default risk last week. Baltimore's First Mariner Bancorp disclosed similar problems.
Sales of existing homes fell for the fourth month in a row, and more than expected. New-home sales were even worse. Homebuilders also reported worse-than-predicted results as sales plunged and assets depreciated.
And the stock market, one proxy for the larger economy, had its worst week in nearly five years.
"To this point we have not seen significant spillovers from the housing sector into other parts of the economy," Federal Reserve Chairman Ben S. Bernanke told Congress nine days ago.
Wonder what he thinks now?
Nobody expected the home and mortgage businesses to thrive anytime soon. But nobody expected Countrywide chief executive Angelo R. Mozilo to start comparing the current environment with that of the Great Depression. Nobody figured on a spike in soured loans to homeowners with good credit ratings.
Nobody expected the collapse of two New York hedge funds investing in subprime mortgages to kick up dust in Baltimore. Nobody expected a bunch of First Mariner's mortgages in Northern Virginia to go bad less than three months after they were issued.
"I've never had anything like this happen to me," First Mariner Chief Executive Officer Edwin F. Hale Sr. said last week.
This from a guy who has been wheeling and dealing for decades and became chairman of the Bank of Baltimore after it had to foreclose on 13 hotel projects in the early 1990s. Hale took control of the bank through a proxy fight and sold it before starting First Mariner.
Until very recently, economic optimists had comforted themselves with the notion that housing problems were "contained."
The biggest were confined to Florida, California and maybe a few Midwestern states, they said. Only the worst combinations of upward-adjusting interest rates and poorly qualified borrowers would cause defaults. Homebuilder stocks were still a good long-term bet.
Unemployment was still low, implying plenty of personal income to pay mortgages. Things would pick up in the spring home-buying season, people figured.
But there was no season, it is now apparent. At least not enough of one to prevent a downward spiral in states such as Nevada, Arizona, Illinois, Ohio, Indiana, Maryland and Virginia.
The salve of federal money that has protected the Baltimore-Washington region from economic pain is losing its effectiveness. Half of First Mariner's problem loans were in Northern Virginia, home of a defense-spending spree since 2001. The rest were in several other states.
First Mariner had sold the loans to New York investment house Bear Stearns Cos., but it was required to repurchase them when borrowers began missing payments. This month Bear Stearns disclosed that two of its subprime mortgage investment pools called hedge funds were all but worthless.
Hale thinks some of the mortgages may have been issued to "flippers" seeking a quick buck, violating contract terms requiring the money to be applied to a primary residence.
Even so, the delinquencies don't speak well of the Northern Virginia economy or, by implication, Maryland's, which has been operating in the same federal bubble.
Now even mortgages issued to well-qualified borrowers are at risk. The Mortgage Bankers Association had already reported an uptick in soured "prime" loans for the first quarter. Foreclosure rates in Indiana, Ohio and Michigan exceeded those in Texas during the oil bust in the 1980s, the association said.
Last week Countrywide said more borrowers with good credit records were missing payments - and not just on loans whose low "teaser" rates were adjusting upward. Some were delinquent because of unemployment, which suggests an economywide problem. And the crescendo of adjusting loans continues; plenty of three-year adjustables issued in recent years have yet to reset to market rates and ding family finances.
Homebuilder stocks are revisiting lows of last summer, and now trauma has spread across the securities spectrum.
It wasn't just most stocks that sold off last week. Corporate bonds took a header, too, which could presage a credit crunch and slower growth.
All this occurs on an economic foundation that wasn't solid to begin with. National employment growth has slowed from last year, and so has Maryland's.
The metro-Baltimore economy "has taken a sharp hit in the past six months, with job growth coming in well below the national pace thus far this year," Economy.com's Rakesh Shankar wrote recently. "This is a marked deviation from the previous five years."
It's not hopeless. The low dollar will boost U.S. exports. Interest rates should fall (it's time to start now, Chairman Bernanke), which will help. Maryland is getting tens of thousands of defense-related jobs, which will help even more. We won't see a recession.
But we will see even slower growth, and the housing industry will be the chief ball and chain. (baltimoresun.com)
Monday, July 16, 2007
For sale by lender
Foreclosed properties make up 10%-15% of local property listings
Thanks to a sharp rise in foreclosures, homebuyers are increasingly likely to encounter bank-owned properties in the housing market - listed for sale, offered at auction or even touted as a "good deal" on lenders' Web sites. But getting a bargain on a foreclosed home is hardly a sure bet.
Amid a housing slump that has pushed home listings to record numbers, lenders, too, are competing to sell homes, often through the multiple-listing service. Borrowers, in many cases, have been hurt in the slowdown by a loss of equity that could have helped them avoid foreclosure.
The increase in bank-owned properties comes as more homeowners, many in the suburbs, find themselves unable to keep up with payments on loans made during the housing boom, a time when low mortgage rates, relaxed lending standards and fast-rising home prices fueled a frenzied market.
Though it's difficult to track how many foreclosed properties are listed for sale, agents who sell homes for lenders estimate they represent 10 percent to 15 percent of active listings in the Baltimore area.
In June, nearly 20,000 homes were on the market in Baltimore and the five surrounding counties, according to statistics from Metropolitan Regional Information Systems Inc.
The number of lender-owned properties is expected to grow as billions of dollars in mortgages reset in coming months, triggering higher payments for homeowners.
Loans in the foreclosure process in Maryland soared nearly 30 percent in the first quarter compared with the first three months of 2006, and the number of borrowers at least 60 days behind on payments rose 20 percent, according to the most recent report by the Mortgage Bankers Association.
While Maryland is faring better than the nation as a whole, that still means about 5,700 Maryland homeowners were in danger of losing their homes in the first quarter.
Rising foreclosures could squeeze home values even more and prolong the slump, economists say.
"Eventually, foreclosures will be returned to the marketplace," said Celia Chen, director of housing economics for Moody's Economy.com. "Lenders have to take them back and sell them and try to sell them as fast as they can. ... It will keep price appreciation weak."
Local home listings, already at a record high, will climb even more, partly because of mounting foreclosures, said economist Anirban Basu, chief executive officer of Sage Policy Group Inc. of Baltimore.
"Inventory has been rising sharply, and it will continue to rise, with the impact of ARMs [adjustable-rate mortgages] resetting and foreclosure activity," Basu said. "I don't think we've begun to see that impact in a major way."
Real estate agents and brokers, too, worry that putting more inventory into an already sluggish market will bring down prices and cause houses to sit longer.
Jennifer Marshall, an agent with Maryland REO real estate brokerage, said she is seeing the number of foreclosure properties soaring in suburban areas.
"With more inventory, it's a buyer's market now," Marshall said. "People aren't going to offer what the house is listed for. ... It's more challenging for agents, and you have to think about different ways to get your properties out there and get them sold."
Banks are increasingly buying foreclosed properties back at auction as other bids fall short of the amount owed. That scenario has become more common as the number of owners with little or no equity - or even negative equity - has grown, particularly in cases of pricier homes with more recent mortgages.
"Because we're seeing more expensive homes, higher-end homes going to foreclosure, logic indicates that less of those are being sold to third parties," or buyers other than the lender," said Donald Miller, national sales director for Express Auctions, of Baltimore. Miller said about 30 percent of the homes sold through his company's foreclosure auctions go back to the lenders, but banks tend to buy back an even greater percentage at foreclosure auctions in general.
"As a general rule, the newer loans have less equity, so there's going to be a higher percentage of buy-ins" by the bank, said Daniel M. Billig, a partner in A.J. Billig and Co., the Baltimore auction house.
Lenders' bigger stakes mean they aren't likely to discount properties they buy back and subsequently list, agents said. And lenders can invest thousands more to repair properties.
As a result, like other sellers, they're looking to get top dollar, said David McIlvaine, an associate broker with Keller Williams in Ellicott City who sells foreclosure properties for lenders.
McIlvaine said when he began listing homes for lenders eight years ago, most of the homes were lower-end properties, typically city rowhouses.
"That's not the case anymore," McIlvaine said. "We're seeing a more representative group of inventory crossing all lines."
That's because borrowers who stretched to qualify for more flexible loans - including adjustable rates, no down payments and interest-only payments - have been added to the categories of borrowers who had lost their homes to foreclosure due to job loss, illness or divorce, experts said.
"You're seeing nicer homes, higher-priced homes," agreed Jeff Rogers, an associate broker with Coldwell Banker who lists homes for lenders, who said some of the borrowers have owned their homes for two years or less. "You sort of saw that coming. [Borrowers] were being set up for failure with some of these mortgages."
Miller, at Express Auctions, one of a handful of auction houses that handles the majority of foreclosure auction sales in the state, said investors continue to buy most auctioned properties that aren't bought back by lenders.
But individual homebuyers are starting to get into the mix, as investor Ed Kowalski has noticed.
"On a few occasions I have been outbid by owner-occupants," said Kowalski, who buys, renovates and resells homes in Baltimore and Baltimore County. "Generally, they'll pay more than I'll pay as an investment."
One homebuyer who came to an Express Auction in May beat out an investor on a three-year-old house in Hampstead, with a winning bid of $567,500. Before the auction, the owners had listed it for sale at $1 million, Miller said.
The buyer of the property got a sprawling five-bedroom house with a master bedroom, sitting room with coffee bar, workout room, library and a three-car garage, in a neighborhood where houses have sold for more than $700,000.
Buying at foreclosure auction is not without hurdles.
Successful bidders often must pay a cash deposit, typically 10 percent of the outstanding loan amount. The new owner must pay off any liens or second mortgages. And properties are sold as is. And an owner or tenant living in the house may or may not be cooperative about moving out.
Sihin Shiferaw, an investor who buys and rehabs homes in Baltimore City and Howard County, mostly at auction, recently took a chance on a bank-owned home listed for sale. After signing a sales contract, she discovered water in the home's basement and backed out of the deal, losing a $2,000 deposit.
Evelyn Ray, a real estate agent with Long and Foster in Bel Air, is hoping the increase in foreclosures might help some of her clients who are struggling to buy a house in the aftermath of a soaring market. Ray said she has begun looking for foreclosure properties to show her clients.
"Now, people just cannot afford the houses that are out there," said Ray. "I have about 30 buyers who are just waiting. They either can't afford the houses they want or are just scared or waiting for prices to come down, or they can't sell."
Cathy Holmes, a single mother of three who works as a biological lab technician at Aberdeen Proving Ground, hopes to find a deal on a foreclosed home as a last resort to finally be able to move from a rental apartment in Whiteford. Ray, her agent, has taken her to see several homes. But so far she hasn't been able to come up with the deposit that would qualify her to bid.
"I've been renting the same apartment for 11 years, it's just impossible to get out," said Holmes, who is looking for a single-family house with some land. "I just want to have a house where I don't have to hear the neighbors' telephones ringing and their conversations. I look and I look and I look. I just can't find anything that I can afford." (baltimoresun.com)
Thanks to a sharp rise in foreclosures, homebuyers are increasingly likely to encounter bank-owned properties in the housing market - listed for sale, offered at auction or even touted as a "good deal" on lenders' Web sites. But getting a bargain on a foreclosed home is hardly a sure bet.
Amid a housing slump that has pushed home listings to record numbers, lenders, too, are competing to sell homes, often through the multiple-listing service. Borrowers, in many cases, have been hurt in the slowdown by a loss of equity that could have helped them avoid foreclosure.
The increase in bank-owned properties comes as more homeowners, many in the suburbs, find themselves unable to keep up with payments on loans made during the housing boom, a time when low mortgage rates, relaxed lending standards and fast-rising home prices fueled a frenzied market.
Though it's difficult to track how many foreclosed properties are listed for sale, agents who sell homes for lenders estimate they represent 10 percent to 15 percent of active listings in the Baltimore area.
In June, nearly 20,000 homes were on the market in Baltimore and the five surrounding counties, according to statistics from Metropolitan Regional Information Systems Inc.
The number of lender-owned properties is expected to grow as billions of dollars in mortgages reset in coming months, triggering higher payments for homeowners.
Loans in the foreclosure process in Maryland soared nearly 30 percent in the first quarter compared with the first three months of 2006, and the number of borrowers at least 60 days behind on payments rose 20 percent, according to the most recent report by the Mortgage Bankers Association.
While Maryland is faring better than the nation as a whole, that still means about 5,700 Maryland homeowners were in danger of losing their homes in the first quarter.
Rising foreclosures could squeeze home values even more and prolong the slump, economists say.
"Eventually, foreclosures will be returned to the marketplace," said Celia Chen, director of housing economics for Moody's Economy.com. "Lenders have to take them back and sell them and try to sell them as fast as they can. ... It will keep price appreciation weak."
Local home listings, already at a record high, will climb even more, partly because of mounting foreclosures, said economist Anirban Basu, chief executive officer of Sage Policy Group Inc. of Baltimore.
"Inventory has been rising sharply, and it will continue to rise, with the impact of ARMs [adjustable-rate mortgages] resetting and foreclosure activity," Basu said. "I don't think we've begun to see that impact in a major way."
Real estate agents and brokers, too, worry that putting more inventory into an already sluggish market will bring down prices and cause houses to sit longer.
Jennifer Marshall, an agent with Maryland REO real estate brokerage, said she is seeing the number of foreclosure properties soaring in suburban areas.
"With more inventory, it's a buyer's market now," Marshall said. "People aren't going to offer what the house is listed for. ... It's more challenging for agents, and you have to think about different ways to get your properties out there and get them sold."
Banks are increasingly buying foreclosed properties back at auction as other bids fall short of the amount owed. That scenario has become more common as the number of owners with little or no equity - or even negative equity - has grown, particularly in cases of pricier homes with more recent mortgages.
"Because we're seeing more expensive homes, higher-end homes going to foreclosure, logic indicates that less of those are being sold to third parties," or buyers other than the lender," said Donald Miller, national sales director for Express Auctions, of Baltimore. Miller said about 30 percent of the homes sold through his company's foreclosure auctions go back to the lenders, but banks tend to buy back an even greater percentage at foreclosure auctions in general.
"As a general rule, the newer loans have less equity, so there's going to be a higher percentage of buy-ins" by the bank, said Daniel M. Billig, a partner in A.J. Billig and Co., the Baltimore auction house.
Lenders' bigger stakes mean they aren't likely to discount properties they buy back and subsequently list, agents said. And lenders can invest thousands more to repair properties.
As a result, like other sellers, they're looking to get top dollar, said David McIlvaine, an associate broker with Keller Williams in Ellicott City who sells foreclosure properties for lenders.
McIlvaine said when he began listing homes for lenders eight years ago, most of the homes were lower-end properties, typically city rowhouses.
"That's not the case anymore," McIlvaine said. "We're seeing a more representative group of inventory crossing all lines."
That's because borrowers who stretched to qualify for more flexible loans - including adjustable rates, no down payments and interest-only payments - have been added to the categories of borrowers who had lost their homes to foreclosure due to job loss, illness or divorce, experts said.
"You're seeing nicer homes, higher-priced homes," agreed Jeff Rogers, an associate broker with Coldwell Banker who lists homes for lenders, who said some of the borrowers have owned their homes for two years or less. "You sort of saw that coming. [Borrowers] were being set up for failure with some of these mortgages."
Miller, at Express Auctions, one of a handful of auction houses that handles the majority of foreclosure auction sales in the state, said investors continue to buy most auctioned properties that aren't bought back by lenders.
But individual homebuyers are starting to get into the mix, as investor Ed Kowalski has noticed.
"On a few occasions I have been outbid by owner-occupants," said Kowalski, who buys, renovates and resells homes in Baltimore and Baltimore County. "Generally, they'll pay more than I'll pay as an investment."
One homebuyer who came to an Express Auction in May beat out an investor on a three-year-old house in Hampstead, with a winning bid of $567,500. Before the auction, the owners had listed it for sale at $1 million, Miller said.
The buyer of the property got a sprawling five-bedroom house with a master bedroom, sitting room with coffee bar, workout room, library and a three-car garage, in a neighborhood where houses have sold for more than $700,000.
Buying at foreclosure auction is not without hurdles.
Successful bidders often must pay a cash deposit, typically 10 percent of the outstanding loan amount. The new owner must pay off any liens or second mortgages. And properties are sold as is. And an owner or tenant living in the house may or may not be cooperative about moving out.
Sihin Shiferaw, an investor who buys and rehabs homes in Baltimore City and Howard County, mostly at auction, recently took a chance on a bank-owned home listed for sale. After signing a sales contract, she discovered water in the home's basement and backed out of the deal, losing a $2,000 deposit.
Evelyn Ray, a real estate agent with Long and Foster in Bel Air, is hoping the increase in foreclosures might help some of her clients who are struggling to buy a house in the aftermath of a soaring market. Ray said she has begun looking for foreclosure properties to show her clients.
"Now, people just cannot afford the houses that are out there," said Ray. "I have about 30 buyers who are just waiting. They either can't afford the houses they want or are just scared or waiting for prices to come down, or they can't sell."
Cathy Holmes, a single mother of three who works as a biological lab technician at Aberdeen Proving Ground, hopes to find a deal on a foreclosed home as a last resort to finally be able to move from a rental apartment in Whiteford. Ray, her agent, has taken her to see several homes. But so far she hasn't been able to come up with the deposit that would qualify her to bid.
"I've been renting the same apartment for 11 years, it's just impossible to get out," said Holmes, who is looking for a single-family house with some land. "I just want to have a house where I don't have to hear the neighbors' telephones ringing and their conversations. I look and I look and I look. I just can't find anything that I can afford." (baltimoresun.com)
Saturday, May 26, 2007
Don't Get Duped by Hidden Mortgage Fees
Q: DEAR BOB: Which home mortgage fees are proper for a lender to charge borrowers? -- Stephen O.
A: DEAR STEPHEN: Some mortgage lenders are constantly working to create new names for unnecessary fees to impose on naive borrowers. Start shopping among at least a half-dozen mortgage lenders for a "no-cost, no-fee" home loan. In today's market, I recommend obtaining a fixed-rate mortgage.
However, if you are certain you won't keep your home more than five years, then an adjustable-rate mortgage fixed for five years can save you a few interest dollars. Be certain that it does not contain a prepayment penalty or negative amortization, whereby the interest rate adjusts monthly or semiannually and unpaid interest is added to your loan balance.
If you are dealing with a direct lender, such as Wells Fargo, Bank of America or Countrywide, the lender's good-faith estimate must reveal all loan charges. But you might be asked to pay legitimate fees to third parties, such as for the appraisal, credit report and lender's title insurance. That's fine. Those are not junk fees.
However, if you are dealing with a mortgage broker, his or her written good-faith estimate might be less reliable.
Watch out for previously undisclosed fees with such creative names as underwriting fee, document preparation fee, loan review fee, warehousing fee and loan origination fee.
If the lender asks you to pay a loan fee of 1 or 2 percent of the amount borrowed, usually called points, ask how much reduction you will receive in the interest rate. For each point paid, you should receive at least a one-eighth percentage-point reduction in your loan's interest rate for the life of the mortgage. Pay a loan fee only if you expect to stay in the house at least 10 years. Otherwise, take the no-cost, no-fee loan with all lender charges included in the interest rate.
DEAR BOB: Our condo homeowners association was assessed $6,000 each for replacement of roofs, which we have to pay even if we sell the condo. My roof was replaced last year, but they still want me to pay $6,000. What can I do? -- Rita S.
DEAR RITA: Your homeowners association was not assessed. Instead, the association has assessed condominium owners $6,000 each to replace the roofs. That's the way a homeowners association works. Even when your individual condo unit won't directly benefit, you are subject to special assessments, approved by the board of directors, that benefit the entire condo complex.
DEAR BOB: My widowed mother died recently, and the lawyer who prepared her trust wants to charge an outlandish fee to fill out the court papers for her small estate. Is it possible that I could file the papers myself with the court? Where do I obtain them? -- Eugene B.
DEAR EUGENE: If your mother left her major assets in a revocable living trust, no probate court proceedings are required. However, if she left a will with a testamentary or irrevocable trust, probate court proceedings are probably required. This is not a do-it-yourself project.
Shop around among probate lawyers. Although state law sets a maximum for probate legal fees based on the gross value of the estate, most probate lawyers will adjust their fees downward if you ask unless there are complications or a will contest involving the heirs.
DEAR BOB: Several days after we phoned our neighbor to ask him to quiet his barking dog, and to stop running his tractor and spewing carbon monoxide near my disabled daughter's room, he built a "spite fence." I live on a lake and had a nice view from my kitchen window for 28 years. What chance do I have to either remove part of the fence that blocks my lake view or cut it down by two feet? What recourse do I have? -- Elly W.
Use Local Explorer to learn about Washington, D.C., Maryland and Virginia communities.
DEAR ELLY: Unless your city or county has a view-protection ordinance, you have no legal right to a view. However, if the neighbor's tall fence is defined by local ordinance as a spite fence, usually 6 feet or taller and built without a required building permit, you may have a legal right to have the fence removed. Consult a lawyer for details.
DEAR BOB: In 1988, my husband and I bought a house together. In 1994, we got divorced, and I removed his name from the title. We remarried in May 2006. I added his name back to the title. If we sell our home within a year and file our income tax returns jointly for 2006, can we claim the $500,000 home-sale tax deduction? -- Rita R.
DEAR RITA: Not yet. For your husband to qualify for an additional $250,000 principal-residence-sale tax exemption, Internal Revenue Code 121 says he must occupy the principal residence at least 24 of the 60 months before its sale.
However, he does not have to be on the title if he meets the 24-month principal-residence-occupancy test and you file a joint income tax return in the year of principal residence sale. Consult a tax adviser for details.
DEAR BOB: I am interested in finding out who is buying the house next door to mine. The sale is pending. Is there any way to learn other than asking the buyers or realty agents directly? -- Carole B.
DEAR CAROLE: No. Until a home sale closes and the title transfer is recorded, the real estate agents and the other parties handling the transfer cannot legally disclose who is buying the home. That is confidential information.
Nor can they reveal the purchase price without breaching their fiduciary duty to the seller and buyer. The only way to find out the buyer's name now is to ask the seller. But that individual doesn't have to disclose the buyer's name.
DEAR BOB: I feel the sellers from whom I bought my home did not disclose a material and expensive problem with the house. The neighbors tell me the previous owners tried extensive repairs over the years to remedy the problem but did not succeed. Is there any way I can learn the disclosures the sellers of my house were given when they bought? -- Diane S.
DEAR DIANE: No. You have no legal right to obtain the written disclosures made to your seller unless they are public information, such as local building permits, pest control inspection report, etc.
Of course, if there are any warranties, such as a 10-year roof warranty, you are entitled to the balance of the covered period. Consult a lawyer for details.
DEAR BOB: I gave my tenant notice to move, confirmed with a receipt of notice. She agreed to move out, but the unit is now locked and no one is there, though her car is parked in the driveway. I phoned several times, but no reply. What options do I have? I have already hired a contractor to update the unit, based on the tenant's promise to move out on schedule. -- Paras R.
DEAR PARAS: Consult a lawyer whose specialty is evictions. I'm sure you have thought of the possibilities: The tenant moved out but left the car, abandoned the apartment and the car, died either in the apartment or elsewhere, is in a hospital, is in jail, is avoiding you because she refuses to move out, or wants to drag out the eviction procedure to obtain as much free rent from you as possible.
All these situations have happened to me with my rentals. Ask the neighbors if they have seen your tenant or any activity at the rental. Then contact the local police to learn if they have any record of activity at the property or if they can trace your missing tenant. After that, follow your attorney's advice to regain possession of your rental unit.
DEAR BOB: Several years ago, my mother gifted her house to me because she was moving into her new husband's home in Florida. Now I want to sell that house, but my tax adviser says I am stuck with my mother's cost basis of only $23,000, while the house is worth about $375,000 today. At the time of the gift, the house was worth about $225,000. Will I have to pay tax on all that capital gain? -- Alan P.
DEAR ALAN: Your tax adviser is correct. The general rule for gifts is that the donee takes over the donor's basis for a property.
Unless the property is your principal residence and you have owned and occupied it at least 24 of the 60 months before its sale so that you can qualify for the $250,000 tax exemption of Internal Revenue Code 121 (up to $500,000 for a qualified married couple filing jointly), your capital gain will be taxable. The good news is the federal capital gain tax rate is only 15 percent.
DEAR BOB: Last year, my husband bought a house with his name on the title and mortgage. I help him pay the mortgage and property taxes. What is the best way for him to transfer 5 percent of the property to my name? How much will it cost? -- Patricia S.
DEAR PATRICIA: If you will be receiving only a 5 percent interest in the property, that means you probably want to hold title as a tenant in common with your husband, who will retain a 95 percent interest. Each of you needs valid written wills to pass your interests upon the death of either of you to whomever you each designate.
Your husband can convey a 5 percent interest in the house to you by a recorded quitclaim deed. The deed should include a legal description of the property, the percent interest transferred to you, the official parcel number, the method of holding title and his notarized signature so the deed can be recorded.
DEAR BOB: My parents divorced in 1995. The judge gave the house to my mom, but she had to either sell it or refinance the mortgage. She wanted to keep the house, but she couldn't refinance because her debt-to-income ratio was too high. My mother gave me a quitclaim deed, signing the house over to me, and I helped her refinance with a new mortgage. Now I want to get my name off the title and put my mother back as sole owner, as she desires. If I do that and my mother dies, am I responsible for the mortgage payments even though I don't hold title? What do I need to do to quitclaim the house title back to my mom? Do I need to go through a title company? -- David P.
DEAR DAVID: If you are now on the title alone, you can sign a quitclaim deed to your mother. However, you will still remain liable to make sure the mortgage payments are made even when you don't hold title to the property.
After your mother dies, the title to the house goes to whomever she names in her will or revocable living trust.
You don't need to go through a title company to quitclaim your title to your mother. The deed must include a legal description of the property, usually with its parcel number, and your signature must be notarized so the deed can then be recorded to transfer title to your mother.
DEAR BOB: Our next-door neighbor, Charlie, is about 65 and retired. He is divorced and lives alone. In 1995, he and his then-wife bought the house for $220,000. Today, it is worth about $650,000. His ex-wife is asking that he sell the house so she can receive her half of the profit. Charlie doesn't want to sell the house and move. My wife and I trust him completely and are willing to use our liquid assets to help him stay in his house. We are thinking of buying the house from him for cash and then selling the house back to him. Or perhaps we can lend him the money to pay off the mortgage and buy out his wife's share, with him getting a home-equity line of credit to pay us back. What should we do? -- Ashley S.
DEAR ASHLEY: If Charlie can qualify to get a home-equity line of credit for the amount needed to buy out his ex-wife and pay off the existing mortgage, let him do it on his own. No sense in you getting involved in a potentially messy situation.
If he can't qualify for a new mortgage, perhaps you can buy the house and rent it back to him. That would give you the rental-property tax benefits, and Charlie and his ex-wife could each claim their principal-residence-sale tax exemption, up to $500,000 total. Consult a tax adviser for details.
DEAR BOB: I have heard that some people can have a custom home constructed by a builder and after construction is complete wind up with 50 to 60 percent equity in their new homes. Is this true, and how can I go about doing this? -- Greg H.
DEAR GREG: Hire a quality custom home builder who charges low construction prices. If you already own a building lot, that gives you a head start. There is no guaranteed way to turn a fast profit on new custom homes unless you can lock in a low construction price and market values rise during construction. (washingtonpost.com)
A: DEAR STEPHEN: Some mortgage lenders are constantly working to create new names for unnecessary fees to impose on naive borrowers. Start shopping among at least a half-dozen mortgage lenders for a "no-cost, no-fee" home loan. In today's market, I recommend obtaining a fixed-rate mortgage.
However, if you are certain you won't keep your home more than five years, then an adjustable-rate mortgage fixed for five years can save you a few interest dollars. Be certain that it does not contain a prepayment penalty or negative amortization, whereby the interest rate adjusts monthly or semiannually and unpaid interest is added to your loan balance.
If you are dealing with a direct lender, such as Wells Fargo, Bank of America or Countrywide, the lender's good-faith estimate must reveal all loan charges. But you might be asked to pay legitimate fees to third parties, such as for the appraisal, credit report and lender's title insurance. That's fine. Those are not junk fees.
However, if you are dealing with a mortgage broker, his or her written good-faith estimate might be less reliable.
Watch out for previously undisclosed fees with such creative names as underwriting fee, document preparation fee, loan review fee, warehousing fee and loan origination fee.
If the lender asks you to pay a loan fee of 1 or 2 percent of the amount borrowed, usually called points, ask how much reduction you will receive in the interest rate. For each point paid, you should receive at least a one-eighth percentage-point reduction in your loan's interest rate for the life of the mortgage. Pay a loan fee only if you expect to stay in the house at least 10 years. Otherwise, take the no-cost, no-fee loan with all lender charges included in the interest rate.
DEAR BOB: Our condo homeowners association was assessed $6,000 each for replacement of roofs, which we have to pay even if we sell the condo. My roof was replaced last year, but they still want me to pay $6,000. What can I do? -- Rita S.
DEAR RITA: Your homeowners association was not assessed. Instead, the association has assessed condominium owners $6,000 each to replace the roofs. That's the way a homeowners association works. Even when your individual condo unit won't directly benefit, you are subject to special assessments, approved by the board of directors, that benefit the entire condo complex.
DEAR BOB: My widowed mother died recently, and the lawyer who prepared her trust wants to charge an outlandish fee to fill out the court papers for her small estate. Is it possible that I could file the papers myself with the court? Where do I obtain them? -- Eugene B.
DEAR EUGENE: If your mother left her major assets in a revocable living trust, no probate court proceedings are required. However, if she left a will with a testamentary or irrevocable trust, probate court proceedings are probably required. This is not a do-it-yourself project.
Shop around among probate lawyers. Although state law sets a maximum for probate legal fees based on the gross value of the estate, most probate lawyers will adjust their fees downward if you ask unless there are complications or a will contest involving the heirs.
DEAR BOB: Several days after we phoned our neighbor to ask him to quiet his barking dog, and to stop running his tractor and spewing carbon monoxide near my disabled daughter's room, he built a "spite fence." I live on a lake and had a nice view from my kitchen window for 28 years. What chance do I have to either remove part of the fence that blocks my lake view or cut it down by two feet? What recourse do I have? -- Elly W.
Use Local Explorer to learn about Washington, D.C., Maryland and Virginia communities.
DEAR ELLY: Unless your city or county has a view-protection ordinance, you have no legal right to a view. However, if the neighbor's tall fence is defined by local ordinance as a spite fence, usually 6 feet or taller and built without a required building permit, you may have a legal right to have the fence removed. Consult a lawyer for details.
DEAR BOB: In 1988, my husband and I bought a house together. In 1994, we got divorced, and I removed his name from the title. We remarried in May 2006. I added his name back to the title. If we sell our home within a year and file our income tax returns jointly for 2006, can we claim the $500,000 home-sale tax deduction? -- Rita R.
DEAR RITA: Not yet. For your husband to qualify for an additional $250,000 principal-residence-sale tax exemption, Internal Revenue Code 121 says he must occupy the principal residence at least 24 of the 60 months before its sale.
However, he does not have to be on the title if he meets the 24-month principal-residence-occupancy test and you file a joint income tax return in the year of principal residence sale. Consult a tax adviser for details.
DEAR BOB: I am interested in finding out who is buying the house next door to mine. The sale is pending. Is there any way to learn other than asking the buyers or realty agents directly? -- Carole B.
DEAR CAROLE: No. Until a home sale closes and the title transfer is recorded, the real estate agents and the other parties handling the transfer cannot legally disclose who is buying the home. That is confidential information.
Nor can they reveal the purchase price without breaching their fiduciary duty to the seller and buyer. The only way to find out the buyer's name now is to ask the seller. But that individual doesn't have to disclose the buyer's name.
DEAR BOB: I feel the sellers from whom I bought my home did not disclose a material and expensive problem with the house. The neighbors tell me the previous owners tried extensive repairs over the years to remedy the problem but did not succeed. Is there any way I can learn the disclosures the sellers of my house were given when they bought? -- Diane S.
DEAR DIANE: No. You have no legal right to obtain the written disclosures made to your seller unless they are public information, such as local building permits, pest control inspection report, etc.
Of course, if there are any warranties, such as a 10-year roof warranty, you are entitled to the balance of the covered period. Consult a lawyer for details.
DEAR BOB: I gave my tenant notice to move, confirmed with a receipt of notice. She agreed to move out, but the unit is now locked and no one is there, though her car is parked in the driveway. I phoned several times, but no reply. What options do I have? I have already hired a contractor to update the unit, based on the tenant's promise to move out on schedule. -- Paras R.
DEAR PARAS: Consult a lawyer whose specialty is evictions. I'm sure you have thought of the possibilities: The tenant moved out but left the car, abandoned the apartment and the car, died either in the apartment or elsewhere, is in a hospital, is in jail, is avoiding you because she refuses to move out, or wants to drag out the eviction procedure to obtain as much free rent from you as possible.
All these situations have happened to me with my rentals. Ask the neighbors if they have seen your tenant or any activity at the rental. Then contact the local police to learn if they have any record of activity at the property or if they can trace your missing tenant. After that, follow your attorney's advice to regain possession of your rental unit.
DEAR BOB: Several years ago, my mother gifted her house to me because she was moving into her new husband's home in Florida. Now I want to sell that house, but my tax adviser says I am stuck with my mother's cost basis of only $23,000, while the house is worth about $375,000 today. At the time of the gift, the house was worth about $225,000. Will I have to pay tax on all that capital gain? -- Alan P.
DEAR ALAN: Your tax adviser is correct. The general rule for gifts is that the donee takes over the donor's basis for a property.
Unless the property is your principal residence and you have owned and occupied it at least 24 of the 60 months before its sale so that you can qualify for the $250,000 tax exemption of Internal Revenue Code 121 (up to $500,000 for a qualified married couple filing jointly), your capital gain will be taxable. The good news is the federal capital gain tax rate is only 15 percent.
DEAR BOB: Last year, my husband bought a house with his name on the title and mortgage. I help him pay the mortgage and property taxes. What is the best way for him to transfer 5 percent of the property to my name? How much will it cost? -- Patricia S.
DEAR PATRICIA: If you will be receiving only a 5 percent interest in the property, that means you probably want to hold title as a tenant in common with your husband, who will retain a 95 percent interest. Each of you needs valid written wills to pass your interests upon the death of either of you to whomever you each designate.
Your husband can convey a 5 percent interest in the house to you by a recorded quitclaim deed. The deed should include a legal description of the property, the percent interest transferred to you, the official parcel number, the method of holding title and his notarized signature so the deed can be recorded.
DEAR BOB: My parents divorced in 1995. The judge gave the house to my mom, but she had to either sell it or refinance the mortgage. She wanted to keep the house, but she couldn't refinance because her debt-to-income ratio was too high. My mother gave me a quitclaim deed, signing the house over to me, and I helped her refinance with a new mortgage. Now I want to get my name off the title and put my mother back as sole owner, as she desires. If I do that and my mother dies, am I responsible for the mortgage payments even though I don't hold title? What do I need to do to quitclaim the house title back to my mom? Do I need to go through a title company? -- David P.
DEAR DAVID: If you are now on the title alone, you can sign a quitclaim deed to your mother. However, you will still remain liable to make sure the mortgage payments are made even when you don't hold title to the property.
After your mother dies, the title to the house goes to whomever she names in her will or revocable living trust.
You don't need to go through a title company to quitclaim your title to your mother. The deed must include a legal description of the property, usually with its parcel number, and your signature must be notarized so the deed can then be recorded to transfer title to your mother.
DEAR BOB: Our next-door neighbor, Charlie, is about 65 and retired. He is divorced and lives alone. In 1995, he and his then-wife bought the house for $220,000. Today, it is worth about $650,000. His ex-wife is asking that he sell the house so she can receive her half of the profit. Charlie doesn't want to sell the house and move. My wife and I trust him completely and are willing to use our liquid assets to help him stay in his house. We are thinking of buying the house from him for cash and then selling the house back to him. Or perhaps we can lend him the money to pay off the mortgage and buy out his wife's share, with him getting a home-equity line of credit to pay us back. What should we do? -- Ashley S.
DEAR ASHLEY: If Charlie can qualify to get a home-equity line of credit for the amount needed to buy out his ex-wife and pay off the existing mortgage, let him do it on his own. No sense in you getting involved in a potentially messy situation.
If he can't qualify for a new mortgage, perhaps you can buy the house and rent it back to him. That would give you the rental-property tax benefits, and Charlie and his ex-wife could each claim their principal-residence-sale tax exemption, up to $500,000 total. Consult a tax adviser for details.
DEAR BOB: I have heard that some people can have a custom home constructed by a builder and after construction is complete wind up with 50 to 60 percent equity in their new homes. Is this true, and how can I go about doing this? -- Greg H.
DEAR GREG: Hire a quality custom home builder who charges low construction prices. If you already own a building lot, that gives you a head start. There is no guaranteed way to turn a fast profit on new custom homes unless you can lock in a low construction price and market values rise during construction. (washingtonpost.com)
Tuesday, May 22, 2007
O'Malley heads to Las Vegas for shopping convention
BALTIMORE - Governor Martin O'Malley doesn't have much time to rest after the Preakness Stakes. He's headed to Las Vegas tomorrow for a shopping center convention, where he'll pitch Maryland for retail real estate deals.
The governor will be joined by Baltimore's mayor and county executives from Baltimore, Harford, Howard and Prince George's counties.
The International Council of Shopping Centers is a can't-miss event for local officials looking for economic development deals. Organizers say one out of every three retail real estate deals are either conceived at this meeting or completed there.
Maryland will spend 160-thousand dollars on the convention, including airfare, hotels, a large reception and building a booth that includes three meeting rooms. (abc2news.com)
The governor will be joined by Baltimore's mayor and county executives from Baltimore, Harford, Howard and Prince George's counties.
The International Council of Shopping Centers is a can't-miss event for local officials looking for economic development deals. Organizers say one out of every three retail real estate deals are either conceived at this meeting or completed there.
Maryland will spend 160-thousand dollars on the convention, including airfare, hotels, a large reception and building a booth that includes three meeting rooms. (abc2news.com)
Maryland: area home prices still rising
Region holding its value, while U.S. overall loses 1.8%
Baltimore's housing market is holding up better than the nation's as a whole, with the price of an existing single-family home rising nearly 5 percent in the first quarter over a year earlier. The gain in median price put the region among the top quarter of 145 metro areas surveyed by the National Association of Realtors and contrasted sharply with a 1.8 percent nationwide decline.
And the Cumberland area in Western Maryland, which has become one of the last markets in the country to experience a housing boom, registered the biggest increase in the nation, with the median price of a single-family home soaring 17 percent in the first three months of the year.
The Baltimore area's relative affordability in the pricey region surrounding the nation's capital helped drive demand, real estate experts said, fueling the association's reported 4.9 percent increase in median price to $278,900.
By contrast, the median price - or midpoint - of an existing single-family home in the United States slid 1.8 percent, to $212,300, the association said. Half of homes sold for more and half for less.
The Baltimore area ranked 34th among the 145 statistical areas in home value appreciation, NAR statistics showed. Eighty-two of those areas saw prices increase over a year ago, including 11 areas with double-digit gains, while 62 experienced price declines; one was unchanged.
In the Cumberland region, prices jumped by the biggest percentage increase, to a median of $100,000 from $85,400 in the first quarter of 2006.
"What this comes down to is affordability," said Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors. "When you look at [the Baltimore-area]market, ... it is largely affordable when you compare [it] to most of the rest of the state and Washington and Virginia. And interest rates have stayed relatively low, helping to fuel demand."
Areas that are benefiting now experienced less speculative buying, and in turn less of a huge spike in prices over the four-year housing boom, experts said. .
"The focus has turned to value," said Anirban Basu, chief executive officer of Baltimore-based Sage Policy Group Inc.
"Many prospective home buyers sought to place as large a bet as possible on the housing market. Today, that speculative aspect of the housing market has effectively been extinguished and now the buyer is focused on ... making a good deal and buying as much house as possible for their money," Basu said.
Buyers perceive value in Baltimore's market, Basu said. "That explains why Baltimore-area prices have held their own, even as Washington-area price changes have in many instances turned negative,"
Cumberland, too, benefited from the perception of value and is just now seeing the effects of a housing boom that had previously swept through the Baltimore market, economists said. As prices have risen in adjoining Washington and Garrett counties, buyers have been attracted to lower prices in Allegany County, Basu said.
"Cumberland is, from a Western Maryland perspective, the oasis of affordability," he said.
Prices have held up despite slowing sales. In Maryland, the report said, sales, including single-family homes and condos, dropped 10 percent in the first quarter, to 115,000 from 128,400 in the year-earlier period.
Nationwide sales dipped to 6.41 million, down 6.6 percent from 6.86 million sold in the first three months of 2006, the NAR report said. But an NAR economist said the market has likely bottomed.
Fourteen states and Washington showed an improvement in sales in the first quarter, said Lawrence Yun, NAR senior economist, compared to six states posting increases in the fourth quarter. On a quarter-to-quarter basis, sales rose in the United States by 2.4 percent, the NAR said.
The numbers suggest the market is stabilizing, thanks to job growth and relatively low mortgage interest rates that have hovered at just above 6 percent.
"We are encouraged by the fact that there is modest improvement in our quarterly figures, less of a decline in prices and a modest uptick in sales," Yun said. "This is positive compared to what we had experienced before."
He said he would not be surprised to see sales volume increase, on a year-over-year basis, by either the fourth quarter or the first quarter of 2008. (baltimoresun.com)
Baltimore's housing market is holding up better than the nation's as a whole, with the price of an existing single-family home rising nearly 5 percent in the first quarter over a year earlier. The gain in median price put the region among the top quarter of 145 metro areas surveyed by the National Association of Realtors and contrasted sharply with a 1.8 percent nationwide decline.
And the Cumberland area in Western Maryland, which has become one of the last markets in the country to experience a housing boom, registered the biggest increase in the nation, with the median price of a single-family home soaring 17 percent in the first three months of the year.
The Baltimore area's relative affordability in the pricey region surrounding the nation's capital helped drive demand, real estate experts said, fueling the association's reported 4.9 percent increase in median price to $278,900.
By contrast, the median price - or midpoint - of an existing single-family home in the United States slid 1.8 percent, to $212,300, the association said. Half of homes sold for more and half for less.
The Baltimore area ranked 34th among the 145 statistical areas in home value appreciation, NAR statistics showed. Eighty-two of those areas saw prices increase over a year ago, including 11 areas with double-digit gains, while 62 experienced price declines; one was unchanged.
In the Cumberland region, prices jumped by the biggest percentage increase, to a median of $100,000 from $85,400 in the first quarter of 2006.
"What this comes down to is affordability," said Joseph T. Landers III, executive vice president of the Greater Baltimore Board of Realtors. "When you look at [the Baltimore-area]market, ... it is largely affordable when you compare [it] to most of the rest of the state and Washington and Virginia. And interest rates have stayed relatively low, helping to fuel demand."
Areas that are benefiting now experienced less speculative buying, and in turn less of a huge spike in prices over the four-year housing boom, experts said. .
"The focus has turned to value," said Anirban Basu, chief executive officer of Baltimore-based Sage Policy Group Inc.
"Many prospective home buyers sought to place as large a bet as possible on the housing market. Today, that speculative aspect of the housing market has effectively been extinguished and now the buyer is focused on ... making a good deal and buying as much house as possible for their money," Basu said.
Buyers perceive value in Baltimore's market, Basu said. "That explains why Baltimore-area prices have held their own, even as Washington-area price changes have in many instances turned negative,"
Cumberland, too, benefited from the perception of value and is just now seeing the effects of a housing boom that had previously swept through the Baltimore market, economists said. As prices have risen in adjoining Washington and Garrett counties, buyers have been attracted to lower prices in Allegany County, Basu said.
"Cumberland is, from a Western Maryland perspective, the oasis of affordability," he said.
Prices have held up despite slowing sales. In Maryland, the report said, sales, including single-family homes and condos, dropped 10 percent in the first quarter, to 115,000 from 128,400 in the year-earlier period.
Nationwide sales dipped to 6.41 million, down 6.6 percent from 6.86 million sold in the first three months of 2006, the NAR report said. But an NAR economist said the market has likely bottomed.
Fourteen states and Washington showed an improvement in sales in the first quarter, said Lawrence Yun, NAR senior economist, compared to six states posting increases in the fourth quarter. On a quarter-to-quarter basis, sales rose in the United States by 2.4 percent, the NAR said.
The numbers suggest the market is stabilizing, thanks to job growth and relatively low mortgage interest rates that have hovered at just above 6 percent.
"We are encouraged by the fact that there is modest improvement in our quarterly figures, less of a decline in prices and a modest uptick in sales," Yun said. "This is positive compared to what we had experienced before."
He said he would not be surprised to see sales volume increase, on a year-over-year basis, by either the fourth quarter or the first quarter of 2008. (baltimoresun.com)
Friday, May 18, 2007
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
The Color Of Credit
Just a few years ago, there were only two ways to get a home loan: a fixed rate or a basic adjustable rate mortgage. Now consumer groups estimate there are more than 200 different types of loans out there and ABC2 News Investigator Tisha Thompson discovered too many people in Maryland may end up with high-risk loans not because of how much money they make, but because of what they look like.
For Chenea Carter, foreclosure was something she never thought would happen to her. “Utter panic,” she says went through her when she received her foreclosure notice. “Utter, utter panic.”
It started when Carter refinanced the mortgage on the home her family had owned for 50 years. “The furnace went up,” she says. “The heater went up, things that just required attention and money.”
But, a few years into her new loan, the interest rate on her mortgage exploded. “I didn’t know that after the first three years it would happen like that,” Carter says. She didn’t know it when she signed her paperwork, but Carter’s broker signed her up for what’s called a “subprime loan.” It’s a loan that’s more than 3% higher than the typical loan. It’s supposed to help people with a low credit score to buy a house. The problem is we’ve found that too many people in Maryland got a subprime loan not because of how much money they make, but because of what they look like.
Our ABC2 News investigation found that one out of six Maryland homes used a subprime loan in the last few years. "A lot of them qualify for conventional loans,” Congressman Elijah Cummings (D-MD) says. “That's the part that eats away at my heart."
Phillip Robinson of Civil Justice Network says brokers push people into these loans because that’s how they make their money.
“Subprime loans are not necessarily predatory loans,” he says. “What makes it predatory are the extra fees that are charged.” He explains that the bigger the loan, the bigger the commission. So, to get people qualified, Robinson says some brokers combine subprime loans with high-risk options like 100% financing, an adjustable rate, paying only the interest or paying just a minimum payment similar to a credit card, and all of the debt that comes with it.
"Few of these borrowers can afford to make monthly payments that in year three skyrocket 30 to 50 percent higher than the first two years," says Allen Fishbein, Director of Housing and Credit Policy at the Consumer Federation of America.
Some consumer groups say some brokers decide if they’re going to push you into a subprime loan based on what you look like.
When we went through the more than 1.7 million loans made in Maryland in 2004 and 2005, the ABC2 News Investigators found minorities ended up with a subprime loan two to three times more often than their white non-Hispanic neighbors, even if they made the same amount of money. The hardest hit? The elderly, Latinos and African-Americans, including those who had a family income of more than $100,000.
"I find it offensive that 'oh, upper income African-Americans must have credit problems,’” says Secretary Thomas Perez, the head of the Maryland Department of Labor, Licensing and Regulation. “That's an offensive notion to me."
Perez is in charge of regulating Maryland’s mortgage industry. “One of the things we can't currently do that I would like to see changed,” he says, “is to be able to develop the capacity to identify mortgage brokers who have a disproportionate number of loans that go into foreclosure.”
"I said you couldn't have bought my home!"
Carter says she barely managed to pay off her ballooning mortgage, but her mortgage company still sold her house at a foreclosure auction anyway. She sued the company in court.
"The judge said, I rule in your favor, the foreclosure is cancelled, the selling of the home is canceled,” Carter says. “I won."
(abc2 news.com)
For Chenea Carter, foreclosure was something she never thought would happen to her. “Utter panic,” she says went through her when she received her foreclosure notice. “Utter, utter panic.”
It started when Carter refinanced the mortgage on the home her family had owned for 50 years. “The furnace went up,” she says. “The heater went up, things that just required attention and money.”
But, a few years into her new loan, the interest rate on her mortgage exploded. “I didn’t know that after the first three years it would happen like that,” Carter says. She didn’t know it when she signed her paperwork, but Carter’s broker signed her up for what’s called a “subprime loan.” It’s a loan that’s more than 3% higher than the typical loan. It’s supposed to help people with a low credit score to buy a house. The problem is we’ve found that too many people in Maryland got a subprime loan not because of how much money they make, but because of what they look like.
Our ABC2 News investigation found that one out of six Maryland homes used a subprime loan in the last few years. "A lot of them qualify for conventional loans,” Congressman Elijah Cummings (D-MD) says. “That's the part that eats away at my heart."
Phillip Robinson of Civil Justice Network says brokers push people into these loans because that’s how they make their money.
“Subprime loans are not necessarily predatory loans,” he says. “What makes it predatory are the extra fees that are charged.” He explains that the bigger the loan, the bigger the commission. So, to get people qualified, Robinson says some brokers combine subprime loans with high-risk options like 100% financing, an adjustable rate, paying only the interest or paying just a minimum payment similar to a credit card, and all of the debt that comes with it.
"Few of these borrowers can afford to make monthly payments that in year three skyrocket 30 to 50 percent higher than the first two years," says Allen Fishbein, Director of Housing and Credit Policy at the Consumer Federation of America.
Some consumer groups say some brokers decide if they’re going to push you into a subprime loan based on what you look like.
When we went through the more than 1.7 million loans made in Maryland in 2004 and 2005, the ABC2 News Investigators found minorities ended up with a subprime loan two to three times more often than their white non-Hispanic neighbors, even if they made the same amount of money. The hardest hit? The elderly, Latinos and African-Americans, including those who had a family income of more than $100,000.
"I find it offensive that 'oh, upper income African-Americans must have credit problems,’” says Secretary Thomas Perez, the head of the Maryland Department of Labor, Licensing and Regulation. “That's an offensive notion to me."
Perez is in charge of regulating Maryland’s mortgage industry. “One of the things we can't currently do that I would like to see changed,” he says, “is to be able to develop the capacity to identify mortgage brokers who have a disproportionate number of loans that go into foreclosure.”
"I said you couldn't have bought my home!"
Carter says she barely managed to pay off her ballooning mortgage, but her mortgage company still sold her house at a foreclosure auction anyway. She sued the company in court.
"The judge said, I rule in your favor, the foreclosure is cancelled, the selling of the home is canceled,” Carter says. “I won."
(abc2 news.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
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)
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
Monday, May 14, 2007
Maryland: Forestalling foreclosures
For homeowners floundering under burdensomely high subprime mortgage payments, help is on the way - but it's unlikely to meet the demand or head off the 2.2 million more foreclosures expected in the coming two years.
Since Congress began looking into skyrocketing foreclosures tied to the subprime lending industry, federally chartered financiers Freddie Mac and Fannie Mae have pledged to provide loans with more reasonable terms, and at least two national banks, Citigroup Inc. and Bank of America Corp., have promised $1 billion in mortgage refinancing to help borrowers in trouble. But what look to be big bailout plans may not be enough to keep houses lost in foreclosures from blighting neighborhoods. States need to step up as well, and some are.
Advertisement
Maryland, with one of the lowest foreclosure rates in the country, was out in front of the problem last June when it established its Lifeline Refinance, a program that will provide $20 million in relief for borrowers falling behind on loans with adjustable rates and balloon payments. Trouble is, no one is taking advantage of it; fewer than a dozen people have applied, even though the program can serve 100. The state must get the word out and be ready to meet the need.
Ohio, which is leading the nation in home foreclosures, has put together a $100 million package to refinance loans. Massachusetts Gov. Deval Patrick was shamed into assisting homeowners who were facing foreclosure after they protested outside his office - Mr. Patrick once served as a director of one of the nation's biggest subprime lenders. He is talking about criminal prosecutions of predatory lenders and making certain misleading tactics a crime.
A faster way to forestall foreclosures is for homeowners at risk to call their lenders directly. A 2005 survey by Freddie Mac and Roper Public Affairs found then - before the subprime crisis hit - that 50 percent of homeowners in foreclosure never even bothered to contact their lender. Housing counseling groups also can intervene, but homeowners have to first make that call.
Until now, Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate banking committee, has used persuasion to get some lenders to voluntarily lower interest rates for homeowners in trouble. But others are ready to introduce legislation that would require changes in the industry to ensure that borrowers can repay their loans.
More rigorous standards should be the norm, and the mortgage industry needs to better police itself and act more responsibly - because as foreclosures rise, calls for tougher regulations are sure to follow.
(Baltimore sun)
Since Congress began looking into skyrocketing foreclosures tied to the subprime lending industry, federally chartered financiers Freddie Mac and Fannie Mae have pledged to provide loans with more reasonable terms, and at least two national banks, Citigroup Inc. and Bank of America Corp., have promised $1 billion in mortgage refinancing to help borrowers in trouble. But what look to be big bailout plans may not be enough to keep houses lost in foreclosures from blighting neighborhoods. States need to step up as well, and some are.
Advertisement
Maryland, with one of the lowest foreclosure rates in the country, was out in front of the problem last June when it established its Lifeline Refinance, a program that will provide $20 million in relief for borrowers falling behind on loans with adjustable rates and balloon payments. Trouble is, no one is taking advantage of it; fewer than a dozen people have applied, even though the program can serve 100. The state must get the word out and be ready to meet the need.
Ohio, which is leading the nation in home foreclosures, has put together a $100 million package to refinance loans. Massachusetts Gov. Deval Patrick was shamed into assisting homeowners who were facing foreclosure after they protested outside his office - Mr. Patrick once served as a director of one of the nation's biggest subprime lenders. He is talking about criminal prosecutions of predatory lenders and making certain misleading tactics a crime.
A faster way to forestall foreclosures is for homeowners at risk to call their lenders directly. A 2005 survey by Freddie Mac and Roper Public Affairs found then - before the subprime crisis hit - that 50 percent of homeowners in foreclosure never even bothered to contact their lender. Housing counseling groups also can intervene, but homeowners have to first make that call.
Until now, Sen. Christopher J. Dodd, a Connecticut Democrat and chairman of the Senate banking committee, has used persuasion to get some lenders to voluntarily lower interest rates for homeowners in trouble. But others are ready to introduce legislation that would require changes in the industry to ensure that borrowers can repay their loans.
More rigorous standards should be the norm, and the mortgage industry needs to better police itself and act more responsibly - because as foreclosures rise, calls for tougher regulations are sure to follow.
(Baltimore sun)
Fall in Maryland home sales reflects trend across nation
Houses sitting longer on market.
The insider jargon is little consolation to apprehensive homeowners who are tired of seeing ‘‘For Sale” signs languish in their front yards.
Average time on the market for a Montgomery County home was 93 days in March, compared with just 50 days in March 2006. In Prince George’s County, time on the market increased from 40 to 76 days and in Frederick County from 65 to 110 days, according to data from Metropolitan Regional Information Systems Inc.
And the U.S. Commerce Department last week reported that new home sales in March declined by 23.5 percent from March 2006. The news mirrors a similar picture in existing home sales, also released this week by the National Association of Realtors. The group reported an 11.3 percent drop from last March.
Still, housing experts who worked through the 1980s housing slump remain optimistic.
‘‘The drop in existing home sales in Maryland in the first quarter this year from a year ago was a ‘correction’ to a more normal homebuying market,” said Ilene Kessler, president of the Maryland Association of Realtors.
‘‘In 2005 and 2006, there was a lot of interest in buying,” Kessler said. ‘‘It’s now a more balanced market. A lot of people have already bought.”
The market is finding equilibrium, said Frank Armantea, vice president for mortgage lending at Mid-Atlantic Federal Credit Union in Germantown.
‘‘You have to look at it as situational,” Armantea said. ‘‘There are some areas of [Montgomery County] that are quite robust. Some are drawing multiple contracts in the more moderate price ranges.”
Mortgage lender Glen Lazovick with Mid-Atlantic said there are pockets of the county with a shortage of inventory in the $500,000 range, particularly in ‘‘down county Potomac and Bethesda.”
The housing boom that ended last year was unprecedented, in that lending rates did not change much, Armantea said.
Another unusual sign was that traditional pricing trends, such as proximity to Washington, D.C., did not hold, he said. For example, in 2005 some 2,800- to 3,800-square-foot homes in Frederick were selling for the same prices as similar houses in lower Montgomery County, he said.
Last month’s slowdown in Maryland was strange, said Kenneth Wenhold, regional director of Metrostudy of Fairfax, Va., a nationwide housing market survey service.
Sales in January and February were ‘‘considerably stronger” than a year ago, he said. But the last two weeks in March were much slower than expected, possibly due to bad weather and Easter, he speculated.
By last week, though, the number of visitors to model homes and the number of signed contracts had picked up again to about 8 percent higher than the previous week, Wenhold said.
A March 31 survey by Metrostudy showed the inventory of available single-family detached homes and townhouses in Montgomery County was ‘‘very supply-constrained” at 700 units, compared with 1,026 in mid-2004, at the height of the boom. But the inventory had actually increased by more than 10 percent from Dec. 31. Meanwhile, inventory in Prince George’s and Frederick counties decreased considerably since December, Wenhold said.
Metrostudy is ‘‘really quite hopeful that the summer will increase sales as we burn through the remaining inventory and builders have more starts,” he said.
The resale market is down by 15 percent in Maryland and 18 percent in Virginia from the same time last year, according to Metrostudy.
This report originally appeared in The Business Gazette.
Falling Market
In Maryland, existing home sales in March fell 15.7 percent from a year ago, with the following decreases:
Montgomery County:16.4 percent
Frederick County:21.6 percent
Prince George’s County: 31.4 percent
Baltimore city: 8.5 percent
Source: U.S. Commerce Department
(gazette.net)
The insider jargon is little consolation to apprehensive homeowners who are tired of seeing ‘‘For Sale” signs languish in their front yards.
Average time on the market for a Montgomery County home was 93 days in March, compared with just 50 days in March 2006. In Prince George’s County, time on the market increased from 40 to 76 days and in Frederick County from 65 to 110 days, according to data from Metropolitan Regional Information Systems Inc.
And the U.S. Commerce Department last week reported that new home sales in March declined by 23.5 percent from March 2006. The news mirrors a similar picture in existing home sales, also released this week by the National Association of Realtors. The group reported an 11.3 percent drop from last March.
Still, housing experts who worked through the 1980s housing slump remain optimistic.
‘‘The drop in existing home sales in Maryland in the first quarter this year from a year ago was a ‘correction’ to a more normal homebuying market,” said Ilene Kessler, president of the Maryland Association of Realtors.
‘‘In 2005 and 2006, there was a lot of interest in buying,” Kessler said. ‘‘It’s now a more balanced market. A lot of people have already bought.”
The market is finding equilibrium, said Frank Armantea, vice president for mortgage lending at Mid-Atlantic Federal Credit Union in Germantown.
‘‘You have to look at it as situational,” Armantea said. ‘‘There are some areas of [Montgomery County] that are quite robust. Some are drawing multiple contracts in the more moderate price ranges.”
Mortgage lender Glen Lazovick with Mid-Atlantic said there are pockets of the county with a shortage of inventory in the $500,000 range, particularly in ‘‘down county Potomac and Bethesda.”
The housing boom that ended last year was unprecedented, in that lending rates did not change much, Armantea said.
Another unusual sign was that traditional pricing trends, such as proximity to Washington, D.C., did not hold, he said. For example, in 2005 some 2,800- to 3,800-square-foot homes in Frederick were selling for the same prices as similar houses in lower Montgomery County, he said.
Last month’s slowdown in Maryland was strange, said Kenneth Wenhold, regional director of Metrostudy of Fairfax, Va., a nationwide housing market survey service.
Sales in January and February were ‘‘considerably stronger” than a year ago, he said. But the last two weeks in March were much slower than expected, possibly due to bad weather and Easter, he speculated.
By last week, though, the number of visitors to model homes and the number of signed contracts had picked up again to about 8 percent higher than the previous week, Wenhold said.
A March 31 survey by Metrostudy showed the inventory of available single-family detached homes and townhouses in Montgomery County was ‘‘very supply-constrained” at 700 units, compared with 1,026 in mid-2004, at the height of the boom. But the inventory had actually increased by more than 10 percent from Dec. 31. Meanwhile, inventory in Prince George’s and Frederick counties decreased considerably since December, Wenhold said.
Metrostudy is ‘‘really quite hopeful that the summer will increase sales as we burn through the remaining inventory and builders have more starts,” he said.
The resale market is down by 15 percent in Maryland and 18 percent in Virginia from the same time last year, according to Metrostudy.
This report originally appeared in The Business Gazette.
Falling Market
In Maryland, existing home sales in March fell 15.7 percent from a year ago, with the following decreases:
Montgomery County:16.4 percent
Frederick County:21.6 percent
Prince George’s County: 31.4 percent
Baltimore city: 8.5 percent
Source: U.S. Commerce Department
(gazette.net)
Wednesday, May 9, 2007
Statistics indicate unprepared buyers are entering foreclosure
With the nation undergoing a surge in high-interest loans for people with a history of bad credit, analysts should have seen what was coming next: foreclosures. For March, there were nearly 149,150 foreclosure filings nationally, up 7 percent from February, RealtyTrac, a nationally recognized foreclosure Web site, said in its monthly report.
Maryland had 965 foreclosures in March.
“The difference between now and the past is all of the subprime mortgages,” said Deborah Ford, director of the undergraduate real estate program at the University of Baltimore. “Also, a lot of these adjustable-rate mortgages are resetting, meaning rates are continuing to go up. We have not had that in the past.”
People who read this also read:
Antero Pietila: Dixon’s cache of toys and trinkets
In Maryland this March, there was one foreclosure for every 2,220 households, substantially better than the nationwide figure of one for every 775 households — but it’s not all good news. Maryland saw a 160 percent jump in foreclosures for the month, compared to the national average of about 7 percent. Put up against last year’s numbers, foreclosures are up 327 percent in state.
Metropolitan Regional Information Statistics also indicate that people are spending more money on property. In March, real estate in the Baltimore region was selling for an average of nearly $306,588, an increase of about 4 percent from 2006. With this jump in cost, along with a 12.39 percent fourth-quarter increase in subprime mortgages reported by the Mortgage Bankers Association, residents can expect to see the number of foreclosures going up.
“I think it’s going to keep rising this year,” Ford said. “The rest of the nation is going up, too.”
(Examiner.com)
Maryland had 965 foreclosures in March.
“The difference between now and the past is all of the subprime mortgages,” said Deborah Ford, director of the undergraduate real estate program at the University of Baltimore. “Also, a lot of these adjustable-rate mortgages are resetting, meaning rates are continuing to go up. We have not had that in the past.”
People who read this also read:
Antero Pietila: Dixon’s cache of toys and trinkets
In Maryland this March, there was one foreclosure for every 2,220 households, substantially better than the nationwide figure of one for every 775 households — but it’s not all good news. Maryland saw a 160 percent jump in foreclosures for the month, compared to the national average of about 7 percent. Put up against last year’s numbers, foreclosures are up 327 percent in state.
Metropolitan Regional Information Statistics also indicate that people are spending more money on property. In March, real estate in the Baltimore region was selling for an average of nearly $306,588, an increase of about 4 percent from 2006. With this jump in cost, along with a 12.39 percent fourth-quarter increase in subprime mortgages reported by the Mortgage Bankers Association, residents can expect to see the number of foreclosures going up.
“I think it’s going to keep rising this year,” Ford said. “The rest of the nation is going up, too.”
(Examiner.com)
Baltimore: There's New Help For Those Facing Foreclosure
BALTIMORE, MD - Thousands of Marylanders may face the prospect of losing their homes but are too embarrassed to tell anyone.
Political reporter Pat Warren has more on the risk they're taking and where they can go for help.
It's called the secret shame--a situation so pervasive it's under investigation on Capitol Hill: Homeowners facing foreclosures on subprime loans.
Subprime loans are marketed to people with poor credit histories and limited incomes, who may not otherwise qualify.
By calling 311, the city's non-emergency line, you can be connected to a help hotline. There's a toll-free number to call for help, 888-995-HOPE.
On May 19, there's a call to action for people who are in danger of foreclosure. It's at 1 East Mount Royal Avenue.
(© MMVII, CBS Broadcasting Inc. All Rights Reserved.
video: http://wjz.com/video/?id=27368@wjz.dayport.com)
Political reporter Pat Warren has more on the risk they're taking and where they can go for help.
It's called the secret shame--a situation so pervasive it's under investigation on Capitol Hill: Homeowners facing foreclosures on subprime loans.
Subprime loans are marketed to people with poor credit histories and limited incomes, who may not otherwise qualify.
By calling 311, the city's non-emergency line, you can be connected to a help hotline. There's a toll-free number to call for help, 888-995-HOPE.
On May 19, there's a call to action for people who are in danger of foreclosure. It's at 1 East Mount Royal Avenue.
(© MMVII, CBS Broadcasting Inc. All Rights Reserved.
video: http://wjz.com/video/?id=27368@wjz.dayport.com)
Tuesday, May 8, 2007
Maryland: Region avoids housing slump
Despite slower sales, prices are still rising in Baltimore area.
Baltimore's cooling housing market should continue to dodge the price slumps that have hit other parts of the country, experts said yesterday.
Home values will continue to gain moderately through the end of the year despite the slowdown in sales, thanks to relatively strong employment and job growth in the region, predicted Gregory H. Leisch, chief executive officer of Washington real estate consulting firm Delta Associates. Leisch presented his forecast at a housing outlook conference held by Metropolitan Regional Information Systems Inc., a Rockville-based real estate listing service that covers parts of Maryland, Washington, Northern Virginia, West Virginia and Pennsylvania.
The median price of a single-family home in the United States dipped 2.7 percent in 2006, compared with a year earlier, Leisch said. But it rose 4.8 percent in the Baltimore area, surpassing price gains in Chicago, New York and Los Angeles, Leisch said, even as the number of homes sold fell 13 percent.
And the average home price remained stable in the first quarter of this year.
The area, which has an unemployment rate below the national average, has been helped by its shift from a manufacturing base to an economy with growth in the medical, education and defense sectors, Leisch said.
"Baltimore was a Rust Belt city and now is one of the best-balanced regional economies," he said, with consistently high job growth and high-quality jobs, and thousands more expected in the next four years from a federal base realignment, know as BRAC, that will bring jobs to Fort Meade and Aberdeen Proving Ground.
"Is that sufficient to support a sturdy housing market? We think so," said Leisch.
The Washington metro area also fared well in the first three months of this year despite a slower pace of sales, according to the MRIS Trends in Housing Report, released in conjunction with the series of forecast conferences, including yesterday's at Martin's West in Baltimore County.
Though prices in the Baltimore region are projected to increase, values are not expected to approach the double-digit gains that persisted into the second quarter of last year.
And the average number of days homes are staying on the market has continued to rise, from 37 days in 2005 to 60 days in 2006 to 93 days in the first three months of this year.
Daraius Irani, the director of the Applied Economics Group at Towson University's Regional Economic Studies Institute and a panelist at yesterday's event, said job growth in Maryland has not been as strong as in past years.
"We are very puzzled by the fact that job growth has been anemic but unemployment is low," he said. "We view it as not enough job candidates are qualified in these high-skill fields.
The flood of new military and related jobs coming from BRAC will likely attract other companies seeking to locate near a concentration of high-tech businesses, Irani said.
Some 40,000 to 60,000 jobs overall are anticipated by 2011, creating an additional 25,000 households in Maryland and generating an estimated $500 million in income and property taxes annually, said Lisa Swoboda, a panelist and deputy director of the Office of Military and Federal Affairs in the state's Department of Business and Economic Development.
(Baltimore Sun)
Baltimore's cooling housing market should continue to dodge the price slumps that have hit other parts of the country, experts said yesterday.
Home values will continue to gain moderately through the end of the year despite the slowdown in sales, thanks to relatively strong employment and job growth in the region, predicted Gregory H. Leisch, chief executive officer of Washington real estate consulting firm Delta Associates. Leisch presented his forecast at a housing outlook conference held by Metropolitan Regional Information Systems Inc., a Rockville-based real estate listing service that covers parts of Maryland, Washington, Northern Virginia, West Virginia and Pennsylvania.
The median price of a single-family home in the United States dipped 2.7 percent in 2006, compared with a year earlier, Leisch said. But it rose 4.8 percent in the Baltimore area, surpassing price gains in Chicago, New York and Los Angeles, Leisch said, even as the number of homes sold fell 13 percent.
And the average home price remained stable in the first quarter of this year.
The area, which has an unemployment rate below the national average, has been helped by its shift from a manufacturing base to an economy with growth in the medical, education and defense sectors, Leisch said.
"Baltimore was a Rust Belt city and now is one of the best-balanced regional economies," he said, with consistently high job growth and high-quality jobs, and thousands more expected in the next four years from a federal base realignment, know as BRAC, that will bring jobs to Fort Meade and Aberdeen Proving Ground.
"Is that sufficient to support a sturdy housing market? We think so," said Leisch.
The Washington metro area also fared well in the first three months of this year despite a slower pace of sales, according to the MRIS Trends in Housing Report, released in conjunction with the series of forecast conferences, including yesterday's at Martin's West in Baltimore County.
Though prices in the Baltimore region are projected to increase, values are not expected to approach the double-digit gains that persisted into the second quarter of last year.
And the average number of days homes are staying on the market has continued to rise, from 37 days in 2005 to 60 days in 2006 to 93 days in the first three months of this year.
Daraius Irani, the director of the Applied Economics Group at Towson University's Regional Economic Studies Institute and a panelist at yesterday's event, said job growth in Maryland has not been as strong as in past years.
"We are very puzzled by the fact that job growth has been anemic but unemployment is low," he said. "We view it as not enough job candidates are qualified in these high-skill fields.
The flood of new military and related jobs coming from BRAC will likely attract other companies seeking to locate near a concentration of high-tech businesses, Irani said.
Some 40,000 to 60,000 jobs overall are anticipated by 2011, creating an additional 25,000 households in Maryland and generating an estimated $500 million in income and property taxes annually, said Lisa Swoboda, a panelist and deputy director of the Office of Military and Federal Affairs in the state's Department of Business and Economic Development.
(Baltimore Sun)
Monday, May 7, 2007
Prince George’s County tops in state for 2006 foreclosures
Prince George’s County led the state in foreclosures in 2006, and has continued that pattern for the first quarter of 2007.
A total of 1,558 foreclosures were recorded in the county last year, with 590 in the first three months of this year, up 56 percent from the same period in 2006.
But Prince George’s dubious distinction is nothing new, and was the case even before the subprime market plunged, said Darrell Carrington, a senior loan officer with Freestate Mortgage Services in Bowie.
In fact, troubles in the subprime mortgage market have not hit Maryland as hard as other states.
Of the nearly 129,000 subprime home loans serviced in Maryland in 2006, about 2 percent, or 2,580, were in foreclosure by the end of the fourth quarter, up from 1.3 percent, or 1,677, in the first quarter of last year, according to Mortgage Bankers Association 2006 National Delinquency Survey.
That’s still significantly lower than the national average of 5 percent.
Subprime loan delinquencies in Maryland also rose significantly in 2006, from almost 8 percent in the first quarter to 12 percent in the fourth quarter. The mortgage association could not provide county data.
Carrington said high home prices in Prince George’s, in relation to other nearby counties, is a factor in its high foreclosure rate.
The parents of many of today’s homebuyers needed to make a 20 percent down payment, ‘‘but those days are kind of gone,” he said.
Such a down payment on a $350,000 house would be $70,000, and most people don’t have that much cash, he said.
The result is that more of the purchase price is borrowed, resulting in higher mortgage payments.
Mortgage broker Kip S. Douglass, president of Douglass Mortgage Advisory Group in Upper Marlboro, said he has seen the rise in home loan defaults in Prince George’s County. In a listing he surveys, Douglass said, he noted 16 new notices of default filed on April 17.
That total — about double what he used to see — is no longer atypical, he said.
Some of these borrowers will catch up with payments before losing their home, some will file bankruptcy and others will work out a forebearance agreement with their lenders, Douglass said in an e-mail. Some will also try to sell the property, he said, but perhaps half will lose their home to foreclosure.
Some real estate business has been lost because people who were marginally qualified to buy a home before are no longer approved for loans, said Kevin Cyrus, assistant branch manager of Long and Foster Real Estate Inc. in Mitchellville. As the housing market has cooled, lenders are not as lenient, so buyers need either more money down or more help with closing costs, he said.
Since subprime lenders have suddenly either closed their doors or withdrawn from the subprime market, ‘‘they are no longer standing behind pre-approval letters they have already issued,” Cyrus said. The need for Realtors to scrutinize lender letters has heightened, he said.
Subprime market troubles and disappearing lenders have caused some problems, but nothing ‘‘catastrophic,” said Donald Frederick, president of the Prince George’s County Association of Realtors.
‘‘The biggest problems I’m aware of were delayed settlements, not canceled settlements,” Frederick said. ‘‘There are plenty of programs that replace these types of loans, so I don’t see the problem being as big as some people think it is.”
Banks insured by the Federal Deposit Insurance Corp., such as Bank of America, Sandy Spring Bank and BB&T, don’t dabble much in the subprime market.
Nationally, 23 percent of all subprime loans are made by FDIC-insured banks, said Kathleen Murphy, president and CEO of the Maryland Bankers Association. ‘‘It is a small percentage of the overall subprime lending market,” she said.
With some loan programs ending, and credit guidelines tightening, brokers must really be skilled at finding the right loan, Douglass said.
‘‘What’s happening is, people are starting to need more professional help now,” he said.
(Business Gazette)
A total of 1,558 foreclosures were recorded in the county last year, with 590 in the first three months of this year, up 56 percent from the same period in 2006.
But Prince George’s dubious distinction is nothing new, and was the case even before the subprime market plunged, said Darrell Carrington, a senior loan officer with Freestate Mortgage Services in Bowie.
In fact, troubles in the subprime mortgage market have not hit Maryland as hard as other states.
Of the nearly 129,000 subprime home loans serviced in Maryland in 2006, about 2 percent, or 2,580, were in foreclosure by the end of the fourth quarter, up from 1.3 percent, or 1,677, in the first quarter of last year, according to Mortgage Bankers Association 2006 National Delinquency Survey.
That’s still significantly lower than the national average of 5 percent.
Subprime loan delinquencies in Maryland also rose significantly in 2006, from almost 8 percent in the first quarter to 12 percent in the fourth quarter. The mortgage association could not provide county data.
Carrington said high home prices in Prince George’s, in relation to other nearby counties, is a factor in its high foreclosure rate.
The parents of many of today’s homebuyers needed to make a 20 percent down payment, ‘‘but those days are kind of gone,” he said.
Such a down payment on a $350,000 house would be $70,000, and most people don’t have that much cash, he said.
The result is that more of the purchase price is borrowed, resulting in higher mortgage payments.
Mortgage broker Kip S. Douglass, president of Douglass Mortgage Advisory Group in Upper Marlboro, said he has seen the rise in home loan defaults in Prince George’s County. In a listing he surveys, Douglass said, he noted 16 new notices of default filed on April 17.
That total — about double what he used to see — is no longer atypical, he said.
Some of these borrowers will catch up with payments before losing their home, some will file bankruptcy and others will work out a forebearance agreement with their lenders, Douglass said in an e-mail. Some will also try to sell the property, he said, but perhaps half will lose their home to foreclosure.
Some real estate business has been lost because people who were marginally qualified to buy a home before are no longer approved for loans, said Kevin Cyrus, assistant branch manager of Long and Foster Real Estate Inc. in Mitchellville. As the housing market has cooled, lenders are not as lenient, so buyers need either more money down or more help with closing costs, he said.
Since subprime lenders have suddenly either closed their doors or withdrawn from the subprime market, ‘‘they are no longer standing behind pre-approval letters they have already issued,” Cyrus said. The need for Realtors to scrutinize lender letters has heightened, he said.
Subprime market troubles and disappearing lenders have caused some problems, but nothing ‘‘catastrophic,” said Donald Frederick, president of the Prince George’s County Association of Realtors.
‘‘The biggest problems I’m aware of were delayed settlements, not canceled settlements,” Frederick said. ‘‘There are plenty of programs that replace these types of loans, so I don’t see the problem being as big as some people think it is.”
Banks insured by the Federal Deposit Insurance Corp., such as Bank of America, Sandy Spring Bank and BB&T, don’t dabble much in the subprime market.
Nationally, 23 percent of all subprime loans are made by FDIC-insured banks, said Kathleen Murphy, president and CEO of the Maryland Bankers Association. ‘‘It is a small percentage of the overall subprime lending market,” she said.
With some loan programs ending, and credit guidelines tightening, brokers must really be skilled at finding the right loan, Douglass said.
‘‘What’s happening is, people are starting to need more professional help now,” he said.
(Business Gazette)
Fighting to Keep the Roof
Fighting to Keep the Roof
Strapped Owners Find Help From Their Lenders
Ernestine Witherspoon managed to hang onto her house in Northeast Washington even after she lost her job and fell far behind on her mortgage payments.
Her lender, Countrywide Home Loans, was weeks away from seizing the house when Witherspoon called, explained her situation, and worked out a plan to repay the $9,800 she owed. She scraped together $3,600 -- only because she landed a new job -- and Countrywide then tacked $25 onto her monthly payments for the life of the loan to make up the difference.
"I was treated well," said Witherspoon, 51, a secretary at a Maryland hospital. "But when you are in the position I was in, you have no choice but to accept the lender's terms if you want to keep your property, and that makes you feel very, very vulnerable."
Witherspoon benefited from the increasing willingness of lenders to help troubled borrowers stay in their homes. After easing lending standards in recent years, mortgage companies are facing a rising tide of late payments and defaults, driven by subprime borrowers with blemished credit or other factors that make them a risk to lenders. More than two dozen subprime lenders have shut down, and the rest of the industry is seeking ways to limit the damage.
"We would much rather work with a borrower than go through the foreclosure process," said Steve Bailey, Countrywide's senior managing director of loan administration. "We lose money on a foreclosure, the borrower is out of their home, and nobody is happy. The math works against us."
The lenders' new leniency works in favor of some borrowers. But to take advantage, homeowners have to move quickly, even if calling a mortgage company seems intimidating or stressful. Many people facing foreclosure simply "shut down" out of fear, says J. Michael Collins, a housing specialist with PolicyLab Consulting Group in Ithaca, N.Y.
"The more stressed people are, the less they're willing to seek help and the less they feel that lenders are helpful," he said.
If homeowners can overcome their anxiety and act soon enough, they have more options that can help avoid foreclosure. Those include refinancing the house, altering the terms of the original loan, filing for bankruptcy protection or even selling the house at a loss. But borrowers lose leverage, credibility and precious time when they try to dodge the lender, as more than half of them do in foreclosure cases, according to a survey by Freddie Mac, one of the largest investors in U.S. mortgages.
"As soon as you see trouble coming, that's the time to take action," said Ric Edelman, a financial planner in Fairfax.
The Equity Factor
If you're a financially troubled borrower, there are a few steps you should consider before contacting your mortgage company, especially if you have not missed a payment. Think about refinancing or taking out a home-equity loan, if you have equity in the property.
If refinancing won't work, identify every opportunity to raise cash. Sell your childhood toy collection on eBay. Rent out a room. Seek help from your church. "Do whatever it takes to raise money. You don't want to tell a creditor that you're having a problem if you can avoid it," especially if all you need is a one-time fix, Edelman said.
Telling a lender about your financial woes could put you at a disadvantage if you have equity in your home, said Jack Guttentag, professor of finance emeritus at the University of Pennsylvania's Wharton School and author of the Mortgage Professor column.
"The lender may tell you to come back after you've missed two payments," Guttentag said. By that time, your credit is shot, making it tough to borrow money elsewhere. If the lender then forecloses, that lender is protected against loss because the equity in your home could cover the loan balance and foreclosure-related costs, he said.
The riskiest borrowers typically don't have much equity, often because they have put little or no money down to buy their homes or have taken out second mortgages. As the housing market has softened, and home prices stagnated, those borrowers have found it hard to sell or refinance their way out of trouble.
Even if they could refinance, many borrowers with subprime loans face steep penalties if they pay off their loans early. Meanwhile, in response to the mortgage crisis, lenders have tightened their standards and made it harder for risky borrowers to qualify for new loans.
"It's a paradox, but the borrower who gets into trouble and has no equity is in a stronger negotiating position with the lender than the borrower who has equity," Guttentag said.
Work With the Lender
If refinancing is not an option, take a look at your mortgage statement and call the company that manages your loan. That call should be made quickly. The more time passes, the more a homeowner's credit tanks, limiting a lender's ability to work out a payment plan.
Lenders tend to be most amenable to the possibility of a forbearance, in which they suspend or reduce payments for a few months and then tack on portions of those payments to future ones. They will also consider lowering monthly interest rates, extending the life of the loan or altering the loan in some other way.
"Borrowers should seek modifications," said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "But the modification should not just keep the wolf away for a while longer. It should actually create an affordable loan."
So far, the number of mortgages modified has been modest. But the numbers are expected to rise substantially as more adjustable-rate mortgages begin to reset at higher rates at year's end, says Rod Dubitsky, an analyst at Credit Suisse.
"Right now, many people experiencing a reset have a lot of equity because of home-price appreciation at the end of 2005," said Dubitsky. "By the end of this year, fewer and fewer borrowers will have equity to refinance or sell their homes."
Lenders say it's in their interest to work with borrowers. Servicing a healthy loan costs them about $50 a year, and managing a delinquent or foreclosed one costs them about $1,000 and $2,000, respectively, said Robert Lacoursiere, an analyst at Banc of America Securities.
However, that does not mean there's a solution for every troubled borrower. Homeowners whose incomes cannot support their mortgage may get nothing more than a sympathetic ear -- if that -- from whoever handles their mortgage. The ultimate solution may be to walk way from the house.
"There's no incentive to work out payment arrangements if it only delays the inevitable," said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.
Instead, the borrower may be able to arrange a "short sale." With the mortgage holder's permission, a borrower can sell a home for less than the amount due on the loan and turn over the proceeds to the lender.
If the lender has reason to believe it can extract more value from the house, possibly by negotiating lower commissions from the agent involved, it may ask the homeowner to give it the deed of the house, surrender ownership rights and leave the property. This transaction is called a "deed in lieu of foreclosure."
To entice homeowners to leave quickly, some firms might even offer "cash for keys" -- a small sum of money that can help defray moving costs.
For lenders, all these deals typically reduce the cost of taking possession of the house.
In return, borrowers can shed their loan obligations, spare themselves the humiliation of a public foreclosure notice and protect their credit record. A short sale and a deed in lieu of foreclosure are far less damaging to a consumer's credit than an outright foreclosure.
But pay attention, says Richard Gottlieb, a consumer financial services attorney at Dykema Gossett. "A lender has every right to proceed against a borrower for the balance due on the mortgage loan," he said. "A borrower with significant assets is still at risk."
As a practical matter, most lenders will accept whatever money they get from a short sale or a deed in lieu of foreclosure, but borrowers need to make sure when they walk away that they are released of all financial obligations for the loan, consumer advocates said. That release should be put in writing.
If the lender forgives the shortfall, that has tax implications because it is considered income for the borrower, said Steven M. Buckman, a real estate attorney in the District. "And any time you have income, you have to pay income tax on it, federal and state." Lenders are required by law to report canceled debt to the IRS, and borrowers should be sure to get a statement of how much was forgiven on the loan.
A Last Resort
Anita McKenzie's lender suggested she do a short sale. But McKenzie does not want to walk away from her home. She said when she bought her townhouse in Germantown less than a year ago, she believed her agent and broker, who told her she could immediately refinance into a more affordable mortgage.
The refinancing never came through, leaving her stuck with a $3,650 monthly payment on her $40,000 salary. McKenzie fell behind on her payments. She's in danger of losing her house this summer.
"I don't know what to do except file for bankruptcy," said McKenzie, who has been working with HomeFree-USA, a housing counseling agency in the District.
McKenzie's counselor advised against it. Like many consumer advocates, she argues that bankruptcy proceedings should be used as a last resort because they damage a filer's credit, though less so than a foreclosure.
But in some situations, a bankruptcy filing makes sense, says Steven Ramsdell, a bankruptcy attorney in Alexandria.
"For people who have missed house payments, their credit has usually been dinged up already," Ramsdell said. "The credit ramifications of saving a house through bankruptcy should not be a deterrent if they can in fact save it."
Before filing for bankruptcy protection, consumers must attend credit-counseling sessions held by designated groups throughout the country.
Once they do, said Ramsdell, the kind of bankruptcy protection most effective in saving homes is Chapter 13, which immediately halts a foreclosure sale and freezes all collection actions for debts that predated the bankruptcy filing.
The court then approves a repayment plan that determines which creditors get paid back and when.
Under that arrangement, a person has up to five years to pay missed mortgage payments, essentially forcing the lender into a repayment plan and forcing a time frame that most lenders would not otherwise accept, Ramsdell said.
But while trying to make good on past debt, filers must keep up with their regular mortgage payments and other living expenses. For people without sufficient cash flow to make those payments -- plus contribute to the late ones -- this course of action is futile, Ramsdell says. It also makes no sense to file for bankruptcy protection when the house is worth less than the mortgage balance.
"If you owe $480,000 on a house that's worth only $400,000, it may not make sense to hang onto the house," Ramsdell said. "That's a hard thing for people to accept."
(Dina ElBoghdady, Washington Post)
Strapped Owners Find Help From Their Lenders
Ernestine Witherspoon managed to hang onto her house in Northeast Washington even after she lost her job and fell far behind on her mortgage payments.
Her lender, Countrywide Home Loans, was weeks away from seizing the house when Witherspoon called, explained her situation, and worked out a plan to repay the $9,800 she owed. She scraped together $3,600 -- only because she landed a new job -- and Countrywide then tacked $25 onto her monthly payments for the life of the loan to make up the difference.
"I was treated well," said Witherspoon, 51, a secretary at a Maryland hospital. "But when you are in the position I was in, you have no choice but to accept the lender's terms if you want to keep your property, and that makes you feel very, very vulnerable."
Witherspoon benefited from the increasing willingness of lenders to help troubled borrowers stay in their homes. After easing lending standards in recent years, mortgage companies are facing a rising tide of late payments and defaults, driven by subprime borrowers with blemished credit or other factors that make them a risk to lenders. More than two dozen subprime lenders have shut down, and the rest of the industry is seeking ways to limit the damage.
"We would much rather work with a borrower than go through the foreclosure process," said Steve Bailey, Countrywide's senior managing director of loan administration. "We lose money on a foreclosure, the borrower is out of their home, and nobody is happy. The math works against us."
The lenders' new leniency works in favor of some borrowers. But to take advantage, homeowners have to move quickly, even if calling a mortgage company seems intimidating or stressful. Many people facing foreclosure simply "shut down" out of fear, says J. Michael Collins, a housing specialist with PolicyLab Consulting Group in Ithaca, N.Y.
"The more stressed people are, the less they're willing to seek help and the less they feel that lenders are helpful," he said.
If homeowners can overcome their anxiety and act soon enough, they have more options that can help avoid foreclosure. Those include refinancing the house, altering the terms of the original loan, filing for bankruptcy protection or even selling the house at a loss. But borrowers lose leverage, credibility and precious time when they try to dodge the lender, as more than half of them do in foreclosure cases, according to a survey by Freddie Mac, one of the largest investors in U.S. mortgages.
"As soon as you see trouble coming, that's the time to take action," said Ric Edelman, a financial planner in Fairfax.
The Equity Factor
If you're a financially troubled borrower, there are a few steps you should consider before contacting your mortgage company, especially if you have not missed a payment. Think about refinancing or taking out a home-equity loan, if you have equity in the property.
If refinancing won't work, identify every opportunity to raise cash. Sell your childhood toy collection on eBay. Rent out a room. Seek help from your church. "Do whatever it takes to raise money. You don't want to tell a creditor that you're having a problem if you can avoid it," especially if all you need is a one-time fix, Edelman said.
Telling a lender about your financial woes could put you at a disadvantage if you have equity in your home, said Jack Guttentag, professor of finance emeritus at the University of Pennsylvania's Wharton School and author of the Mortgage Professor column.
"The lender may tell you to come back after you've missed two payments," Guttentag said. By that time, your credit is shot, making it tough to borrow money elsewhere. If the lender then forecloses, that lender is protected against loss because the equity in your home could cover the loan balance and foreclosure-related costs, he said.
The riskiest borrowers typically don't have much equity, often because they have put little or no money down to buy their homes or have taken out second mortgages. As the housing market has softened, and home prices stagnated, those borrowers have found it hard to sell or refinance their way out of trouble.
Even if they could refinance, many borrowers with subprime loans face steep penalties if they pay off their loans early. Meanwhile, in response to the mortgage crisis, lenders have tightened their standards and made it harder for risky borrowers to qualify for new loans.
"It's a paradox, but the borrower who gets into trouble and has no equity is in a stronger negotiating position with the lender than the borrower who has equity," Guttentag said.
Work With the Lender
If refinancing is not an option, take a look at your mortgage statement and call the company that manages your loan. That call should be made quickly. The more time passes, the more a homeowner's credit tanks, limiting a lender's ability to work out a payment plan.
Lenders tend to be most amenable to the possibility of a forbearance, in which they suspend or reduce payments for a few months and then tack on portions of those payments to future ones. They will also consider lowering monthly interest rates, extending the life of the loan or altering the loan in some other way.
"Borrowers should seek modifications," said Allen Fishbein, director of housing and credit policy at the Consumer Federation of America. "But the modification should not just keep the wolf away for a while longer. It should actually create an affordable loan."
So far, the number of mortgages modified has been modest. But the numbers are expected to rise substantially as more adjustable-rate mortgages begin to reset at higher rates at year's end, says Rod Dubitsky, an analyst at Credit Suisse.
"Right now, many people experiencing a reset have a lot of equity because of home-price appreciation at the end of 2005," said Dubitsky. "By the end of this year, fewer and fewer borrowers will have equity to refinance or sell their homes."
Lenders say it's in their interest to work with borrowers. Servicing a healthy loan costs them about $50 a year, and managing a delinquent or foreclosed one costs them about $1,000 and $2,000, respectively, said Robert Lacoursiere, an analyst at Banc of America Securities.
However, that does not mean there's a solution for every troubled borrower. Homeowners whose incomes cannot support their mortgage may get nothing more than a sympathetic ear -- if that -- from whoever handles their mortgage. The ultimate solution may be to walk way from the house.
"There's no incentive to work out payment arrangements if it only delays the inevitable," said Greg McBride, senior financial analyst at Bankrate.com, a personal finance Web site.
Instead, the borrower may be able to arrange a "short sale." With the mortgage holder's permission, a borrower can sell a home for less than the amount due on the loan and turn over the proceeds to the lender.
If the lender has reason to believe it can extract more value from the house, possibly by negotiating lower commissions from the agent involved, it may ask the homeowner to give it the deed of the house, surrender ownership rights and leave the property. This transaction is called a "deed in lieu of foreclosure."
To entice homeowners to leave quickly, some firms might even offer "cash for keys" -- a small sum of money that can help defray moving costs.
For lenders, all these deals typically reduce the cost of taking possession of the house.
In return, borrowers can shed their loan obligations, spare themselves the humiliation of a public foreclosure notice and protect their credit record. A short sale and a deed in lieu of foreclosure are far less damaging to a consumer's credit than an outright foreclosure.
But pay attention, says Richard Gottlieb, a consumer financial services attorney at Dykema Gossett. "A lender has every right to proceed against a borrower for the balance due on the mortgage loan," he said. "A borrower with significant assets is still at risk."
As a practical matter, most lenders will accept whatever money they get from a short sale or a deed in lieu of foreclosure, but borrowers need to make sure when they walk away that they are released of all financial obligations for the loan, consumer advocates said. That release should be put in writing.
If the lender forgives the shortfall, that has tax implications because it is considered income for the borrower, said Steven M. Buckman, a real estate attorney in the District. "And any time you have income, you have to pay income tax on it, federal and state." Lenders are required by law to report canceled debt to the IRS, and borrowers should be sure to get a statement of how much was forgiven on the loan.
A Last Resort
Anita McKenzie's lender suggested she do a short sale. But McKenzie does not want to walk away from her home. She said when she bought her townhouse in Germantown less than a year ago, she believed her agent and broker, who told her she could immediately refinance into a more affordable mortgage.
The refinancing never came through, leaving her stuck with a $3,650 monthly payment on her $40,000 salary. McKenzie fell behind on her payments. She's in danger of losing her house this summer.
"I don't know what to do except file for bankruptcy," said McKenzie, who has been working with HomeFree-USA, a housing counseling agency in the District.
McKenzie's counselor advised against it. Like many consumer advocates, she argues that bankruptcy proceedings should be used as a last resort because they damage a filer's credit, though less so than a foreclosure.
But in some situations, a bankruptcy filing makes sense, says Steven Ramsdell, a bankruptcy attorney in Alexandria.
"For people who have missed house payments, their credit has usually been dinged up already," Ramsdell said. "The credit ramifications of saving a house through bankruptcy should not be a deterrent if they can in fact save it."
Before filing for bankruptcy protection, consumers must attend credit-counseling sessions held by designated groups throughout the country.
Once they do, said Ramsdell, the kind of bankruptcy protection most effective in saving homes is Chapter 13, which immediately halts a foreclosure sale and freezes all collection actions for debts that predated the bankruptcy filing.
The court then approves a repayment plan that determines which creditors get paid back and when.
Under that arrangement, a person has up to five years to pay missed mortgage payments, essentially forcing the lender into a repayment plan and forcing a time frame that most lenders would not otherwise accept, Ramsdell said.
But while trying to make good on past debt, filers must keep up with their regular mortgage payments and other living expenses. For people without sufficient cash flow to make those payments -- plus contribute to the late ones -- this course of action is futile, Ramsdell says. It also makes no sense to file for bankruptcy protection when the house is worth less than the mortgage balance.
"If you owe $480,000 on a house that's worth only $400,000, it may not make sense to hang onto the house," Ramsdell said. "That's a hard thing for people to accept."
(Dina ElBoghdady, Washington Post)
Thursday, May 3, 2007
Baltimore City pairs with BHPC to reduce foreclosures
BALTIMORE - Since last year, 50 families a week have lost their homes to foreclosure in Baltimore City — depressing real estate values by $900 million.
Baltimore City and the Baltimore Homeownership Preservation Coalition have partnered to help homeowners and buyers spot predatory lenders and practices before they become their victims.
“Home foreclosure is an issue that can easily undermine the great success realized in neighborhoods throughout Baltimore City,” Mayor Sheila Dixon said. The pair have produced a new educational DVD titled “Judge Smartt,” which is designed to help consumers identify lending practices that can lead to excessive housing costs, potential foreclosures and predatory real estate practices. “Judge Smartt” uses a Court TV format and a humorous approach to get the information across to viewers.
Last year, lenders filed more than 3,200 foreclosure procedures in the city, according to the Baltimore Neighborhood Indicators Alliance. Of that number, 75 percent went to foreclosure. That translates to 2,500 homes lost in 2006.
“Luring uninformed families into loans that are unaffordable from the get-go is a disaster for the families who wind up in foreclosure and the neighborhoods that are left with abandoned houses,” said Vincent Quayle, executive director of the St. Ambrose Housing Aid Center.
With the aid of a $400,000 grant from Baltimore City’s Housing department and matching private support from sources such as the Baltimore Neighborhood Collaborative, more than 1,200 homes have been saved since the program was launched in September 2006. In addition, the city has lent its 311 helpline to provide residents to access a 24-hour toll-free hotline that connects them to free counseling services.
“Homeownership is not just an end in itself — it is a vital element of neighborhood stability and statistically the best means for helping lower- and moderate-income families build substantial assets, so we need to focus on making homeownership sustainable,” said Carol Gilbert, GHPC co-chairwoman.
The DVD will be distributed throughout community groups, housing counselors and other partners in the coming year in order to help prevent foreclosures.
(www.examiner.com)
Baltimore City and the Baltimore Homeownership Preservation Coalition have partnered to help homeowners and buyers spot predatory lenders and practices before they become their victims.
“Home foreclosure is an issue that can easily undermine the great success realized in neighborhoods throughout Baltimore City,” Mayor Sheila Dixon said. The pair have produced a new educational DVD titled “Judge Smartt,” which is designed to help consumers identify lending practices that can lead to excessive housing costs, potential foreclosures and predatory real estate practices. “Judge Smartt” uses a Court TV format and a humorous approach to get the information across to viewers.
Last year, lenders filed more than 3,200 foreclosure procedures in the city, according to the Baltimore Neighborhood Indicators Alliance. Of that number, 75 percent went to foreclosure. That translates to 2,500 homes lost in 2006.
“Luring uninformed families into loans that are unaffordable from the get-go is a disaster for the families who wind up in foreclosure and the neighborhoods that are left with abandoned houses,” said Vincent Quayle, executive director of the St. Ambrose Housing Aid Center.
With the aid of a $400,000 grant from Baltimore City’s Housing department and matching private support from sources such as the Baltimore Neighborhood Collaborative, more than 1,200 homes have been saved since the program was launched in September 2006. In addition, the city has lent its 311 helpline to provide residents to access a 24-hour toll-free hotline that connects them to free counseling services.
“Homeownership is not just an end in itself — it is a vital element of neighborhood stability and statistically the best means for helping lower- and moderate-income families build substantial assets, so we need to focus on making homeownership sustainable,” said Carol Gilbert, GHPC co-chairwoman.
The DVD will be distributed throughout community groups, housing counselors and other partners in the coming year in order to help prevent foreclosures.
(www.examiner.com)
Low appraisals hurt subprime borrowers
BALTIMORE - You face foreclosure. You quickly move to refinance but qualify only for a double-digit subprime rate. You take it, pay for an appraisal and learn your house is worth $425,000. Then the lender reduces your appraisal by $100,000.
That’s the situation Mark Allen, of Gwynn Oak, faced after being downsized at work.
“I took a part-time job to feed my family, keep gas in my car and continue my job search,” said Allen, a single parent of three. “When I finally got a full-time job, I was so far behind I couldn’t catch up. I had to refinance to save my home, but when they dropped my appraisal by $100,000, I was floored.”
Allen accepted that his monthly mortgage payments would go up by $1,000 and that he would only receive 70 percent loan to value, but he questions whether dropping his appraisal was legal.
A loan officer from Quality Home Loans, a lender that downgrades appraisals, said, “Appraisals can be downgraded for a lot of reasons, like market saturation, houses that stay on the market too long, or if when doing a public records search we see that though additions were made to a residence, the proper permits were not obtained. So then we disallow those additions.”
Real estate lawyer Stephen Greenwood said he thought lenders are “being oversensitive” to avoid financial problems such as those that affected New Century Financial, which went bankrupt.
“I don’t know if it is actually legal to decide to reduce somebody’s appraisal,” he said. “Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.”
Ashidda Khalil, executive director of the Baltimore branch of the Neighborhood Assistance Corporation of America, was familiar with the practice. “Imagine your neighbor with the identical house in the same condition gets 100 percent LTV, and not only do you get double-digit interest rates and only 60 to 70 percent LTV, but now they drop the value of your home by tens of thousands of dollars,” she said.
Khalil cautions borrowers to steer clear of lenders that drop appraisals. “There is legitimate help out there that doesn’t seek to further victimize the borrower,” she said.
(www.examiner.com)
That’s the situation Mark Allen, of Gwynn Oak, faced after being downsized at work.
“I took a part-time job to feed my family, keep gas in my car and continue my job search,” said Allen, a single parent of three. “When I finally got a full-time job, I was so far behind I couldn’t catch up. I had to refinance to save my home, but when they dropped my appraisal by $100,000, I was floored.”
Allen accepted that his monthly mortgage payments would go up by $1,000 and that he would only receive 70 percent loan to value, but he questions whether dropping his appraisal was legal.
A loan officer from Quality Home Loans, a lender that downgrades appraisals, said, “Appraisals can be downgraded for a lot of reasons, like market saturation, houses that stay on the market too long, or if when doing a public records search we see that though additions were made to a residence, the proper permits were not obtained. So then we disallow those additions.”
Real estate lawyer Stephen Greenwood said he thought lenders are “being oversensitive” to avoid financial problems such as those that affected New Century Financial, which went bankrupt.
“I don’t know if it is actually legal to decide to reduce somebody’s appraisal,” he said. “Then again, the lenders are the ones loaning the money, and they want to make sure their risks aren’t worse than what they already are.”
Ashidda Khalil, executive director of the Baltimore branch of the Neighborhood Assistance Corporation of America, was familiar with the practice. “Imagine your neighbor with the identical house in the same condition gets 100 percent LTV, and not only do you get double-digit interest rates and only 60 to 70 percent LTV, but now they drop the value of your home by tens of thousands of dollars,” she said.
Khalil cautions borrowers to steer clear of lenders that drop appraisals. “There is legitimate help out there that doesn’t seek to further victimize the borrower,” she said.
(www.examiner.com)
Subscribe to:
Posts (Atom)
