Baltimore: Statistics indicate unprepared buyers are entering foreclosure

BALTIMORE - Subprime mortgages are undermining the housing market.

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.”
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.”

(www.examiner.com)

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)

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)

Baltimore Housing Turning To Buyer's Market

(WJZ) BALTIMORE Sales are down and prices are up this spring, according to housing market specialists in the Baltimore region.As Derek Valcourt reports, the trend is painting a different picture of the Baltimore area's housing market than in the past few years, and analysts think it's a good thing for buyers.For Sale signs go up everyday in Baltimore and the surrounding area. Some are only there for a few days before homes are sold. Others take months.But, analysts are now saying houses are spending more time on the market than last year. Statistics show houses are taking between an average of 41 to 104 percent longer to sell."What's happened here in the last year or so is that the market has stabilized and it has gone to more of a normal market or more of a buyer's market," said Long and Foster realtor Sharon Blough.In addition, not as many homes are selling. Right now only about one out of five homes currently on the market sell each month."The number of properties sold were less than in previous years but at the same time the properties are still holding their value," said Blough.The sales slowdown, according to Blough, is due in part to the cost of home prices rising.In Carroll County average sale prices are up nearly 12 percent from this time last year. In Baltimore City prices are up nearly 10 percent, while other surrounding counties have seem more modest gains.Howard and Anne Arundel Counties have seen prices fall, but only slightly.Economist Anirban Basu said Baltimore's proximity to Washington and its affordability have helped keep prices rising."Actually, I think that the adjustment from the hot seller's market of 2004 and 2005 to a buyer's market has been as smooth as one could have hoped for," said Basu.Although other East Coast cities are suffering, the Baltimore region is holding its own."This could have been predicted because right now the buyers are focused on value," said Basu. "But they are looking for a place to live and they are looking for value and Baltimore offers that."According to experts, the best bet on selling a home quickly is to make sure it is priced reasonably--at or below comparable homes in the area.Spring usually sees an increase in home sales as many people get their tax returns and children prepare to finish up the school year.
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