Scammers are taking advantage of mortgage holders at their most vulnerable - when they're about to lose their homes.
NEW YORK (CNNMoney.com) -- Jennifer Falke and her family had been in their Columbus, Ohio, home for nearly 12 years when they hit a rough patch in 2006. Falke was out of work and fell behind on the mortgage.
Falke said a flood of mailings and flyers then arrived at her door promising help from foreclosure rescue companies claiming to act as an intermediary between her and her lender to keep her from losing her home.
According to Falke, the company she contacted, Foreclosure Assistance Solutions (FAS), simply took her money and did nothing for her. And by delaying a workout with her lender, it made getting back on track harder and more expensive.
"I called the company, thinking it was the best thing I could do," she said. "They told me they could help. But one of the first things they said was, 'Don't call your mortgage company. If you do they'll tack on fees.'"
For a $1,200 payment, according to Falke, FAS claimed it would handle everything, including calls to the lender, but she charges it did nothing.
"Every time I got enough together to pay off the arrears, they would say the amount had increased." Falke received an income tax refund that she wanted to put toward a payment. But according to her, FAS said her mortgage company said it wasn't enough.
"Then they stopped answering my calls. I would leave a message every day," Falke said. "One day, they told me, 'We're dropping your case' and hung up on me."
Only then did she call her lender. Falke found out the payoff was less than what FAS had told her - $2,600 instead of $3,500. And then she learned that the bank had dealt with many cases like hers.
"To prey on people at one of the most vulnerable points in their lives is despicable," said Ohio Attorney General Mark Dann, who filed suit earlier this month against six foreclosure rescue companies, including FAS, who he claims snared Ohio residents in their webs.
FAS did not return a phone message asking for comment.
As foreclosure rates rise, evidence from other parts of the country indicates the number of rescue scams may be increasing. According to Alison Preszler, a spokeswoman for the Council of Better Business Bureaus, the BBB for Clearwater, Florida, received 508 complaints about local foreclosure rescue companies in the past three years with 322 coming just within the last 12 months.
Charlotte, North Carolina's BBB office reported last year that two foreclosure rescue companies were operating; today the count is 15 and six have already had legal actions taken against them. Twenty-one new companies began operations this year in Cleveland.
According to Dann, the most common form of foreclosure rescue scam in Ohio is like the one Falke claims was used on her. A scammer takes an up-front fee, usually $1,000 or more, to solve the victim's foreclosure problems, and then does little or nothing, pocketing the money.
Dann said victims are often low-income minorities, the elderly or immigrants in poor neighborhoods, but anyone can be targeted.
The most vulnerable members of society often make the easiest marks. A client of Jessica Attie of South Brooklyn Legal Services, was a mentally ill woman with a $60,000 mortgage balance that carried an interest rate of more than 10 percent. She was falling behind on payments, had few other resources and wanted to reduce her payments.
Attie said a scam artist convinced her client to sign over her title while he cleared up the arrears. She could rent the home for six months, and then he would sell it back to her. Instead, according to Attie, the scammer resold the house and absconded with more than $400,000.
Michael Sichenzia knows mortgage rescue scams from the inside out; in 2002, he was convicted and served hard time for mortgage fraud at the Attica Correctional Facility in New York State. Today he's an investigator for the Deerfield Beach, Florida law firm, Glinn Somera & Silva and chief operating officer of Dynamic Consulting Services, specializing in financial fraud.
According to Sichenzia, the most common foreclosure rescue scam has always been "equity stripping."
"The scammer promises to save the home by taking title," he said, "renting it to the owner and selling it back sometime later. Instead, he strips the equity by charging excessive fees, doing phony renovations and not making the mortgage payments."
Sometimes the home owner is fully aware that the title is changing hands, counting on the promise to be able to redeem it later. But other times the scammer tricks the owner.
"The signing over of title is buried in an avalanche of paperwork or in the language of the contracts," said Sichenzia.
Duane Legate, who runs Housebuyernetwork.com, which arranges short sales for homeowners in trouble and also offers foreclosure prevention advice, said, "There's only a handful of legitimate companies out there, ones that really do try to help clients. The rest are just looking for a quick payoff."
According to Legate, the scammers are multiplying so rapidly that there's even a company that sells foreclosure rescue Web sites, complete with testimonials from smiling, satisfied clients.
Here are some of the tactics that scammers are known to use:
* Saturation marketing: They learn of mortgage delinquencies through published reports and proceed to bombard the owners with phone calls, flyers and posters.
* Exploiting trust: Scammers build trust by acting sympathetic and solicitous; many owners can't believe they would lie to their faces.
* Isolating owners: Scammers assure victims that they'll handle everything. They tell them not to call their lenders nor seek legal advice.
* Outright fraud: Scammers have homeowners sign blank papers and fill them in afterward or they sneak the paperwork through without telling victims what they're signing.
* Affinity marketing: Especially among minorities and sometimes evangelical church congregations, a scammer builds trust based on a common ethnicity or religion.
According to Dann, you should never trust anyone who has contacted you, unsolicited, offering to help. "There are no boundaries to entry for any entrepreneurial criminal to get into these scams."
The best thing to do is to call your lender and try to work out a plan. If in doubt, get in touch with your state attorney general's office. It can put you in touch with a Housing and Urban Development-approved free credit counseling service that will do you a lot more good than fee-based rescue services.
Jennifer Falke was able to work out a settlement with her bank. She's back to work and current with her mortgage payments, but she is out the $1,200 she paid to FAS.
"The ingenuity of people who would rather cheat than work hard is unending," said Dann. (http://money.cnn.com)
Monday, August 27, 2007
Thursday, August 23, 2007
756 to share $1 million in housing settlement
Advocates for the disabled announced yesterday that 756 people are in line to share $1 million from the settlement of a Baltimore housing discrimination lawsuit.
A victims' compensation fund was established as part of a landmark 2004 settlement in a lawsuit alleging that thousands of people with disabilities were intentionally or illegally excluded from public housing. Other terms of the settlement, worth more than $100 million, include development of more than 1,000 units of public housing accessible to people with disabilities and a program to help them obtain housing.
The parties in the lawsuit - the Maryland Disability Law Center, the U.S. Department of Justice and the Housing Authority of Baltimore City - jointly filed in U.S. District Court yesterday a recommendation to compensate the 756 people. Both the law center and the justice department had sued the housing authority.
Last summer, officials mailed 40,000 notices to potential housing discrimination victims, urging them to take advantage of the compensation fund. Soup kitchens and shelters also held informational meetings about it. About 2,500 claims were filed, said Lauren Young, the disability law center's legal director.
Assuming the court approves the arrangement, each of the identified victims will receive about $1,300 sometime in the next few months, Young said.
"These payments are given to individuals in recognition that their civil rights were violated based on their disabilities," she said in a statement.
Among those recommended for compensation are people who were denied housing because they used wheelchairs, and a person who had requested grab bars and fell repeatedly in the shower.
University of Baltimore's law school is planning to offer financial counseling sessions for recipients of the money. (baltimoresun.com)
A victims' compensation fund was established as part of a landmark 2004 settlement in a lawsuit alleging that thousands of people with disabilities were intentionally or illegally excluded from public housing. Other terms of the settlement, worth more than $100 million, include development of more than 1,000 units of public housing accessible to people with disabilities and a program to help them obtain housing.
The parties in the lawsuit - the Maryland Disability Law Center, the U.S. Department of Justice and the Housing Authority of Baltimore City - jointly filed in U.S. District Court yesterday a recommendation to compensate the 756 people. Both the law center and the justice department had sued the housing authority.
Last summer, officials mailed 40,000 notices to potential housing discrimination victims, urging them to take advantage of the compensation fund. Soup kitchens and shelters also held informational meetings about it. About 2,500 claims were filed, said Lauren Young, the disability law center's legal director.
Assuming the court approves the arrangement, each of the identified victims will receive about $1,300 sometime in the next few months, Young said.
"These payments are given to individuals in recognition that their civil rights were violated based on their disabilities," she said in a statement.
Among those recommended for compensation are people who were denied housing because they used wheelchairs, and a person who had requested grab bars and fell repeatedly in the shower.
University of Baltimore's law school is planning to offer financial counseling sessions for recipients of the money. (baltimoresun.com)
Tuesday, August 21, 2007
Behind on your mortgage? Ask for help right away
Don't wait until you become delinquent on your mortgage payments or are facing foreclosure before seeking help.
That's the key advice from housing counselors in the Baltimore area, who are trying to get struggling homeowners out from under ballooning mortgage payments.
"The moment they're falling behind, or think they're falling behind, call us immediately," said Ashidda Khalil, director of the Baltimore office of the Neighborhood Assistance Corp. of America, a nonprofit housing advocacy group. "Because for some reason they became afraid, and don't talk to the lender, it gets out of control."
There are several options for Marylanders, especially subprime borrowers, who housing counselors say have seen their monthly payments double in some cases as interest-only or adjustable-rate mortgages (ARMs) reset.
During the housing boom, many buyers stretched to buy a home before prices rose higher. They sought subprime mortgages because they meant lower payments in the first few years.
In addition, lenders made more subprime loans, typically at higher interest rates, to people with spotty credit records.
During 2004 and 2005, subprime loans nearly tripled, according to the Federal Reserve.
But now, as home values flatten or even decline and higher interest rates kick in, many homeowners can't keep up. Those with little or no equity are finding it tough to find new, fixed-rate loans or even sell the house for what they owe.
The state and some nonprofit organizations offer refinancing options for homeowners in dire situations. Many have eligibility requirements, such as income limits.
$1 billion in refinancing
Neighborhood Assistance, for instance, recently announced a commitment of $1 billion to refinance loans of people at risk of losing their homes.
To qualify, homeowners have to have subprime mortgages with interest rates of 10 percent or higher, Khalil said. They can refinance into a 30-year loan with a fixed rate that is 1 percent below market. So far, Khalil said the group has helped several Baltimore homeowners refinance and prevent foreclosure.
Neighborhood Housing Services of Baltimore Inc., a nonprofit group whose mission includes providing affordable housing, offered $1 million to refinance loans between January and May but then ran out of money because of the high demand.
The organization expects to have financing again in October.
Neighborhood Housing also offers emergency loans of up to $5,000 to help homeowners through tough months. The foreclosure process is quick in Maryland and the loans help people buy time, the group said.
"The idea is to forestall things for a limited amount of time and give homeowners time to fix the problem," said Felix Torres, the group's executive director.
"The customer that we were able to refinance basically had subprime loans they couldn't afford," Torres said. "In some cases they could barely afford it, and they were facing interest rates that were just going to push them over the edge."
Funding exhausted
The Community Assistance Network in Dundalk, too, recently exhausted its limited funding to help homeowners avoid delinquency and foreclosures, said Jon Brown, the group's sole housing counselor. The maximum grant is $450, and homeowners would have to provide the difference to bring payments current.
Marylanders also may qualify for the state's new Lifeline Refinance Mortgage program.
The loans, which have income limits, currently carry an interest rate of 6.5 percent.
Lifeline has about a dozen loans in the pipeline and has had about 600 inquiries since June. Officials expect to see an even bigger wave next year when more adjustable-rate mortgages reset, said Russell Thomas, a spokesman for the Department of Housing and Community Development, which administers the program.
Aside from financial help, nonprofit groups provide free counseling. Housing counselors can work with lenders to review options, such as lowering the interest rate.
"We're calling lenders and asking them to modify the loan so this person can continue to live in their home and raise their family," said Khalil of the Neighborhood Assistance. "We're pleading with lenders."
The St. Ambrose Housing Aid Center Inc. is on track this year to see nearly triple the amount of people it normally helps, from 700 to over 2,000 clients. The center said many homeowners had adjustable-rate loans and are now being squeezed. Others got into houses they couldn't afford. Many are coming in too late.
St. Ambrose will contact a homeowner's lender to see if better financing terms can be worked out. The center can also refer people to refinancing programs. It helps to sell the properties if it's too late to save them.
"Many of the families are already behind on their mortgage payments and the options become fewer and fewer," said Lisa Evans, deputy director of St. Ambrose. "People need to come in before their ARMs adjust and before their interest rates increase."
Where to seek help
Here are some places where homeowners struggling to make mortgage payments can turn to for help or further referrals:
• Lifeline Refinance Mortgage Program
A state program that provides refinancing. http://www.dhcd.state.md.us/Lifeline/ 877-462-7555
• St. Ambrose Housing Aid Center Inc.
Offers free counseling and referrals http://www.stambros.org/ 410-366-8550
• Neighborhood Housing Services of Baltimore
Provides emergency loans. It expects to have new funding available for refinancings in October. 410-327-1200
• Neighborhood Assistance Corp. of America
Offers a refinancing program and homeownership counseling. https://www.naca.com/index_main.jsp 410-783-0465
• Maryland attorney general's office
List of foreclosure counseling services http://www.oag.state.md.us/Consumer/foreclose.htm
• Homeownership Preservation Foundation
Hotline for homeowners in danger of facing foreclosure to connect with a U.S. government-approved counselor. Call 888-995-HOPE (4673). (baltimoresun.com)
That's the key advice from housing counselors in the Baltimore area, who are trying to get struggling homeowners out from under ballooning mortgage payments.
"The moment they're falling behind, or think they're falling behind, call us immediately," said Ashidda Khalil, director of the Baltimore office of the Neighborhood Assistance Corp. of America, a nonprofit housing advocacy group. "Because for some reason they became afraid, and don't talk to the lender, it gets out of control."
There are several options for Marylanders, especially subprime borrowers, who housing counselors say have seen their monthly payments double in some cases as interest-only or adjustable-rate mortgages (ARMs) reset.
During the housing boom, many buyers stretched to buy a home before prices rose higher. They sought subprime mortgages because they meant lower payments in the first few years.
In addition, lenders made more subprime loans, typically at higher interest rates, to people with spotty credit records.
During 2004 and 2005, subprime loans nearly tripled, according to the Federal Reserve.
But now, as home values flatten or even decline and higher interest rates kick in, many homeowners can't keep up. Those with little or no equity are finding it tough to find new, fixed-rate loans or even sell the house for what they owe.
The state and some nonprofit organizations offer refinancing options for homeowners in dire situations. Many have eligibility requirements, such as income limits.
$1 billion in refinancing
Neighborhood Assistance, for instance, recently announced a commitment of $1 billion to refinance loans of people at risk of losing their homes.
To qualify, homeowners have to have subprime mortgages with interest rates of 10 percent or higher, Khalil said. They can refinance into a 30-year loan with a fixed rate that is 1 percent below market. So far, Khalil said the group has helped several Baltimore homeowners refinance and prevent foreclosure.
Neighborhood Housing Services of Baltimore Inc., a nonprofit group whose mission includes providing affordable housing, offered $1 million to refinance loans between January and May but then ran out of money because of the high demand.
The organization expects to have financing again in October.
Neighborhood Housing also offers emergency loans of up to $5,000 to help homeowners through tough months. The foreclosure process is quick in Maryland and the loans help people buy time, the group said.
"The idea is to forestall things for a limited amount of time and give homeowners time to fix the problem," said Felix Torres, the group's executive director.
"The customer that we were able to refinance basically had subprime loans they couldn't afford," Torres said. "In some cases they could barely afford it, and they were facing interest rates that were just going to push them over the edge."
Funding exhausted
The Community Assistance Network in Dundalk, too, recently exhausted its limited funding to help homeowners avoid delinquency and foreclosures, said Jon Brown, the group's sole housing counselor. The maximum grant is $450, and homeowners would have to provide the difference to bring payments current.
Marylanders also may qualify for the state's new Lifeline Refinance Mortgage program.
The loans, which have income limits, currently carry an interest rate of 6.5 percent.
Lifeline has about a dozen loans in the pipeline and has had about 600 inquiries since June. Officials expect to see an even bigger wave next year when more adjustable-rate mortgages reset, said Russell Thomas, a spokesman for the Department of Housing and Community Development, which administers the program.
Aside from financial help, nonprofit groups provide free counseling. Housing counselors can work with lenders to review options, such as lowering the interest rate.
"We're calling lenders and asking them to modify the loan so this person can continue to live in their home and raise their family," said Khalil of the Neighborhood Assistance. "We're pleading with lenders."
The St. Ambrose Housing Aid Center Inc. is on track this year to see nearly triple the amount of people it normally helps, from 700 to over 2,000 clients. The center said many homeowners had adjustable-rate loans and are now being squeezed. Others got into houses they couldn't afford. Many are coming in too late.
St. Ambrose will contact a homeowner's lender to see if better financing terms can be worked out. The center can also refer people to refinancing programs. It helps to sell the properties if it's too late to save them.
"Many of the families are already behind on their mortgage payments and the options become fewer and fewer," said Lisa Evans, deputy director of St. Ambrose. "People need to come in before their ARMs adjust and before their interest rates increase."
Where to seek help
Here are some places where homeowners struggling to make mortgage payments can turn to for help or further referrals:
• Lifeline Refinance Mortgage Program
A state program that provides refinancing. http://www.dhcd.state.md.us/Lifeline/ 877-462-7555
• St. Ambrose Housing Aid Center Inc.
Offers free counseling and referrals http://www.stambros.org/ 410-366-8550
• Neighborhood Housing Services of Baltimore
Provides emergency loans. It expects to have new funding available for refinancings in October. 410-327-1200
• Neighborhood Assistance Corp. of America
Offers a refinancing program and homeownership counseling. https://www.naca.com/index_main.jsp 410-783-0465
• Maryland attorney general's office
List of foreclosure counseling services http://www.oag.state.md.us/Consumer/foreclose.htm
• Homeownership Preservation Foundation
Hotline for homeowners in danger of facing foreclosure to connect with a U.S. government-approved counselor. Call 888-995-HOPE (4673). (baltimoresun.com)
Home sales slump in Md.
21.1% fewer sold in spring; prices in area hold up
Maryland's housing market took a beating in the spring selling season, recording one of the biggest drops in sales in the nation.
Homeowners in the state sold 21.1 percent fewer homes during the second quarter than they did a year earlier, the National Association of Realtors said yesterday. That was nearly double the 10.8 percent drop for the nation as a whole. The numbers, which track existing homes, are annualized and adjusted for seasonal variations.
Despite the steep sales decline, pricing in the Baltimore metropolitan area held up. The median price of a single-family home gained 3 percent in the April-June quarter over the same three months a year earlier, according to the association. Nationally, prices fell 1.5 percent.
The slump in sales in the April-June period preceded the current turmoil in the mortgage industry, which was ignited by failures in subprime loans made to buyers with shakier credit. Now, as foreclosures mount and more lenders go out of business, it has become harder to qualify for a mortgage, narrowing the pool of potential buyers.
That's a sharp contrast to what happened during the housing boom, when relaxed lending standards and the proliferation of adjustable-rate, interest-only and other nontraditional loans led to rising sales and prices.
"All of us were on a nice bubble, and everybody was waiting for that bubble to fizzle," said Thomas C. Shaner, executive director of the Maryland Association of Mortgage Brokers. "Well, it popped."
Lawrence Yun, senior economist with the National Association of Realtors, thinks prices in the Baltimore area are holding up because the economy continues to create high-paying jobs.
"There's not a panic in the market," agreed John McClain, senior fellow at the Center for Regional Analysis at George Mason University. "There are still people out there who need to live here because we still have job growth."
But sales might be better if prices were dropping.
Maryland home prices doubled from 2000 to 2005, an unusually big gain even for the U.S. boom years. Incomes didn't rise nearly as fast. With half the homes now selling for more than $325,000, some would-be buyers just can't make the numbers work.
"Affordability has been eroded," said Celia Chen, director of housing economics for Moody's Economy.com. "If prices are not falling off, that's going to constrain sales."
She thinks the local housing market probably won't improve until the middle of next year, and that's assuming no more nasty surprises.
"Conditions can easily become much worse than we expect because of all the issues arising right now in the mortgage markets and financial markets," Chen said.
Only Florida, Nevada, Arizona and Tennessee saw bigger decreases in second-quarter sales than Maryland. Florida - a state that, like Maryland, recorded some of the biggest price increases in the country during the housing boom - had a 41 percent slump in sales.
In all, 41 states plus the District of Columbia recorded declines.
Maryland's annualized sales pace in the second quarter was just under 93,000 home sales, compared with about 118,000 the same time last year, the National Association of Realtors said.
Existing homes aren't the only part of the market feeling the pinch. The National Association of Home Builders said yesterday that its index of builder confidence for August fell to its lowest level since the recessionary days of January 1991. Builders say the credit crunch is causing problems not only for borrowers with shaky credit but also for prospective buyers who need "jumbo" loans of more than $417,000.
It's hardly helpful for expensive markets such as Howard County. Nearly half the existing homes in Howard are selling for more than that price, let alone the big new homes.
"That's a scary thought," said Pat Hiban, an associate broker at the Pat Hiban Real Estate Group with Keller Williams Realty in Ellicott City. With interest rates on jumbo loans rising, some would-be buyers are reconsidering whether to purchase a home, he said.
Yun said mortgage troubles will hold back demand during the short term. But he said the subprime bust has propelled buyers with less-than-perfect credit back to loans insured by the Federal Housing Administration, a segment of the financing market that was all but abandoned during the go-go days of the boom.
He expects small gains in prices in the Baltimore area in the near future.
Yun noted signs of nationwide improvement in prices during the second quarter with 97 metropolitan areas out of 149 showing year-over-year gains in price, up from 83 in the first quarter and 68 in the fourth quarter of last year.
But Chen thinks some of the second-quarter increases were artificially high. Median prices might have been skewed upward by a drop-off in sales of cheaper homes, she said, because the subprime market was in trouble before interest rates rose for jumbo loans.
"The lower end of the housing market is falling off quickly, more quickly, because of all the problems of the subprime lending market," Chen said.(baltimoresun.com)
Maryland's housing market took a beating in the spring selling season, recording one of the biggest drops in sales in the nation.
Homeowners in the state sold 21.1 percent fewer homes during the second quarter than they did a year earlier, the National Association of Realtors said yesterday. That was nearly double the 10.8 percent drop for the nation as a whole. The numbers, which track existing homes, are annualized and adjusted for seasonal variations.
Despite the steep sales decline, pricing in the Baltimore metropolitan area held up. The median price of a single-family home gained 3 percent in the April-June quarter over the same three months a year earlier, according to the association. Nationally, prices fell 1.5 percent.
The slump in sales in the April-June period preceded the current turmoil in the mortgage industry, which was ignited by failures in subprime loans made to buyers with shakier credit. Now, as foreclosures mount and more lenders go out of business, it has become harder to qualify for a mortgage, narrowing the pool of potential buyers.
That's a sharp contrast to what happened during the housing boom, when relaxed lending standards and the proliferation of adjustable-rate, interest-only and other nontraditional loans led to rising sales and prices.
"All of us were on a nice bubble, and everybody was waiting for that bubble to fizzle," said Thomas C. Shaner, executive director of the Maryland Association of Mortgage Brokers. "Well, it popped."
Lawrence Yun, senior economist with the National Association of Realtors, thinks prices in the Baltimore area are holding up because the economy continues to create high-paying jobs.
"There's not a panic in the market," agreed John McClain, senior fellow at the Center for Regional Analysis at George Mason University. "There are still people out there who need to live here because we still have job growth."
But sales might be better if prices were dropping.
Maryland home prices doubled from 2000 to 2005, an unusually big gain even for the U.S. boom years. Incomes didn't rise nearly as fast. With half the homes now selling for more than $325,000, some would-be buyers just can't make the numbers work.
"Affordability has been eroded," said Celia Chen, director of housing economics for Moody's Economy.com. "If prices are not falling off, that's going to constrain sales."
She thinks the local housing market probably won't improve until the middle of next year, and that's assuming no more nasty surprises.
"Conditions can easily become much worse than we expect because of all the issues arising right now in the mortgage markets and financial markets," Chen said.
Only Florida, Nevada, Arizona and Tennessee saw bigger decreases in second-quarter sales than Maryland. Florida - a state that, like Maryland, recorded some of the biggest price increases in the country during the housing boom - had a 41 percent slump in sales.
In all, 41 states plus the District of Columbia recorded declines.
Maryland's annualized sales pace in the second quarter was just under 93,000 home sales, compared with about 118,000 the same time last year, the National Association of Realtors said.
Existing homes aren't the only part of the market feeling the pinch. The National Association of Home Builders said yesterday that its index of builder confidence for August fell to its lowest level since the recessionary days of January 1991. Builders say the credit crunch is causing problems not only for borrowers with shaky credit but also for prospective buyers who need "jumbo" loans of more than $417,000.
It's hardly helpful for expensive markets such as Howard County. Nearly half the existing homes in Howard are selling for more than that price, let alone the big new homes.
"That's a scary thought," said Pat Hiban, an associate broker at the Pat Hiban Real Estate Group with Keller Williams Realty in Ellicott City. With interest rates on jumbo loans rising, some would-be buyers are reconsidering whether to purchase a home, he said.
Yun said mortgage troubles will hold back demand during the short term. But he said the subprime bust has propelled buyers with less-than-perfect credit back to loans insured by the Federal Housing Administration, a segment of the financing market that was all but abandoned during the go-go days of the boom.
He expects small gains in prices in the Baltimore area in the near future.
Yun noted signs of nationwide improvement in prices during the second quarter with 97 metropolitan areas out of 149 showing year-over-year gains in price, up from 83 in the first quarter and 68 in the fourth quarter of last year.
But Chen thinks some of the second-quarter increases were artificially high. Median prices might have been skewed upward by a drop-off in sales of cheaper homes, she said, because the subprime market was in trouble before interest rates rose for jumbo loans.
"The lower end of the housing market is falling off quickly, more quickly, because of all the problems of the subprime lending market," Chen said.(baltimoresun.com)
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