« April 2008 | Main | June 2008 »

May 31, 2008

Housing fair -- for buyers and renters

Greater Coppin Heights/Rosemont Community organizers know that homebuyers aren't the only ones who could use advice and help, so they've put together a housing fair meant for buyers and renters. The event is scheduled for next Saturday -- June 7 -- from 10 a.m. to 2 p.m. at the dining and meeting hall of Coppin State College, 2500 W. North Ave.

The free event, billed as the second annual, will include workshops about buying, mortgages and budgeting, and tenant/landlord issues. (Current homeowners might want to go for the workshop about avoiding foreclosure.)

Organizers suggest pre-registering, which you can do by emailing chcdc@coppin.edu or by calling one of the numbers on the announcement. (Scroll down to the second page of the PDF.)

May 30, 2008

An escrow allegation

The point of an escrow account is to safeguard money or other property with a neutral third party, which is why state regulators just shut down a title company that is allegedly missing up to $2 million from its account for property settlements.

Hanah Cho reports today:

Maryland Insurance Commissioner Ralph S. Tyler ordered yesterday that business licenses for Day Title Inc. and owner Deborah A. Williams be suspended and revoked. The Maryland Insurance Administration issues licenses and regulates title companies, which conduct real estate closings.

Tyler's action follows an order issued last week by an Anne Arundel County Circuit Court judge appointing a receiver to oversee the liquidation of Day Title. The court action was initiated by The Security Title Guarantee Corp. of Baltimore, the title insurance company for Day Title.

Security Title says homeowners will not be responsible for any losses.

Industry players say escrow misuse is rare, but it can crop up "when title company owners who are facing financial difficulties use money in their escrow accounts to operate their business," Cho notes:

Tyler said his office is seeing a spike in complaints involving title companies not making mortgage payments, a trend the commissioner attributes to the slowing real estate market.

May 29, 2008

Overpaying to get the loan?

A HUD-funded study released today says that many borrowers are overpaying "by thousands of dollars" for their closing costs.

The press release sums it up thusly:

The study found that there are significant and unsupported variations in loan charges, title fees and other closing costs charged to homebuyers, and that minority borrowers pay hundreds of dollars more in total loan origination fees than do non-minority homebuyers.

This isn't about the crazy mortgages of the late housing boom. The Urban Institute, which produced the study for HUD, looked at FHA-insured, fixed-rate mortgages originated in May and June of 2001.

HUD is trying to win support for a proposal that mortgage lenders and brokers give consumers a standard "good faith estimate" so consumers can more easily compare offers.

"This report demonstrates once and for all that the process consumers endure when they buy their homes is entirely too confusing," said HUD Deputy Secretary Roy A. Bernardi. "Clearly, we need to open the window and allow consumers to understand the fine print and shop more effectively for the largest purchase of their lives."
According to the study:

--Title fees can range by more than $1,000 even in the same state and to "identical" borrowers

--Borrowers agreeing to higher interest rates aren't generally getting lower upfront fees in exchange

--African-American borrowers "pay an average of $415 more in total loan origination fees than non-minorities"

--Costs range substantially from state to state, even after accounting for differences in loan amounts and borrower qualifications. Nevada borrowers pay the most in lender or broker charges -- $2,700 more than the lowest-cost state, Alaska. Marylanders pay almost $1,900 more than Alaskans.

Higher fee, condo concerns and lots of construction

If you rely on city water, plan on paying about $30 more a year for it. The Sun reports today that the Board of Estimates approved the increase to cover the cost of sewer upgrades:
The rate increases would have a direct effect on customers in Baltimore and the surrounding counties that use city water, including Howard, Anne Arundel and Carroll counties.

Also today, Lorraine Mirabella has a story about the new condo market. Figures from Delta Associates suggest that condo developers are feeling the effects of borrowing restrictions and nervous buyers:

Contract cancellations have begun to show up in the sales numbers in metropolitan Baltimore, which had a net gain of just 13 condo sales in the city and Baltimore, Harford, Howard and Anne Arundel counties in the first three months of the year, Delta said.

And you know -- I completely forgot to mention that I had a story yesterday about the new "State of Downtown" report, which had interesting statistics about the pace of construction. Though market conditions have stalled some major projects in the planning stages, there's lots of construction activity:

Developers finished nearly $550 million in downtown Baltimore construction projects in the first four months of the year - more than twice the value of developments completed in all of 2007.

That's according to the Downtown Partnership of Baltimore, which detailed a continuing boom in activity in its newest "State of Downtown" report being released today. About $2.7 billion in construction is under way now, despite the housing slump, credit crunch and economic slowdown, the group said.

May 28, 2008

The 800-pound gorillas

A story today about a fight over appraisals includes this nugget, which underscores how significant the already sizable Fannie Mae and Freddie Mac have become in the new lending reality:
Created by Congress to increase homeownership, Fannie Mae and Freddie Mac have become one of the few avenues for new mortgage financing as competitors scaled back amid record increases in delinquencies and defaults. Their share of the conforming mortgage market, or new loans of $417,000 or less, almost doubled to 81 percent in the first quarter.

And that, dear friends, is why Fannie and Freddie's borrowing rules matter to you if you're trying to buy, sell or refinance.

May 27, 2008

A smorgasbord of news

In the good news/bad news department: The federal government said today that new-home sales increased in April, the first upward movement in six months -- but only because March was worse than it originally thought.

As the Associated Press notes:

The Commerce report on new home sales showed the April rebound was led by a huge 41.7 percent surge in sales in the Northeast. Sales were up 8.3 percent in the West and 5.8 percent in the Midwest. The only region which saw a decline in sales in April was the South, where sales fell by 2.4 percent.

Maryland, according to the Commerce Department, is in the South, in case you were wondering.

Also today, the federal government and National Association of Realtors settled an antitrust suit "that accused the trade group of trying to restrain competition," Bloomberg reports. No longer will NAR-affiliated multiple-listing services be able to keep online real estate brokers from fully accessing the listing information:

The government said the practice propped up an old-fashioned business model and harmed consumers who can save up to 1 percent of the price of a home by using a Web-based broker.

The National Association of Realtors says in a press release (headlined "Realtors Compete, Consumers Win") that the order "expressly provides that NAR does not admit any liability or wrongdoing and NAR will make no payments in connection with the settlement." 

Interested in the Justice Department press release? Read it HERE.

May 26, 2008

How-to Monday: Property taxes

TaxStockxchng.jpg

Photo courtesy of Stock.XCHNG

Local property taxes range considerably in Maryland, as anyone who's moved to and from Baltimore knows. You might not want to make homebuying decisions based on taxes alone, but it doesn't hurt to understand the differences beforehand.

So I've broken it out for you. Here's what you'd be paying in county and state property taxes this fiscal year if you bought the median-priced home in various jurisdictions in 2007, and what you'd be paying for a $300,000 house.

Read this doc on Scribd: PropertyTaxRates3

Read this doc on Scribd: PropertyTaxRates2

(Squinting at the numbers? You can hit the plus button to make the chart larger.)

The home price data comes from the Maryland Association of Realtors, and the tax rates I used to calculate the bill are courtesy of the state Department of Assessments and Taxation. These rates are for July 2007 through June 2008, which means they could change come July 1.

Your home price and your "taxable assessment" aren't necessarily one and the same, but for the purposes of this example I'm assuming that they are. Also, keep in mind that the county rates really are the county rates: If you live in a municipality that adds an additional property tax, such as Annapolis, you'll pay more. (Click HERE to look at all the rates.)

Baltimore City's property tax rate -- $2.268 per $100 of taxable assessment -- means a tax bill that's far and away the highest when you're comparing costs for a $300,000 house across the state. (In fact, it's almost $5,400 more than the cheapest county, Talbot.) It looks better if you're comparing what you'd pay in taxes for the typical city home vs., say, the typical Howard County home.

What you get for your taxes is harder to sum up in a neat jurisdictional chart. That's always a heated topic.

May 25, 2008

Is your house your retirement plan?

Rapidly rising home prices during the boom years may have helped lull Americans into a false sense of security about retirement. That's one of the explanations offered for the slowing number of workers investing in 401(k) and 401(k)-like plans during those years, the Los Angeles Times reports:
The number of people investing in 401(k) and similar plans climbed to 50.9 million in 2000, from 42.2 million in 1995, according to the Employee Benefit Research Institute. From there, though, participation rose only to 52.2 million through 2004, the institute said.

There are several reasons, including fewer small companies offering plans and lingering investor concerns about the stock market after the bursting of the technology bubble in 2000, said Craig Copeland, the author of the study.

But the preoccupation with housing played a role, Copeland said, as some people earmarked cash for new or remodeled dwellings as home prices surged, instead of funding retirement accounts.

People considered housing to be "the big investment," he said.

May 24, 2008

Map those trends

The Reinvestment Fund, which has tracked foreclosures and other housing-related issues in Maryland, has a new tool for people who like to see what's going on.

PolicyMap lets you add layers of data to see what's going on with home prices, mortgages, neighborhood conditions, etc. You can try an address to see a close-in look or check out the entire state.

Find anything interesting? Feel free to weigh in. 

May 23, 2008

Housing affordability improves

Let it not be forgotten in the turmoil created by a downward market that falling home prices have at least one benefit: More renters can afford to buy, if they choose (and if they can qualify for a mortgage, of course).

The National Association of Home Builders, which released its NAHB/Wells Fargo "housing opportunity" index this week, calculated that 57 percent of the new and existing homes sold in the first three months of this year in the Baltimore metro area were in price ranges affordable to families making the area's median income. Less than half the homes sold in the last three months of 2007 fit the same criteria.

The low point in the 17-year index was the spring of 2006, when the median-income family could afford just 41 percent of the homes that sold in the Baltimore metro area. (The index defines a home as affordable if the typical household wouldn't have to spend more than 28 percent of its income on the mortgage payments.) 

The home builders take into account fluctuating interest rates as well as changing prices and incomes. In the first quarter of this year, according to the figures they track, interest rates fell, incomes rose and prices dropped.

The Baltimore area ranks 123rd out of 223 metros for affordability, with 1 being most affordable. It was 31st in the spring of 2000, when three-quarters of the homes that sold were in the typical family's price range.

Nowadays, the area's median family income is $78,000 and the median home price is $250,000, the home builders say.

May 22, 2008

Maryland home prices: 8th biggest drop in nation

Maryland home sale prices in the first three months of the year dropped 4.8 percent from a year earlier, the Office of Federal Housing Enterprise Oversight said today. That's the eighth largest decline in the country.

Here's the bottom 10:

1. California, down 19 percent

2. Nevada, down 17 percent

3. Florida, down 15 percent

4. Arizona, down 11 percent

5. Michigan, down 8.9 percent

6. New Hampshire, down 5.1 percent

7. Minnesota, down 5 percent

8. Maryland, down 4.8 percent

9. Ohio, down 3.9 percent

10. Virginia, down 3.7 percent

You can see OFHEO's news release HERE and its data HERE. OFHEO says home sales prices are down 3.1 percent nationally, the largest drop on record. (In its press release, it has a ranking of the states that includes not just sales but also refinance mortgages, so it's a bit apples-to-oranges to the national figure. That's why I crunched the data to come up with a purchase-only ranking.)

Wells Fargo and city exchange barbs

The city's suit against Wells Fargo for allegedly bad lending practices is well into the pointed-words and finger-pointing stage. As Lynn Anderson reports today, the two are going back and forth about who's the bigger baddie.

Wells Fargo says the city's tax lien program is responsible for many more "foreclosure actions" in Baltimore than the company is:

A spokesman for the bank said the city is trying to make it a "scapegoat for broad social problems that have plagued Baltimore for decades."

The city responded this week in a court filing that "the bank's conclusion that City Hall is responsible for Baltimore's urban ills is 'palpably false,'" Anderson wrote.

"Defendants would have the court believe that Baltimore has intentionally 'unleashed' on its residents a program of tax lien sales that causes thousands of foreclosures for nothing more than a small unpaid water bill and the like," city attorneys said in opposing the bank's request. "Maryland law mandates that Baltimore conduct these sales."

May 21, 2008

More notification for renters?

A bill working its way through the City Council aims to "prevent tenants from being notified of a foreclosure for the first time when a sheriff's deputy arrives to evict them," as John Fritze reports today:
The proposal requires tenants of foreclosed property to be notified by certified mail and first-class mail at least two weeks before the eviction takes place and also requires that notice be posted on the property a week in advance.

"That will eliminate renters suddenly being evicted while totally unaware their landlords are being foreclosed upon," said Mel Freeman, president of the board of the Citizens Planning and Housing Association, which has advocated for the legislation.

That's a problem, as we noted in this story last week.

Renters, how much notice would you need to find a new place and move your belongings?

May 20, 2008

Two new developments

John Fritze reports today that a developer planning to build a large community of homes along Baltimore's southern border won initial approval to buy 159 acres of city-owned land -- a former landfill slated to be used as an access point for the homes:
Charles County developer Stephen P. McAllister has proposed building 1,300 homes on a site in Anne Arundel County and hopes to build an access road across the former Pennington Avenue landfill near Curtis Bay.

There's debate over the plan, which advanced past the City Council yesterday but still needs an OK by the Board of Estimates. Some residents are glad the landfill would be cleaned up, while some businesses foresee that new homeowners and current industrial traffic in the area will end up at odds.

Meanwhile, Lorraine Mirabella has a story today about plans to restore the North Avenue Market in midtown Baltimore:

Developers envision a market of a different sort. Plans call for an arts-focused mix of shops, eateries and offices that can become a gathering spot for Charles North, part of the city's emerging Station North arts district.

May 19, 2008

How-to Monday: Childproofing

NotchildproofStockxchng.jpg

Photo courtesy of Stock.XCHNG

Expecting a child? In the flurry of baby purchases and preparations, don't forget to childproof your house or apartment.

The U.S. Consumer Product Safety Commission says that home hazards kill or injure about 2.5 million children every year, a sobering statistic.

Here's what the commission and others suggest you do:

Bathrooms: Childproof them by installing a safety latch on the toilet seat and safety covers on the faucet handles -- unless you're planning to keep Baby out altogether by putting a latch on the door, suggests the UCSF Children's Hospital in California. Move medicines, household cleaners, etc., out of reach.

Kitchen: Whether the contents are dirty or clean, the dishwater should be locked. Install safety latches on drawers and cabinets -- but move poisons out of reach entirely just in case, says ServiceMagic, which connects people with home improvement contractors. Put corner and edge bumpers on counters. Remove refrigerator magnets so they can't fall and tempt your child into tasting them. Alternative plan: Get a baby gate or gates to help prevent kitchen incursions by unauthorized underage persons.

Bedrooms: Make sure you have smoke detectors near bedrooms (and on every level of the home). The commission also recommends checking them frequently -- once a month. If you have gas or oil heat or an attached garage, you'll also want to install a carbon monoxide detector near sleeping areas, the commission says.

Dining room: Beware of tablecloths, ServiceMagic says. If your child tugs, down come the plates, flower vases, etc.

Stairs: You'll want baby gates at the top and bottom. A gate that screws to the wall is preferable for the top of a staircase than one that relies on pressure to work, the safety commission says. And avoid older gates with "V" shapes in which a child could get his or her head stuck.

Water: To prevent scalding, the children's hospital recommends you set your home's hot water temperature at no more than 120 degrees Fahrenheit. You could also install anti-scald devices on your faucets and shower heads to keep water from getting too hot, the commission notes.

Cords: Window blinds, phones, lamps -- anything with a hanging cord can be a hazard. Tuck them out of reach. ServiceMagic also suggests cutting blind cords that are long or that form a loop.

Outlets: Have any unused outlets? Avoid problems by putting in plastic outlet plugs.

Furniture: Soften sharp edges with corner and edge bumpers.

Windows/balconies/decks: Keep inquisitive babies from accidentally falling by installing window guards or safety netting, the safety commission suggests. Just keep in mind that you'll want at least one window in every room to be accessible for quick escapes in emergency situations.

Want more advice? Click HERE for the commission's tip sheet, HERE for the UCSF Children's Hospital recommendations and HERE for ServiceMagic's lists (scroll to the bottom of the page). (The commission also notes that you can check its site to make sure any hand-me-down safety products or toys haven't been recalled, and you can sign up for email updates about new recalls.)

Want to offer advice? Comment away.

May 18, 2008

A different way to heat and cool

Andrea Siegel has a story today about homeowners switching to geothermal heating and cooling in an effort to cut down on rapidly rising utility expenses. She follows the Borles of Pasadena as they have their system installed:
They are making a $22,000 investment in their home now. They will start to realize utility bills cut by about half. They'll recoup that upfront outlay, depending on their thermostat settings and utility rates, in 10 years at the outside, but most likely sooner. ...

Come July 1, the Maryland Energy Administration maximum grant to a homeowner for installing a geothermal system will rise from $1,000 to $3,000, and jump to $10,000 for a commercial use. Officials expect the number of applications for the $591,000 cash pool that is to be shared with grants for solar-energy systems to continue to climb.

"It will go quickly," said David Cronin, MEA assistant director for renewable resources.

Reason to click the link above and read the whole story: There's a fascinating anecdote from a Middle River builder about how his clients are going geothermal once they see the numbers.

Q&A with a man who gave an early warning

Dean Baker, an economist who back in 2002 warned that the housing market was caught in a bubble, chatted with me recently for a Q&A. The results are in the Ideas section today -- you can read it HERE.

Here's his answer to the question, Do you think now is a good time to buy a home?

Across the Midwest, the South, upstate New York, you can find lots of places where housing looks pretty reasonably priced, isn't much different than it was 10 years ago. But places like the D.C. area, New York, Boston, it's hard for me to see that those prices don't still have a long way down to go.

What about the Baltimore area?

Baltimore didn't have as much of a run-up as D.C., but it did have one. My expectation is you're going to see a lot of that, if not all of that, eliminated. ... Prices won't fall back to where they were in the '90s, even adjusting for inflation. They'll probably stay higher. But they'll certainly come down from their peak in '06.

May 17, 2008

More on down payment requirements

Interested in Fannie Mae's decision to drop its requirements for higher down payments in areas with declining home prices? Read more HERE.

This is what Maryland folks had to say about it:

Local industry players hailed the announcement as good news. Joseph Child, director of Greenbelt-based Step One Mortgage, who does most of his business in the Baltimore metro area, said he ran up against the declining-market requirements frequently and found it difficult to tell why the company was flagging certain neighborhoods. Tim Higgins, home loan consultant with Patuxent Funding in Ellicott City, said almost every place in the state appeared to be flagged. ...

Higgins thinks Fannie Mae's move will ripple through the lending industry as a whole, encouraging lenders who sell to the mortgage financier to drop their own declining-market down payment requirements. But that could take a while, he added.

One sticking point: New underwriting rules Fannie Mae is rolling out might disqualify more borrowers from loans even as it lets those who do qualify put less money down, Child said. The company said in a statement yesterday that the new system "will limit risk layering and assess each loan more precisely."

May 16, 2008

Fannie Mae changes down payment rules

Mortgage giant Fannie Mae, which in December began requiring higher down payments in markets it deemed to be declining, said today that it's scrapping that policy. Buyers of single-family homes will be able to put down as little as 3 percent nationwide.

That's for loans made to people who will occupy the homes they're buying and handled through Fannie's automated underwriting system. Loans underwritten in other ways will require 5 percent down.

Here's what the company says in a press release:

"As another part of our 'Keys to RecoveryTM' initiative, we are today announcing that we will be equalizing the down payment requirements for borrowers in all parts of the country, regardless of local market conditions," Marianne Sullivan, Senior Vice President, Single-Family Credit Policy and Risk Management, said. "This new down payment policy reinforces our goal to support successful home-owning, not just home-buying, as we seek to bring liquidity to all communities and help the housing market recover."

Fannie, a major player in the market because it buys and securitizes mortgages made by other lenders, said it can afford to make this change because its new model for automated underwriting "will limit risk layering and assess each loan more precisely."

So, folks -- now seems as good a time as any to try out our snazzy new ability to do blog polls:

May 15, 2008

What renters and homeowners have in common

Answer: Foreclosure can affect both. We have a story today about a tenant who found herself evicted, despite paying her rent, because her landlord lost the house -- a largely unmeasured but clearly growing problem.

Janet Portman, an attorney and the managing editor at Nolo, a provider of legal information and products, offers these tips for renters to safeguard themselves beforehand or get justice after the fact:

--Look the landlord up in the court records to make sure he or she isn't already facing a foreclosure action on the property in question or other properties. The Maryland Judiciary Case Search lets you do that online.

--Ask to see the landlord's credit report. "Especially if you're going to pay several thousand dollars a month for a single-family home," Portman says. "If you look at someone's credit report, you're going to see how extended they are. Now, a lot of landlords are going to say, 'Heck no.' But if it's a soft market, you might get somewhere with that."

--Ask the landlord's lender for an agreement that if they foreclose, they won't evict you as long as you're not in default. Businesses renting commercial space do that all the time -- it's called a "subordination, attornment and nondisturbance" clause, Portman says. But this is the "platinum model for protecting yourself," as she puts it, because you're going to have to really work to get a residential lender to agree, and you'd probably need to hire a lawyer.

--Remember that you can take the landlord to court if you get evicted because he or she gets foreclosed on. "There's no reason you can't sue that person in small claims court for moving costs and everything else" for failure to make the home available for the period specified in the lease, Portman says.

On the flip side, sometimes landlords go into foreclosure because their renters aren't paying, not because they've overextended themselves. I interviewed a real estate investor last year who couldn't juggle the mortgage payments on his handful of properties because he kept having renter problems.

May 14, 2008

It's all relative

Economists and Realtors often point out that our housing market isn't the hardest hit by the downturn, and inevitably California and Florida get mentioned as the "could be worse" examples. Prices are falling faster in communities there.

But frustrated local sellers who think it's the worst of times now have something they can point to, too: Home sales in Maryland fell faster than in any other state from January-March 2007 to January-March of this year.

You can see the numbers from the National Association of Realtors HERE, look at the NAR's press release HERE or read the story I wrote about the data HERE.

In the fourth quarter of last year, Maryland's sales decline was seventh-biggest in the nation.

May 13, 2008

Monitoring mortgage risk

What's the risk of late mortgage payments in the Baltimore metro area? Higher than in Dallas but lower than in Los Angeles, according to real estate information company First American CoreLogic.

Its latest "mortgage risk monitor" report ranks our metro No. 71 out of 381 markets, with 1 being the highest risk. The Dallas area, by comparison, is ranked 318th and LA comes in at No. 2 (right behind Riverside, Calif.).

The company's ranking of other parts of Maryland include Bethesda-Gaithersburg-Frederick at No. 100, Cumberland in Western Maryland at 109, Hagerstown at 115 and Salisbury at 149. CoreLogic says it bases its risk forecast on "fraud propensity and collateral risk, house price dynamics, and the health of local market economies."

You can find the second-quarter report HERE.

May 12, 2008

Too good to be true

Readers of The Sun, not to mention this blog, may remember that I had a story last Thursday about a study showing that sales of less expensive homes were actually rising year-over-year despite the steep falloff in sales overall.

Alas -- the study was wrong.

Delta Associates, a real estate research firm that prepared the report for multiple listing service Metropolitan Regional Information Systems, said today that it included condos in its calculation for the first three months of this year but excluded them in the first quarter 2007 calculation. That apples-to-oranges comparison made it look like cheaper homes were selling like hotcakes when in fact they too were seeing sales declines.

Delta says now that single-family home sales -- that is, not condos -- fell 26 percent in the $120,000 to $249,999 category. (Its original calculation was a sales increase of nearly 20 percent.)

Ouch.

So why did no one -- either at Delta, at Wonk Central or in the Realtor ranks I interviewed -- suspect there was an error at first? Because all anecdotal evidence has for months suggested that this price range is doing significantly better than more expensive homes. Over and over, agents have said there are more buyers interested in under-$250 homes.

And they're right, relatively speaking. Cheaper homes haven't seen as steep a sales dropoff as more expensive ones. Sales of homes priced at $250,000 and above declined 37 percent in the first quarter of this year vs. the first quarter of last year, according to Delta's new calculation. (That includes a dropoff of al