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May 31, 2011

Right-sizing the house

Size matters when it comes to the cost of housing. More space means forking over more money, both for energy and for the rent or mortgage.

The constraints imposed by the housing bust/financial crisis/recession trifecta put downward pressure on the ever-expanding size of new houses. After increasing in floor area by more than 40 percent between 1980 and 2007, the typical newly built single-family house in the U.S. shrunk 6 percent over the next two recessionary years, according to the most recent Census Bureau data.

But that's a minor change, not a major one. At 2,135 square feet, the typical single-family home built in 2009 was still substantially larger than the 1,595-square-foot new homes people were buying a generation earlier.

It's not just homes for sale. Apartment units have also gotten bigger over the years. Thirty-four percent of U.S. units built in 2007 were 1,200 square feet or larger, compared with 21 percent in 1999. (Those were the most recent and oldest years available from this Census Bureau report.)

Do we really need that extra space?

Extra amenities inside homes and outside, in the development or apartment complex, drive up costs, too. When I wrote about high-end rental amenities in the region earlier this year, Wonk reader BB noted that average complexes have felt the need to spruce up -- and then raised the rents.

"Many of the $650-750 apartments are now asking $800-900+. They ALL were boasting 'new' kitchens, and a free LCD wall mount tv in the living room," BB wrote. "There was nothing wrong with the old kitchens, and I do not need a TV - Can I go back to paying $700 a month please? To me this is a major disincentive that is just driving up the cost."

I'm curious whether the new (or newly renovated) homes and apartments in the region fit your idea of the right balance between quantity, quality and affordability. Would you do something entirely different if you were in charge? Or is everything peachy?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Affordable housing, Homebuilding, Renting
        

May 27, 2011

Homeownership vs. renting -- a roller-coaster decade

Two-thirds of the state's occupied homes were owned by the people living in them last year, the same as in 2000, according to new Census Bureau figures.

If we had only the decennial census to go by, it might seem like a remarkably stable decade. But the reality was just the reverse, of course.

A separate report from the agency that tracks homeownership quarter by quarter showed Maryland's rate hitting 74 percent at the beginning of 2006 before foreclosures and the rough economy sent it tumbling to 68 percent.

Hard-hit Florida, meanwhile, overshot. The homeownership rate was 67 percent last year, lower than in 2000, when it was 70 percent, according to the decennial figures.

The Census Bureau released another report recently that dug into a far more interesting question than how many Americans moved between 2009 and 2010: Why they moved. Some did so for work, for family reasons and the like, but more than 40 percent said housing itself was the motivating factor.

About 4 million said they moved to get a nicer place. Plenty of others, though -- 3 million -- moved in order to get cheaper digs. Just over 1 million were making the switch from renting to owning.

What's more important to you these days: nicer or cheaper?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (5)
Categories: Renting
        

May 26, 2011

Keep or scrap? The home seller's dilemma

JungleWallpaper.jpg

 

Most people put their own unique stamp on their homes in some way. But the advice when you sell is depersonalize, depersonalize, depersonalize, right down to the paint on the walls and carpet on the floor.

That's probably an excellent idea when it comes to getting rid of the cruddy beanbag in your living room. But are sellers better off keeping some touches?

It was precisely because I didn't question the rule of thumb that I wasn't wild about my husband's plan to put wallpaper in our toddler's room last summer. Wallpaper! Buyers hate wallpaper. This was no mild pattern, either, but a colorful jungle scene across the entirety of one wall.

And what happened once it was up? Well, I was completely won over. I went into the wallpapering knowing that it would have to come down before we ever tried to sell (someday), but now some tiny part of me wonders if someone else would enjoy it as much as I do. So I can well understand how sellers think, "But I love this -- surely the right buyer will, too!"

Buyers, set the record straight: Do you find yourselves connecting better with homes that are an off-white blank slate for you to superimpose your own tastes, or does lack of personality leave you cold on the walk-through? What homeowner touches have you liked -- if any -- and what did you hate?

Maybe we should have a "thumbs up or down" feature here for would-be sellers.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (19)
Categories: Housing market experiences, Question of the day
        

May 25, 2011

Home sales in 30 days or less vs. a year-plus

Just over a quarter of the Baltimore-area homes that changed hands in April got under contract in 30 days or less -- about 540 in all. That's a lot more than the number of sales that took at least a year (115, or 6 percent).

Here's what the stats don't say but I'd like to know: How many of the homes that haven't sold yet have languished for upwards of a year? Or have bounced on and off the market as their owners test the waters with no success?

I frequently hear from real estate agents that the first few weeks are critical for a seller. Price the home competitively right off the bat, put it on the market in good condition, make sure you have tons of photos online, etc., and your odds of buyer interest are pretty good -- or at least as good as you can make it given that demand for your neighborhood is mostly outside your control. But what about the homes whose sellers (and/or agents) don't get it right from the get-go and have to adjust course a month or three later?

One way of reading the sales statistics is that it gets progressively harder to sell:

Days on market# sold% of total
30 days or less53927%
31 to 60 23512%
61 to 90 19410%
91 to 120 1729%
121 to 180 30215%
181 to 360 44322%
361 to 720 1005%
721 days or more151%
TOTAL2,000

Source: Metropolitan Regional Information Systems' RealEstate Business Intelligence. Baltimore metro area statistics include Anne Arundel County, Baltimore City, Baltimore County, Carroll County, Harford County and Howard County.

The share of total sales does tick up for the 121-to-180 and 181-to-360 categories, but keep in mind that both are multiple months -- and each has a smaller piece of the pie than the 30-days-or-less group.

One of the tricky things about days-on-market statistics, though, is that you can pull your home off the market, wait for a while and get back on with a restarted clock. Odds are that some of the homes selling quickly in April had been listed last year to no avail and came back later with a lower price, better amenities and/or more aggressive marketing.

When I wrote in February about some homes selling speedily and others sitting forever, Wonk reader fronesis said 10 months of searching for a home really emphasized this either-or pattern: "I think this 'super quick and very slow' phenomenon is a product of a falling market in which prices going down are sticky. Even though the market is now leveling off, there are still tons of homes that are overpriced. The ones that are priced right, go quickly; the others just sit there.

"And here's what exacerbates the phenomenon: if a home STARTS off overpriced, then it will take longer to sell, EVEN AFTER the price is lowered to a fair market price."

Just in case you're wondering: 70 percent of Baltimore-area homes sold in April 2005 -- near the peak of the frenzy -- went in a month or less. If you couldn't sell quickly in those days, you were really doing something wrong.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (8)
Categories: Housing stats
        

May 24, 2011

Demand may be down, but so is supply (for now)

Just as the number of newly inked pending deals for home sales in the Baltimore metro area slumped in April, so did the number of homes newly listed for sale.

Both dropped just over 20 percent compared with a year ago, when both buyers and sellers were trying to take advantage of the federal tax credit -- buyers so they could get $8,000 from Uncle Sam and sellers so they could, you know, sell. 

Metrostudy, which does market research for homebuilders, noted that new listings are down across the Baltimore-Washington region.

"There are two ways to correct an oversupplied market," Kenneth Wenhold, Mid-Atlantic regional director for Metrostudy, wrote in a market analysis. "The first is to increase demand to sell the supply faster. The second is to reduce the supply itself, and we are effectively doing exactly that by adding fewer units to the market. This should go a very long way to reducing inventories in Maryland and stabilizing the market in 2011, even in Baltimore."

(By "Baltimore," he means the suburban Baltimore area, which is what builders tend to focus on.)

Spring is the selling season for homes, but sellers don't always rush to list the same month. So out of curiosity, I tallied up new listings for January through April since 1998, when Metropolitan Regional Information Systems began tracking the area.

Newly listed homes for sale are down 13 percent overall this year vs. last year. That's not the largest-ever drop, but the 15,600 new listings do add up to one of the smaller starts to a year.

I'd sure like to know how much this drop reflects a lasting reduction (fewer people who want to sell) as opposed to a temporary reduction (with people who actually do want to sell holding off because they don't like their odds or the prices). The foreclosure robo-signing scandal might also be playing a role in the statistics this year -- lenders could have been leery of listing new bank-owned property for sale if they were battling documentation problems.

Whatever the reason, a colleague looking for a house mentioned to me that she's stopped seeing much come on the market that's in her price range and areas of interest.

What are you all noticing out there?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: Housing stats
        

May 23, 2011

Neighborhood love: Pigtown

mount%20clare%20mansion.jpg

Photo of Mount Clare in Pigtown by Meg Fairfax Fielding

 

Today, Meg Fairfax Fielding is reviving a reader-fueled feature that started off strong last year and sadly petered out: My Neighborhood 'Tis of Thee, an opportunity to share a resident's-eye view of where you live. Neighborhood love -- or tough love, depending.

Last year readers shared Overlea, Hoes Heights and Canton with us. Now comes Meg to give you a tour (complete with photos) of Pigtown, the Southwest Baltimore neighborhood also known as Washington Village. She just bought her first house elsewhere in the city -- an earlier contract she had on a home in the neighborhood fell through -- so it's a chance to reflect on her Pigtown days.

Take it away, Meg:

 

------------------------------

I've lived in Pigtown for about five years, since moving back to the U.S. from the U.K. I wanted to live in a place that was up-and-coming, and was close to things that I knew and places I visited a lot. Pigtown seemed to tick a lot of boxes, and when a nice little house with very reasonable rent on a tree-lined street became available, I snapped it up.

The main street in Pigtown is Washington Boulevard, which swings from east-west at Martin Luther King Boulevard, to north-south as it heads past Carroll Park. On the east, Russell Street and MLK Boulevard make up the general boundary, and on the south, it's Monroe Street. To the north, it's Pratt and Lombard streets.

Most of the housing stock dates from the 1880s and is comprised of two- and three-story rowhouses. The B&O Railroad was the leading cause for the original development of the neighborhood, and as legend has it, the pigs used to run down Washington Boulevard, from the railroad sidings at the B&O to the slaughterhouses where Camden Yards is sited now. In the early 2000s, a number of new townhouses were built on Scott Street and comprise Camden Crossing.

bus%20depot%20on%20wash%20blvd.jpg

Above: The bus yard

 

Pigtown is filled with interesting buildings, including the B&O Roundhouse (the largest 22-sided building in the USA)' the MTA's bus yard buildings with their Palladian windows and elegant buttresses; the historic Mount Claire Mansion set atop a hill in Carroll Park; an old kosher abattoir on Paca Street; and the Victorian gasworks building that is home to Housewerks, the architectural antiques and salvage business.

housewerks%20salvage.jpg

Above: Housewerks

 

As one of the truly integrated neighborhoods in the city, Pigtown has long-time residents living alongside newly-arrived urban professionals who commute to Washington on the Camden line, or attend classes at the University of Maryland, Baltimore.

It is a neighborhood of walkers, either heading for public transportation, to schools from elementary to graduate level, or out giving their dogs their daily exercise. From my house in Pigtown, it's a seven-minute walk to Camden Yards, about 20 minutes to the Convention Center and 25 minutes to the Inner Harbor.

Above: The view from Pigtown. (This doesn't quite do it justice -- click for a larger image.)

 

Pigtown really starts hopping on Ravens game days, when the neighborhood fills with fans attending the game, or tailgating in the parking lots surrounding the stadium. On warm fall days when the windows are open, you can hear the cheers from the crowds as the Ravens make a great play. Orioles games are a little quieter, but on summer evenings, you can hear the cheers and see the fireworks after the games.

There is a lot of available housing stock in Pigtown, as the economic downturn came just after numerous investors had purchased vacant houses or shells and started to renovate and rehab them. It's sad to see so many empty houses on some blocks. But there are a lot of real estate deals to be had in the area.

People in Pigtown know each other, they're friendly to each other, and they actually speak to each other when they pass by on the street. People keep an eye out for each other, too. There are several community organizations that schedule routine clean-up mornings, manage the Main Street marketing and work on overall neighborhood issues.

While Pigtown is in the middle of the city and just moments from the always busy I-95, it is often a very quiet neighborhood, with just the sounds of the train whistles blowing and the distant hum of traffic. I've often walked my dog Connor late at night and reveled in the quiet of the streets.

I can't write a piece like this without addressing some of the perceptions of Pigtown, namely, that it's a crime-ridden area. My personal experience, and that of the CitiStat tracking, does not bear this out. There is some drug-related activity, but if you're not buying or selling, then it's generally not an issue.

There is scant property crime in the area of Pigtown where I live, and most of the personal crime is between people who are known to each other. I've had plants and decorative items in front of my house for years, and nothing's ever turned up missing. One of my enduring memories is of an early summer evening, with the windows open, listening to someone walking up the street singing an old Motown song.

Pigtown's just another one of Baltimore's neighborhoods that's like a little village.

painted%20screen%20in%20pigtown.jpg

 

Above: A painted screen. Below: A street view.

 

pigtown%20house.jpg

 

------------------------------

Thanks, Meg!

If you'd like to write your own My Neighborhood 'Tis of Thee piece, give me a shout at jhopkins(at)baltsun(dot)com. (You can find the photo gallery here -- and more photos just of Pigtown here.)

And just a reminder: I'm happy to get guest posts that share your housing experiences or your expertise. You'll find details here.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (14)
Categories: My neighborhood, 'tis of thee
        

May 20, 2011

A long road to loan modification for Maryland family

Bill Henderson and his family in Queen Anne's County offer a window into the tortured loan-modification process that few -- relatively speaking -- have managed to get through successfully.

They've just been approved for a trial modification. But it was a long time coming.

When we last heard from the Hendersons, they had convinced the state Department of Housing and Community Development -- which owns their loan -- to modify rather than foreclosure. They went to court-supervised mediation to get that agreement, helped by forensic mortgage auditing firm Professional Compliance Examiners.

That was October. Months passed. The state and its mortgage servicer said they were waiting on the mortgage insurer, the USDA's Rural Housing Service, to sign off on the modification. Then last month it looked as if everything was falling apart.

Here's how the Hendersons explained it to President Barack Obama in a letter:

On October 5, 2010, we went to mediation about our home mortgage. We were fighting to save our home. ... In that mediation, the lawyers were on the phone with CDA a branch of DHCD - MD Department of Housing and Community Development and RHS – Rural Housing Service. DHCD said they were not required to follow HAMP guidelines. RHS said they would not approve the loan modification unless HAMP guidelines were followed. They would send DHCD the guidelines necessary to get this modification approved.

Since this October 5th mediation we have been waiting for an answer on our loan modification. RHS has been the hold up on this matter. We were informed in February by DHCD and our Servicer, Bogman, Inc. that they had both approved our loan modification according to the HAMP guidelines specified by RHS. They were waiting on the decision of RHS.

Everything that RHS requested was followed and agreed upon by all. On Friday, April 8, 2011, more than 6 months after our mediation, we received a call from our Servicer. They informed us that RHS did not approve the loan modification. They were not given a reason why and we have not received any information as to why it was not approved. Both DHCD and Bogman, our servicer, said they don’t understand why it was not approved. They said the loan modification should have been approved.

RHS, the very agency that laid out specific HAMP guidelines to DHCD and our servicer, did not approve their own HAMP guidelines!?! Our question to you is why RHS, a branch of the FEDERAL GOVERNMENT, did not approve our loan modification? Your HAMP program, a federal government program to help homeowners stay in their home, was not even followed by your own agency. It was their guidelines that the servicer and DHCD HAD to agree upon for the modification. ...

The big banks are allowing modifications, but not RHS, a FEDERAL GOVERNMENT agency!! WHY? What can you do to help us before our family gets thrown out on the street?

They cc'd me, so I called USDA -- the parent agency of mortgage insurer -- to find out what had happened. It took several weeks for the agency to sort through the history of the case for an answer, at which point the modification was approved (though not, I was assured, because I had inquired). This was the official statement about the matter:

"On February 3, 2011, USDA Rural Development’s Centralized Servicing Center received a loan modification request from the company servicing the Henderson’s loan. The application was incomplete and additional information requested. A second loan modification was submitted on March 4, 2011. The application was reviewed and on April 4, 2011 a letter was sent to the servicing company recommending a traditional loan modification. On April 26, Rural Development’s Centralized Servicing Center received a third loan modification request. USDA has approved the loan modification and will submit documentation to the lender this week."

What the USDA is saying, a spokeswoman confirmed, is that the first request of any sort it received for modification didn't arrive until four months after the mediation hearing.

But Jacqueline Lampell, a spokeswoman for the Maryland housing department, said the state, both directly and through its servicer, was in contact with the agency in November and December. She confirmed the Hendersons' account that the USDA mortgage insurer was involved in the October mediation where the agreement was struck.

Both USDA and the state housing agency were loathe to make their timeline arguments strongly, lest they be seen as finger-pointing.

"Since going through loan modifications was a new process for Bogman, CDA and RHS, there was a lot of back and forth to figure out the best way to do it," said Lampell, with the state housing department. The state "did not pursue any legal action while this was an open item, and the Hendersons were able to stay in their home during the process, and now they have achieved a positive outcome."

In case you're wondering: The state-owned loan program is self-supporting and does not tap state funds.

The Hendersons, who have one child, are both employed -- Bill hauls construction equipment and his wife works for the school system. But his income has been battered by the recession. These days he's out of state during the week in order to make a living, returning home on weekends. 

He said this week that he's hopeful the deal to drop their monthly payment from $2,500 to about $1,800 will work out. He said he has no worries about holding up his end of the deal. It's the system that makes him anxious.

"I've got everything in writing, which makes me feel better," he said. "I hope it's been resolved, let's put it that way."

He didn’t know if writing a letter to the White House would do any good, but he said he was "getting to the point of desperation." And as it happens, someone from the Treasury Department did call -- after the modification came through.

"They said the White House was responding to the letter I sent," Henderson said. "I told them, 'We just got notice two days ago that [the modification] had been approved.' He said, 'Very well — if you have any problems, just give us a call.'"

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: The foreclosure mess
        

May 19, 2011

In Hampden, an auction for land that wasn't actually a park

lotauction.jpg

 

Sometimes the way you discover that land in your neighborhood isn't publicly owned open space is when it changes hands -- or gets built on. Colleague Justine Maki got to watch the former in action yesterday in her neighborhood.

Here's her story:

 

--------------------------------------

I've walked by the empty lots in Hampden many times with my dog, and I thought they were part of Hickory Park, so called because across the street, a metal trash can is painted with the name.

But public auction signs sprouted in the grass a few weeks ago, and pretty soon, Alex Cooper had a detailed listing for the land on its website.

My curiosity about the land is how I came to be standing in the rain on a sidewalk circling the uneven field of grass and weeds.

I arrived about 15 or 20 minutes before the auction's 1 p.m. start time, and there were a couple men in suits from Alex Cooper, a man who owns a house adjacent to the lot and another who turned out to be a bidder. The homeowner, Jeremy Kargon, is also an architect. "I came because I'm a interested party, but also in case anybody wants an architect," he said with a laugh.

A few other small groups of suits-and-ties showed up, almost all middle-aged men. When the auctioneer started to talk about the terms, he left a long pause after "Gentlemen ... and ladies" before continuing his announcements.

The auctioneer, Jon Levinson, talked with the handful of bidders, who agreed they wanted the two lots together. Levinson read the details of the land, explaining that there was no ground rent and a 5 percent buyer's premium would be added to the winning bid.

He called the prices a bit slower than in the movies, and when the bids stalled at $185,000 -- just $15,000 over the starting price -- he repeated the number a dozen times before saying he had to consult with the owners. After a few minutes of huddling with a couple other suits, including a man who never took off his sunglasses despite the rain, Levinson announced the owners were "disappointed" with the price but decided to sell today. He called on bidders by name, asking if they would go higher, but none bit.

The losing developers walked away, with one from Remington Properties saying that this was the usual outcome. Conor Creaney, a partner with the affordable housing developer, and others from the company said they came away from 1 in 10 auctions with something to show. A man with him said they might have built affordable housing there, though they hadn't examined whether multifamily townhouses or single-family homes would work best.

The younger man who ended up winning wouldn't say before the auction what he wanted to do with the property, and he declined to give his name. Afterward, he was spirited away by the auction company, though he told his architect friend he would stop by later in the day. If all the terms are met, his purchase will be settled in 45 days.

The architect, whose house was completed in 2005, said he hoped whatever was built on the property would keep kids and other pedestrians from taking a shortcut along his home instead of following the sidewalk. The first year in his house, he said he told kids not to "throw crap around here, but their parents would get upset with me."

The rain started to pick up again, and by about 1:15, almost everybody was gone -- even the signs.

--------------------------------------

 

Thanks, Justine!

Anyone else have an auction tale to share?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: Auctions, Guest post
        

May 18, 2011

Renters & landlords: To-do's and not-to-do's

Both tenants and landlords lurk here, and I've been wanting to get a discussion going that I thought both groups could appreciate: to-do's and not-to-do's in rental life.

Tenants, what things do you want landlords to do -- and not do? Landlords, what's your list for tenants?

Some things are obvious. Landlords want to be paid on time and don't want to find the property trashed. Renters want maintenance problems dealt with promptly and don't want their security deposit withheld for issues they didn't cause.

Is it as simple as that? Weigh in. You might get people to rethink the way they do things.

The last discussion about renters and landlords grew out of an appeal to both groups by a property owner, who wants each side to treat the other better.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (12)
Categories: Landlording, Renting
        

May 17, 2011

Signature craziness

The pointed questions foreclosure attorneys have faced in Baltimore City Circuit Court Judge W. Michel Pierson's courtroom this year basically boil down to these two:

1) Is that, in fact, your signature that appears above your name on this document to foreclose on someone's house?

2) Oh? Why not?

I had a chance to sit in on one of the hearings, and it was illuminating to hear explanations of how attorneys at one law firm representing mortgage servicers juggled their workload.

One of the lawyers representing Virginia-based Shapiro & Burson at the hearing last week told Pierson that seven of the 16 case files up for discussion had documentation with "delegated signatures" -- one attorney signing the name of another.

The attorneys -- Jason Murphy and Erik Yoder -- each gave the other blanket authority to sign the other's name when documents needed their signature but they were out of the office dealing with other foreclosure matters, Murphy testified.

"How many times do you think you authorized Mr. Yoder to sign your name to an affidavit?" Pierson asked.

"I would suspect there would be a good number," Murphy said. "Only on those occasions I wasn't in."

How many were then notarized, the judge asked? (He had just seen an example.)

"Little to zero," Murphy said. 

"Well," the judge said, "we know there's one."

Pierson wanted to know when the attorneys started signing for each other.

"I can't give you a precise date, but I'd say probably June 2008," Murphy said, adding: "As long as Mr. Yoder did a thorough review, ... I would give Mr. Yoder authority to sign."

"These were files you had not reviewed, is that correct?" Pierson asked.

"We had a significant amount of work to do," Murphy said, though he added that he would see the documents later as the case progressed.

Murphy said it probably would have been better had Yoder initialed next to the "delegated signature" to indicate that it wasn't actually Murphy himself who had made it. "But I don't think it takes away from the fact that these documents had an attorney review," he said, differentiating the practice from paralegals signing for lawyers.

Then Pierson asked the question that's probably occurred to all of you: "Why didn't he sign his own name?"

"Well, the names were pre-printed," Murphy said.

He volunteered later that the delegation has been discontinued. "In this climate," he acknowledged, it "has raised some eyebrows."

Notarization problems are one piece of the "robo-signing" scandal rocking law firms and mortgage servicers across the country. Elizabeth Ritter, a special master for the court who has been reviewing foreclosure files for irregularities, put notarized documents in front of Murphy that he identified as actually signing himself and asked if he did so in front of the notary.

"We're in the same office," he said. "I signed those documents and delivered them to her personally."

Ritter then asked if that was his practice.

"Well, sometimes I'll sign right in front of her," he said.

Later he noted that since October (which happens to be when the courts approved an emergency rule to clearly authorize the sorts of hearings Pierson is conducting), he and others "took the extra effort" to make sure documents were signed while notaries watched. 

So what's eyebrow-raising but ultimately OK, and what isn't? Time will tell. When it proposed that emergency rule, the Maryland Court of Appeals' rules committee seemed appalled at the idea that attorneys weren't reading and signing affidavits bearing their names.

"In the Committee’s view, the use of bogus affidavits to support actions to foreclose liens on property, apart from prejudice to the homeowners, constitutes an assault on the integrity of the judicial process itself," the committee wrote, responding in part to revelations that two attorneys -- one at a Baltimore County firm and another at a Montgomery County firm -- had "delegated" their signing duties.

After a former paralegal at Shapiro & Burson contended that one attorney was signing another's name on hundreds of deeds for foreclosed Maryland homes and having them falsely notarized, the Prince George's County state's attorney's office immediately began investigating. (A spokesman there said the office has since turned the case over to the Maryland Attorney General.)

The state's highest court, meanwhile, disbarred an attorney last month for allowing the daughter of a dying woman to forge her mother's signature on estate-planning documents that would save the family $10,000 in probate fees, after which he notarized them as if they were genuine. The disbarment came despite the fact that the attorney had talked to both women earlier about the money-saving action and had reason to believe he was following the mother's wishes at a time when she was no longer able to carry them out herself.

"Attorneys ... are not and cannot be hired guns for individuals who seek to subvert the administration of justice," Judge Lynne A. Battaglia wrote in the majority opinion. "Rather, the great strength of our profession lies in the integrity with which we act and the honor that we bring to our work. Attorneys are not permitted to discard their ethical obligations when it becomes difficult or stressful to maintain them."

But in the Shapiro & Burson situation, a variety of Circuit Court judges have apparently accepted the delegated signing practices.

"When we've provided testimony such as this, they indeed took the position that it didn't legally impair the documents," Murphy said.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: The foreclosure mess
        

May 16, 2011

Dispatch from the field: Moving in with mother-in-law

Many have found themselves doubling up with family the last few years out of necessity, economic or otherwise. This week's guest poster is doing so temporarily while she's between houses. She offered to write a dispatch early on with more to come -- anonymously, so she could be candid without fear of hurt feelings.

Here's her tale:

 

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My husband and I moved in with his mother on April 18, with some trepidation.

We sold our house in Virginia, and now we are in Maryland. We have about four months before our house in western New York will be built. My husband's first choice was to find a short-term rental in New York so that we could immediately begin our new life there. I wanted to move in with his mother for a variety of reasons.

First, I thought that it would allow for a more seamless transition of our U.S. mail. The post office doesn't do well with multiple changes of address in a short period of time. I figured it would be easy to receive any mail that goes to Maryland after we have moved to New York. Second, I thought we could save money. Third, we could help my mother-in-law. In return for not paying her any rent, we were planning to take over my mother-in-law's gardening, lawn-mowing, housecleaning and car-washing. Since she is quite elderly and physically limited, we also planned to help her with anything she feels unable to do -- such as driving long distances and shopping for anything heavy or unwieldy.

After we sold our house and were committed to closing quickly, we felt there was little time to move, store our belongings, and look for temporary housing in New York. So my husband gave in to me on this one. Here we are.

Oh, one other thing. My husband warned me that he could not tolerate his mother and me being at each other's throats. Yes, two women with strong personalities have been known to get into conflicts, but I assured him that things would go smoothly between the two important women in his life.

It's early on in the arrangement, but I feel that things are going relatively well. In addition to the things I mentioned above that we would do for my mother-in-law, my husband discovered a number of projects in the house that had been left undone after his father died, and my husband attacked them with gusto. I have taken my mother-in-law on trips to Baltimore, and we have had some good talks and laughs in the car while traveling. We are beginning to fall into an easy comfort with one another. I have found my mother-in-law to be exceptionally tolerant of our clutter, talking on the phone, and generally making more noise than she is used to.

On the downside, I can't stand the grandfather clock. The clanging I hear every quarter-hour is just unpleasant extraneous noise to me. My mother-in-law deeply loves that clock. She is hoping to leave it to a family member in her will. I told my husband that as soon as I hear she is gone, I am going to take an ax to the clock and the poor person who inherits it is going to find nothing but timber and mechanical parts and chains.

The house is small and feels confining to us. But given that it's spring here in Maryland, we are able to get out and about -- hiking in the park, visiting our granddaughter, driving around, sitting on the deck. We have also decided to take some weekend trips locally in order to gain back a little of the privacy we have lost. Last weekend we ended up in D.C. playing tourist. Our short absences also give my mother-in-law back some of her privacy.

----------------------------

 

Thanks for sharing, Anon!

Thoughts, questions, arguments? Comment away. I'm especially interested in hearing from those who have lived (or are living) with relatives after age 21, and how you negotiated the multiple-adults-in-the-house dance.

If you'd like to write a guest post -- either to share expertise or to share an interesting housing-related personal experience -- please drop me a line. Details here.

And if you've got questions you'd like to see a guest poster address, a la this ground rent Q&A, ask away right here.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: Dispatches, Guest post
        

May 13, 2011

REO-purchasing questions

A local title attorney who focuses on REO transactions -- from foreclosing bank to new owner -- would like to answer your questions for a Q&A guest post.

What do you want to know? 

If you've been looking for a foreclosure to buy and have run into issues, this is an opportunity to get some answers -- the "why" and hopefully the "how to avoid this next time."

You can leave questions in the comments or email them to me directly at jhopkins(at)baltsun(dot)com.

Posted by Jamie Smith Hopkins at 12:47 PM | | Comments (2)
Categories: The foreclosure mess
        

Up for auction: Undeveloped land in Baltimore area

In the market for an entire subdivision or three?

A trio of sites in the Baltimore region -- already named, but not yet to the point of construction -- are scheduled for auction next week as part of the bankruptcy liquidation proceedings of a local builder:

o Rose Hill Estates in Rosedale, which is about 6.7 acres of land at 7800 Philadelphia Road and has a "suggested opening bid" of $200,000. There are already three single-family homes on the land.

o Arbor Ridge in Arbutus, nearly 35 acres at 5301 Keech Road that now has one house and three barns. Suggested opening bid: $350,000.

o Shadowbrook in Elkridge, a 23-acre site next to Patapsco Valley State Park in the 6400 block of Elibank Drive. Suggested opening bid: $400,000.

The auctioneer is Sheldon Good & Co., which says the subdivisions are being sold "absolute," meaning the highest bidder won't be told, "Thanks, but that's not good enough." (The suggested opening bids for both Rose Hill Estates and Shadowbrook are less than the average price for a single home in their respective counties.)

The auction is scheduled for 1 p.m. next Thursday -- May 19 -- at the BWI Airport Marriott, 1743 W. Nursery Road in Linthicum Heights, with registration beginning an hour before.

On the one hand, it's not an easy time to be building new homes, as the bankruptcy that forced this auction suggests. On the other, we've had reports that land prices have remained fairly strong in the area. So it could be interesting to see how it all plays out.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: Auctions
        

May 12, 2011

Report: Md. remains a top state for mortgage fraud

Maryland appears on a variety of top 10 lists. Household income. Advanced degrees. And, unfortunately, mortgage fraud.

The newest LexisNexis Mortgage Fraud Case Report, out this week, shows the state keeping its top-10 position -- bumping up to fifth for originations in 2010. It was sixth in 2009.

Nationwide reports of fraud and "material misrepresentation" by industry professionals, sent to the LexisNexis Mortgage Asset Research Institute and ranging from falsified tax returns to bogus appraisals, dropped substantially between 2009 and 2010. But the report's authors note that other measures suggest fraud hasn't fallen at all. The schemes are getting harder to ferret out even as there are fewer resources to do the ferreting, they say.

Here are the top 10 states: 

1. Florida

2. New York

3. California

4. New Jersey

5. Maryland

6. Michigan

7. Virginia

8. Ohio

9. Colorado

10. Illinois

Another risk-mitigation company, Interthinx, shared statistics for the Baltimore metro area that show the region just a bit higher than the country overall for mortgage fraud risk. But while risk has been easing slightly nationwide by Interthinx's measure, it's rising here. The biggest issue is property valuation.

"Flopping" is in that category. That's when a real estate agent runs or aids a scheme in which a short sale or foreclosure is fraudulently sold for less than market value so it can be quickly resold at a profit. The LexisNexis researchers say banks are relying on "broker price opinions" to determine value, and in some cases agents are misrepresenting value through BPOs to make a buck.

Ann Fulmer, vice president of business relations for Interthinx, said you'll often find that "exposure to the market is manipulated" so buyers who aren't in on the fraud can't get a shot at the property.

Sometimes the home pops up on the multiple-listing service and is immediately listed as under contract, she said. "Or, there’s a sketchy description, there’s no photo; it’s really a half-hearted effort to expose the property to the market," she said. In one case, a property was listed on the multiple-listing service for the wrong city.

Such crimes don't just affect the financial industry. The previous homeowners are victimized, too, she said.

"That increases the borrowers' liability to the bank under a deficiency judgment," Fulmer said. "While the banks themselves tend not to want to collect that, they do sell it to debt collectors. That's one of the sort of hidden damages there -- that the borrower who gets caught up in that could end up with a bigger tab at the end."

And for loans involving FHA, Fannie Mae or Freddie Mac, there's another victim to think about.

"To the extent that money's being left on the table, that's coming out of the pockets of taxpayers," she said. "Excuse me, I take personal offense at that."

Another thing to think about is what Fulmer calls "the fraud contagion effect." Whether it's flipping in a booming market or flopping in a declining market, there's a ripple effect on values.

"Let's just suppose you have a property that's actually worth $100,000, but through nefarious machinations, somebody manages to pick it up for $70,000, and that goes on the books," she said. That $70,000 price gets reported in the multiple-listing service, recorded in the land records. Other people doing appraisals and broker price opinions "see these figures and say, 'Wow, I thought this house was worth $100,000, but maybe not.' It contributes to the incremental devaluation of neighborhoods over time."

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Mortgage fraud/scams
        

May 11, 2011

April home sales drop 17 percent in Baltimore area

AprilHomeSalesContracts.jpg

Above: The month of April in the Baltimore metro area, measured by home sales and newly signed contracts.

Sales last month were the second-lowest on record, while contracts were third-lowest (the recessionary years of 2008 and 2009 were worse). Year-over-year drop in the number of sales, which compares now vs. the homebuyer-tax-credit days of April 2010: 17 percent.

The average home sale price in the metro area was about $255,000, down nearly 4 percent.

You can find data by jurisdiction at Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence.

A truly perfect way to compare home prices so as to avoid skewing doesn't seem to exist -- every measure has its downsides. But I like to see repeat-sale indexes that compare the same homes over time. Here's how Clear Capital's repeat-sale index looks for the Baltimore metro area (the city plus the surrounding suburbs) in the last five years:

ClearCapitalFiveYears.jpg

Source: Clear Capital

The measurement here is an index, not the dollar value, just in case it's hard to see. What should be easier to make out is the long downward trend, interrupted by two upward bumps at various points of the homebuyer tax credit period. The price decline has continued after that.

Some of you have asked about the much-discussed "shadow inventory" of foreclosures, so I chatted with John Burns Real Estate Consulting for its most up-to-date estimate. (The company takes into account all the homes whose owners are behind on payments and predicts how many will end up as distress sales, accounting for the fact that someone who's 30 days behind is more likely to catch up than someone who's 90 days or more in the hole.)

Its calculation: 14 months' supply of shadow inventory in the Baltimore metro area. Inventory measured by MRIS -- the stuff that's actually listed for sale -- is just over eight months' supply, meaning it would take eight months to find buyers for everything at the current pace of sales.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: Housing stats
        

May 10, 2011

Cash deals drive Baltimore's housing market

Want to guess what percentage of homes selling in Baltimore are purchased without bank financing?

More than half.

Yeah, you read that right.

Real estate investors plunking down cash for purchases -- their own or from other investors -- are a major part of the buying pool in the city these days. Today's story gets into some of the causes. Effects TBD. One question is whether this group of investors will fare better than the many who got caught by the housing bust, leaving rentals and half-finished rehabs for the banks -- and neighbors -- to deal with.

Though many investors these days expect to buy and hold as landlords, riding the wave of rising rents, there are still "wholesalers" at work who get homes under contract and then flip the contracts for a fee to other investors -- landlords and rehabbers who don't want the bother of dealing directly with homeowners. Here's a video with wholesaler Mark Whitten of The Equity Depo, who says he's done more than 150 wholesale deals since he got into the business in 2008:

 

Whitten, 29, calls himself a "hustler" by temperament, and he's certainly using his marketing degree to good effect. His van is a moving advertisement, wrapped with his photograph, his telephone number and "Mark Buys Houses" in big letters. He's got videos on YouTube, email blasts with the properties he's hawking ("Granny wants out!!! Minor Cosmetics!!!") and a coaching program for others wanting to give wholesaling a try.

He says he's doing about six wholesale deals a month.

I tagged along with him to see a vacant rowhouse in Woodbourne-McCabe in North Baltimore last Thursday, and he declared himself interested after checking out why the person who had inherited it didn't want it -- boarded-up windows, gash in the ceiling, problems with the roof. He figured it wouldn't be hard to fix up as a rental, and the block struck him as desirable, with occupied homes all around and a grassy expanse of open space across the street.

"I'm going to make an offer and try to get this property under contract today," he said, adding later: "A property like this won’t last long at all. I could probably sell this thing in a day, mostly because of the neighborhood."

Reached by email later, he said he did just that -- got the contract and assigned it to another buyer that very day. 

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (26)
Categories: Real estate investing
        

May 9, 2011

Mike Klijanowicz: Under-appraisals

MikeKlijanowicz.jpg

 

Today's guest poster: Mike Klijanowicz, a real estate agent with Long & Foster in Perry Hall who has been the top individual producer in his office in listings and sales since 2008. He brings thoughts from the field on an issue that can slam the brakes on a transaction.

He works mainly in and around Baltimore, Baltimore County and Harford County, with clients ranging from first-time buyers to investors.

Take it away, Mike:

 

 

-----------------------

A few short years ago most people never thought that their homes would ever "under appraise." Back then home prices were only going one way -- up. However, in today's tumultuous real estate world, under appraisals are becoming more and more common. With all of the foreclosures and short sales that have flooded the local real estate market and the many more thousands that will be released eventually, it continues to have a dramatic impact on non-distressed "normal" residential property values.

With the current HVCC (Home Valuation Code of Conduct) rules and regulations regarding appraisals and home value calculations, appraisers continue to be under an intense pressure to not "over inflate" the properties' value. Those HVCC rules and regulations that went into effect two years ago are still causing serious ripple effects in today’s marketplace.

In reality what we see happening now is very few/none of the appraisers seem to want to set the new high sale comp in a neighborhood. The buyer and the seller may have mutually agreed on a price that was $20,000 higher than what the appraiser determined the value to be. However, if the only comparable sales were from "distressed" properties (short sales, foreclosures, etc.), they brought the overall value in lower.

If this trend continues, how will property values ever increase if appraisers continue to be pressured to not set the new high sale comp in a neighborhood, even when it is the best home in the neighborhood? And whatever happened to rule that the fair market price is determined by what a buyer is willing to pay?

In every year prior to 2010, none of my transactions ever under appraised. In 2010 I had three transactions under appraise, and so far in 2011 I have already had one under appraise with another one pending (but we are keeping our fingers crossed on that one).

Unfortunately, most of the time in residential real estate transactions in our area, the appraisals are not completed until the contract of sale has already been negotiated between the buyer and the seller. Usually it is also completed after the home inspection(s) and any repairs or credits are negotiated as a result of the inspection(s). It should be noted that most of the time the buyer has already paid for the inspections and if the transaction doesn't close, they will not get that money back. When the appraisal comes back under the purchase price, the under appraisal problem begins.

On one hand you have a seller who feels that they have already given enough (often a significantly lowered sales price, a hefty seller contribution, and several items to repair from the home inspections). Then on the other hand you have the buyer who doesn't want to overpay for the home, but still wants and/or needs the same seller contribution from the original contract of sale, and also wants all of the repairs completed that have already been agreed upon by both parties to be completed. At this point, the negotiations start all over again.

Under appraisals are just another obstacle that needs to be overcome in order to get to the settlement table in today's real estate market. Hopefully if you hired a real estate agent who is an excellent negotiator and on top of their game, they will be able to help you work the deal out and get everyone to come to another compromise.

BOTTOM LINE IF YOU ARE A BUYER: Make sure you put in an appraisal contingency with your purchase contract so you are protected in case the appraisal comes in under the agreed purchase price. Depending on your financing, you may automatically have that clause as a contingency. When in doubt, you should always consult with a real estate attorney.

BOTTOM LINE IF YOU ARE A SELLER: Be prepared to negotiate some more if your home comes in under value since most buyers are not going to be willing to pay over the appraised value of the home. You should also know that depending on the type of financing your buyer is using, the value of the appraisal could be fixed to your property for a minimum period of 90 days. It does not matter if you get another contract for more money from another buyer if they are using the same financing program as the original buyer.

Have you experienced an under appraisal? What happened? Were you happy about it or did it ruin the deal?

--------------------------

 

Thanks, Mike! 

Thoughts, questions, arguments? Comment away.

If you'd like to write a guest post -- either to share expertise or to share an interesting housing-related personal experience -- please drop me a line. Details here.

And if you've got questions you'd like to see a guest poster address, a la last week's ground rent Q&A, ask away right here.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (15)
Categories: Appraisals, Guest post
        

May 6, 2011

Housing events and foreclosure help

Two events for would-be homebuyers and one announcement for struggling homeowners:

o Live Baltimore is holding its Buying into Baltimore fair for the western half of the city on Saturday, May 14, which includes the usual opportunity to qualify for $4,000 in city-funded money to put toward closing costs or a downpayment.

o Comprehensive Housing Assistance Inc. is putting on its own open house tour of Northwestern city neighborhoods on Monday, May 16, also with $4,000 settlement-help opportunities.

o Bank of America announced Thursday that it would open a Baltimore-area center that its borrowers can visit if they're having trouble with mortgage payments, one of 28 "customer assistance" locations it plans to open in the next three months. The closest one now is in Arlington, Va. The potential appeal of showing up in person? A common complaint by borrowers seeking loan modifications from their servicers is that the documentation they fax or mail is repeatedly lost.

Know of an event or happening? Please share in the comments.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Foreclosure help, Housing events
        

May 5, 2011

Supply vs. demand in the Baltimore-area housing market

If homes keep selling at the current pace, how long would it take to clear everything currently listed for sale?

Here's the answer for the Baltimore region in March, the most recent statistics from Metropolitan Regional Information Systems, keeper of the multiple-listing service:

Anne Arundel County: 8.4 months

Baltimore City: 9.8 months

Baltimore County: 8.5 months

Carroll County: 12.4 months (longest in the region)

Harford County: 7.8 months

Howard County: 6 months (shortest in the region)

Metro area overall: 8.7 months

To put that into perspective, the rule of thumb is generally that six months reflects a balance between demand (buyers) and supply (sellers).

The months-of-supply stats above are calculated based on transactions that closed in March. If you divide homes listed for sale by the pending deals newly inked in March, the months of supply for the Baltimore metro area drops to 5.6 months.

This is typically the busy time of year for contract-signing, so it makes sense that the months of supply would fall as spring buyers get into gear. If 2011 follows the normal trend, the figure will rise later, especially at the end of the year.

Once we see an entire year with the months' supply averaging around six, then that would probably mean the market's back on an even keel.

Sellers, have you tallied up the competition near you? What sort of months' supply are you looking at? (You can see what's in your ZIP code at the website of MRIS's stats arm, RealEstate Business Intelligence.)

Buyers, do you prefer looking in neighborhoods with lots of homes for sale, or does that ample supply make you nervous?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: Housing stats
        

May 4, 2011

No. 1 reason to buy a home? For some last year, it was tax credit

Thirteen percent of first-time homebuyers surveyed by the National Association of Realtors last year said their primary reason for purchasing -- primary reason, mind you -- was the $8,000 federal tax credit.

That was the second most popular answer after "I wanted to own my own home," though that more traditional reason was far and away the top choice at 53 percent.

Third most popular answer: "affordability of homes," which was the top pick for 8 percent of first-time buyers surveyed.

The trade group's survey results have been out for a while -- and the questionnaire itself was mailed out last July to buyers who purchased between July 2009 and June 2010 -- but hey, I just stumbled across it. I thought you might like to chew over the figures, too. Is it alarming that anyone took on the responsibility of homeownership primarily for an $8,000 tax break ... or, considering the multi-billion-dollar cost of that incentive, that just 13 percent did?

For repeat buyers, the tax credit on offer was $6,500, but only assuming they met the very specific qualifications. It wasn't nearly as popular as the credit for first-time buyers, and the survey results reflect that: Just 3 percent of repeat buyers cited the credit as the primary factor for their purchase. Desire for a larger place was the key motivator.

If you bought -- or sold -- in the last few years, share: What was your primary reason? What about the secondary and tertiary ones?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (6)
Categories: First-time buyer tax credit
        

May 3, 2011

Now taking your housing-related questions

Questions about ground rent pop up all the time, so asking a real estate attorney to weigh in on the common ones was a no-brainer. It seems like a pretty good model for other expert guest posts, too -- taking your questions to people who can answer them.

Let's make this official, then: What burning (or perhaps slightly warm) questions do you have related to residential real estate? Home inspections, appraisals, rental contracts, mortgages, renovation -- you get the idea.

You're not limited to one. Ask 'em all.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (19)
Categories: Expert guest post, Guest post
        

Free housing!

Nearly half of men under 25 -- at least those surveyed by Rent.com -- are paying zilch for their living arrangements. It's no great secret how: They're depending on the kindness of family, or in some cases friends.

They're not the only ones.

The recession and sluggish recovery have put many more people in the category of living with Mom and Dad (or Sis or some other relative with a roof over their heads) out of financial necessity, regardless of age. And in good times and bad, there are always those who move in with family to take care of aging or ill loved ones.

Is this you -- or was it? Is it more upside or downside -- more togetherness or stress?

While we're on the subject, have a poll:

Along with its survey, Rent.com released a Top 10 list of cities for bachelors. Houston was No. 1. No. 10? Baltimore.

"Baltimore, MD attracts singles with charming and scenic Inner Harbor bars and restaurants," the company said in a press release. "Statistics say there are plenty more single ladies than men in this city, and it’s both affordable and unique."

Not being a bachelor, I can't possibly weigh in on this one. What do you think?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (5)
Categories: Polls, Renting
        

May 2, 2011

John Mitnick: Ground rent Q&A

John%20Mitnick.jpg

 

 

Ground rent, that aged Baltimore institution, has been confusing residents for many years. It hasn't gotten any simpler with the raft of new ground-rent rules in 2007.

Real estate attorney John H. Mitnick agreed to tackle some common reader questions in this week's guest post.

He's with the Baltimore law firm of Mitnick & Mitnick, which was founded by his great-grandfather in 1881 and today includes his son, the fifth generation of the family to attend the University of Maryland School of Law. The firm specializes in real estate law.

 

 

 

Take it away, John:

------------------------------------

Q: The ground rent on my property wasn't registered by the owner before the deadline last year. Do I need to officially request an extinguishment certificate from the state? Is there any downside to not doing so?

A: I recommend officially requesting an extinguishment certificate. This should then be recorded in the land records of the jurisdiction in which the property is located. The result is that a future title searcher will be able to report that the property is in fee simple. Absent such recordation, the title searcher would report the leasehold interest as shown by the records, which could cause problems if the property is to be sold or refinanced.

Q: If the ground rent on my property wasn't registered, does that mean I don't need to pay? Or should I anyway, just in case the registration law is overturned by the Court of Appeals?

A: If the registration law is overturned by the Court of Appeals, any unpaid ground rent would be due, up to a maximum of three years' back ground rent, which is the current limitation on ground rent being collected. If bills are being mailed to the homeowner, but the ground rent isn't registered, I would recommend sending a letter to the ground rent owner that you will not be paying the bill, as the ground rent was extinguished through non-registration. It is possible that the ground rent owner has requested an extension due to a legal disability, but I still would not advise payment until they prove they have registered.

If bills are NOT being mailed, it is even more of a no-brainer to refrain from sending payment. Although ground rent is contractually due without bills being sent, all collection procedures require certain defined bills and notices. So it should not be harmful to refrain from paying ground rent if no bills are being received. In both cases, I would recommend requesting and recording the extinguishment certificate.

Q: I'm thinking of redeeming my ground rent. Could you explain how to do that, especially how to figure out the cost? Also, can the ground-rent owner prevent me from redeeming?

A: The redemption of ground rents is explained in the Real Property Article of the Maryland Code, Section 8-110, where it states that the "tenant," which means the homeowner, must send a letter to the "landlord," or ground rent owner, by certified and first class mail, giving the landlord 30 days notice of the redemption. In practice, a phone call, followed by fax or email confirming the price, is usually sufficient. If the notice is properly sent, the ground rent owner cannot legally decline to allow the redemption.

The price is generally the annual rent times 16.66 for rents created after April 5, 1888 but prior to July 1, 1982, and the annual rent times 8.33 for rents created after July 1, 1982. There are some other situations for earlier rents. In addition to paying the redemption amount, the homeowner will usually have to pay any back ground rent which is due, and will also have to pay the cost of preparation and recordation of a ground rent merger deed. It is advisable to engage an attorney to prepare and record this deed, which extinguishes the ground rent, and creates a fee simple title.

Q: Does the ground-rent investor actually own my land, or do they simply have a never-ending lien on it?

A: It's not that simple. The situation is more like a "never-ending lien," but is most precisely defined as follows: Both the ground rent owner and the leasehold owner have interests in both the land and what's on the land. The ground rent owner has a "reversionary" interest in the land and what's on it, and the leasehold owner has a "leasehold interest" in the land and what's on it (the house). The homeowner owns the land and what's on it "subject to" the duty to pay this ground rent every six months.

Additionally, the term "reversionary" is now imprecise, since the legislature outlawed ground rent ejectments in 2007, so that the property can no longer "revert" to the ground rent owner, although they can now obtain and record a lien for unpaid ground rent after following certain procedures.

------------------------------------

Thanks, John!

Thoughts, questions, arguments? Comment away.

If you'd like to write a guest post -- either to share expertise or to share an interesting housing-related personal experience -- please drop me a line. Details here.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (15)
Categories: Expert guest post, Ground rent, Guest post
        
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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
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