The goals include brainstorming new strategies and sharing "game-changing solutions" that can more speedily get vacant homes re-occupied.

The event -- sponsored by Living Cities, HUD and the Ash Center for Democratic Governance and Innovation at the John F. Kennedy School at Harvard University -- is interesting in part because it's not simply bringing together local government administrators. Each place represented (described as "12 of the regions hit hardest by the housing crisis," from South Florida to Los Angeles) sent a team made up of nonprofits and real estate firms as well as government officials.

Detroit -- exceedingly hard-hit -- is not on the list. But leaders there are considering a doozy of a game-changer.

Razing. Razing across the board.

As the Associated Press notes:

After decades of decline that gutted many once-vibrant neighborhoods, Detroit is preparing a radical renewal effort on a scale never attempted in this country: returning a large swath of the city to fields or farmland, much like it was in the middle of the 19th century. Under plans now being refined, demolition crews would move through the most desolate and decayed areas of urban Detroit with building-chomping excavators, reducing houses to rubble.

Tearing down en masse has been suggested in Baltimore, too. Though the city's situation is not as desperate as Detroit's, it has thousands of long-vacant, abandoned houses, and streets where boarded-up properties outnumber the occupied ones.

Continue reading "Fighting the foreclosure fight -- or withdrawing" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (2)
Categories: The economy, The foreclosure mess
        

Pick four mortgaged homeowners at random in Maryland, and chances are that one of them owes more on his or her loan than the home is worth. Twenty-three percent -- very close to one in four -- are in that "underwater" state, according to a new report from First American CoreLogic.

That's higher than all but seven other states. (We've been high up the list for a while, alas.)

Underwater is a lousy place to be. If you need a bigger place, a smaller place, a place in another state where your employer is transferring you, etc., you'll need to bring money to the table -- or become a landlord -- to move on. If you're trying to move because you can't afford your mortgage payments, escaping foreclosure involves an often tortuous process of trying to get your lender to approve a short sale.

If you're not planning on going anywhere and can afford your mortgage payments, then an underwater mortgage could be nothing more than an annoyance. But get too far upside down, and some homeowners will walk, economists note.

"Negative equity is a significant drag on both the housing market and on economic growth. It is driving foreclosures and decreasing mobility for millions of homeowners," Mark Fleming, chief economist with First American CoreLogic, said in a statement. "Since we expect home prices to slightly increase during 2010, negative equity will remain the dominant issue in the housing and mortgage markets for some time to come."

One bit of good-ish news: The underwater problem isn't quite as bad in the Baltimore area as it is statewide. Just under 17 percent of Baltimore metro area homeowners with mortgages are upside down.

The state that's worst off is Nevada, where First American CoreLogic estimates that a whopping 70 percent of borrowers owe more than their homes are worth. Where do you stand?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (7)
Categories: Mortgages, The economy, The foreclosure mess
        

Several of you asked for a visual on the foreclosure mess. Here's one -- not actually foreclosures, but the number of Maryland borrowers behind on their payments, as measured by the Mortgage Bankers Association.

The red past-due line on the chart below includes homeowners whose lenders have started foreclosure proceedings -- that's "foreclosure inventory" in the association's parlance (not to be confused with homes already foreclosed on and on banks' books). The blue line shows only those loans in the foreclosure process.

A bit of good news from the newest numbers, out Friday: Fewer people were newly delinquent -- 30 days behind -- at the end of December than at the end of September. That's true in Maryland and the nation.

Because new delinquencies usually go up at the end of the year, when people are hit by heating bills and other seasonal expenses, the mortgage bankers think that's a good sign. But no one's saying the foreclosure mess is going away anytime soon.

On a related note: U.S. Rep. Elijah E. Cummings' foreclosure prevention workshop, postponed because of snow, has been rescheduled to Feb. 20. Here's a PDF with details.

Posted by Jamie Smith Hopkins at 12:00 PM | Permalink | Comments (2)
Categories: The foreclosure mess
        

A new report looking at delinquent subprime mortgages in Maryland and nearby states finds that foreclosure is still the go-to solution for lenders -- or at least it was through the middle of last year, when the report's dataset ends.

Loss mitigation and loan modification were "much less frequently pursued" than foreclosure, says the report, prepared for the Baltimore Homeownership Preservation Coalition.

Why? Much has been written about that. The report's authors, J. Michael Collins of the University of Wisconsin-Madison and Christopher E. Herbert of Abt Associates Inc., note that financial incentives -- and disincentives -- are one of the barriers.

Servicers, they say, "are reimbursed by investors for missed payments and actions taken in pursuit of a foreclosure, but not for costs associated with loss mitigation activities."

In recognition of these costs, Fannie Mae, Freddie Mac, and the Federal Housing Administration have long offered servicers incentive payments to encourage servicers to pursue these remedies, but investors in private label mortgage backed securities do not provide such incentives. The lack of income from loss mitigation activities may also lie behind the fact that many servicers lack the capacity to handle the workload associated with elevated requests for loan workouts. Absent incentive payments, servicers do not have a financial incentive for adding to their organizational capacity for these functions.

You can read the full report here.

So: What about the servicers who signed an agreement with the state to "to create a streamlined and transparent loss mitigation process for distressed Maryland homeowners"?

Continue reading "What happens when a borrower gets behind" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (8)
Categories: Mortgages, The foreclosure mess
        

Gov. Martin O'Malley wants to make mediation a part of the foreclosure process in Maryland, offering it as one way to avoid more avoidable trips to the auction block. Mediation has popped up in other states, but not in the same way everywhere. So what's the plan here?

Kathleen Skullney, the staff attorney for the foreclosure legal assistance project at Maryland Legal Aid, kindly offered to walk us through it.

The idea, she said, is to tuck new requirements into the state's current foreclosure timeline. Right now, lenders must wait 45 days between notifying Maryland homeowners that they intend to foreclose and actually filing with the court to start those proceedings.

O'Malley's most recent summary of legislative priorities says the bill he is submitting "prohibits the filing of a foreclosure action without completion of loan modification review."

When lenders or servicers file foreclosure actions, they would have to include "an affidavit documenting completion of review, reasons for denial and calculations on which denial was based, or showing that review could not be completed because borrower failed to engage in the process." They would also have to document that they considered other alternatives to foreclosure.

"Meaning you use the 45 days to figure out what else you can do," Skullney said. "And you make sure that that’s a fairly efficient process by giving homeowners the information they need the minute they get the notice of intent to foreclose -- they can immediately apply, whether it’s the federal program, whether it’s the lender’s own program."

On the flip side, homeowners can't expect that failing to respond will bring the process to a halt.

Continue reading "What foreclosure mediation could look like for homeowners" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Foreclosure help, The foreclosure mess
        

Wondering how foreclosure woes vary across Maryland? This map, put together by the Federal Reserve Bank of Richmond, gives you a snapshot as of September.

The key, in case you're squinting at it, goes from 0 percent to 0.5 percent of loans in foreclosure or on homes taken back by banks (dark green) to more than 2.5 percent (red). Though red is particularly concentrated in Prince George's County and the lower Eastern Shore, it makes an appearance all over, like an angry, contagious rash. The Baltimore area, as you can see, isn't immune.

This is from a new Federal Reserve Bank of Richmond report, which is map- and chart-centric. Here's the PDF, if you'd like to peruse.

A few notable numbers from the report:

24 percent: Maryland subprime adjustable-rate mortgages in the foreclosure process in September. (Not just behind. So behind that lenders were trying to repossess the house.)

8.1 percent: Maryland prime adjustable-rate mortgages in the foreclosure process in September -- 14th highest in the nation.

When do you think the foreclosure mess will recede?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (7)
Categories: The foreclosure mess
        

Many newspapers and television stations have reported on loan-modification scammers, people taking money from homeowners who can least afford to be flimflammed. But it's still happening, so the word hasn't reached everyone who needs to hear the message.

Here's an effort to fill in gaps: Loan Modification Scam Alert, a website run by community revitalization nonprofit NeighborWorks America. The site offers "6 Things You Should Know" (for instance, paying an upfront fee to a company for loan-mod help may get you nothing but further in the hole), a list of common scams, people's scam experiences and the like.

It's illegal in Maryland for a loan-modification company to charge upfront fees, so, yeah -- definitely a red flag. The state Department of Labor, Licensing and Regulation has been issuing cease-and-desist orders to operators as part of a nationwide crackdown. You can read more about that effort here. 

But don't heave a sigh of relief: As a Salon piece from September notes, it's "a giant game of whack-a-mole," with cracked-down-on companies finding ways to continue operating and firms using loopholes to get around state laws banning the collection of upfront payments. Many states have an exemption for attorneys, and -- alas -- attorneys are involved in some of the companies under fire. (On the other hand, about 1,000 attorneys in Maryland have signed on to an effort to help borrowers for free.)

Whom should you call, then, if you're hoping you qualify for a modification of your mortgage? The company that services your loan -- that's the firm asking for your payments every month. Or the state's HOPE hot line, 877-462-7555, which will refer you to a nonprofit housing counselor. Or connect with a housing counselor directly -- the HUD-approved list of agencies is here.

Posted by Jamie Smith Hopkins at 7:30 AM | Permalink | Comments (3)
Categories: Foreclosure help, Mortgage fraud/scams, The foreclosure mess
        

The about-face was an immediate reaction to an opinion issued yesterday afternoon by the Maryland Attorney General's office, which said statute and case law don't give counties the authority to tax homes in the way the county was doing.

More in today's story, including the promise of refunds -- though few homes actually got taxed in this way, the county says.

The original story about the uproar over the taxing practice is here.

No one who commented on the blog post about it said they agreed with the policy. Wonk reader Frank Rizzo, for instance, thought the county should stop:

"If you owe 300k and the homes are selling for 200k, then guess what? The home is worth 200k," he wrote. "If the home was worth more, then most likely they would sell the home for more. ... It should not matter what the seller owes on the home when determining transfer taxes, as they are based on the SALES price. The County wants to keep assessments higher because they know if they ... come down, their property tax revenue will fall too."

Thoughts?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (0)
Categories: Property taxes, The foreclosure mess
        

Behind on your mortgage or concerned you might get that way? U.S. Rep. Elijah E. Cummings is sponsoring a foreclosure-prevention workshop in Baltimore County a week from this Saturday, Feb. 6. The registration deadline is Feb. 3.

You can sign up to see a representative of your mortgage servicer, assuming yours is on the sizable invitee list, and you can also ask for time with a housing counselor and/or a pro bono attorney.

Homeowner advocates tell me that Cummings' previous events have been packed.

The event is scheduled from 9 a.m. to 3 p.m. at Woodlawn High School, 1801 Woodlawn Drive in Gwynn Oak. More details, including what financial documents to bring, are on this PDF.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (0)
Categories: Foreclosure help, The foreclosure mess
        

Karl-Henri Gauvin said several of his clients walked away with loan modifications because representatives have the authority to approve them on the spot if the borrowers qualify.

"You cut through all the red tape," said Gauvin, a Baltimore attorney who was named volunteer of the year in September by the Maryland Consumer Rights Coalition.

The event -- also open to Wachovia borrowers -- is set to run until 7 p.m. today at the Baltimore Convention Center, One West Pratt Street. More details on the original post.

Did you go? Was your experience good, bad or neutral?

Posted by Jamie Smith Hopkins at 1:36 PM | Permalink | Comments (1)
Categories: Mortgages, The foreclosure mess
        

The Consuming Interests blog is asking a question that homeowners and economists alike are wrestling with: Is it ever the right decision to walk away from your home and your mortgage?

In a New York Times magazine piece, Roger Lowenstein argues that corporations default on loans for business reasons, so why not Joe Schmoe?

Mortgage holders do sign a promissory note, which is a promise to pay. But the contract explicitly details the penalty for nonpayment — surrender of the property. The borrower isn’t escaping the consequences; he is suffering them.

It's a hotly debated issue, as you can imagine. What do you think? You can take the Consuming Interests poll here.

Posted by Jamie Smith Hopkins at 10:10 AM | Permalink | Comments (1)
Categories: Mortgages, The foreclosure mess
        

Wells Fargo is putting on a mortgage-help event in Baltimore next week for struggling borrowers, including people with loans from Wachovia, which it acquired about a year ago. Here are the details:

The company says you'll "meet with a Wells Fargo representative who will confidentially discuss your financial concerns and options," including whether you're eligible for a loan modification through the federal Home Affordable Modification Program.

The event is 10 a.m. to 7 p.m. Jan. 11, 12 and 13 -- next Monday through Wednesday -- at the Baltimore Convention Center, One West Pratt Street. Go to level 100, hall F.

You can walk in, but Wells Fargo recommends registering at www.wfhmevents.com/leadingthewayhome by the end of the day today. The registration page notes this, but remember to bring a letter explaining your situation, a list of your assets and expenses, and recent pay stubs, bank statements and tax returns/W2s.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (2)
Categories: Mortgages, The foreclosure mess
        

A real estate data firm says Baltimore metro area home sale prices were 8.8 percent lower in the four months ending Dec. 24 than they were a year earlier.

Good news from the company, Clear Capital: Most of the people selling were ... well, people selling. Bank-owned properties made up 15 percent of home sales in the metro area, which isn't as low as some places but is a heck of a lot lower than the 30 to 50 percent in some of the worst-hit parts of the country. (More than half of sales -- 53 percent -- were bank-owned in Riverside, Calif.) 

Bad news: Baltimore was No. 9 on the company's list of "lowest performing major markets" because prices dropped almost 1 percent from the previous quarter. (Baltimore's quarterly price rose very slightly in the summer, according to Clear Capital.)

Of course, your idea of "good news" and "bad news" will be reversed if you're trying to buy a foreclosure and want prices to keep coming down. (At least there's some good news for everyone ...)

Top performer, according to Clear Capital: Detroit. Yes, Detroit, land of $10,000 homes, which saw a more than 17 percent increase vs. the previous quarter. The company attributed that to the metro area's foreclosure-saturated market, saying bank-owned prices "continue to rise from their steeply discounted levels of early 2009."

Clear Capital, which draws its sales figures from assessors' and recorders' offices, calculates price by comparing repeat sales of the same homes over the years. You might have noticed that its most recent "quarter" is four months rather than three, and that's by design. It throws in an extra month of sales for balance in order to include very recent numbers, which come from data that can be incomplete.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: Housing stats, The foreclosure mess
        

Bishop has a short story up now. Look for the full version Thursday. A taste:

"The alleged connection is even more implausible when considered against the background of other factors leading to the deterioration of the inner city," U.S. District Court Judge J. Frederick Motz explained in an six-page memorandum opinion accompanying the dismissal order. He pointed specifically to Baltimore's "extensive unemployment, lack of educational opportunity and choice, irresponsible parenting, disrespect for the law, widespread drug use, and violence."

Motz left the door open for the city to file an amended complaint, however, narrowing the scope of its claims.

Do you think the city should do so?

Posted by Jamie Smith Hopkins at 8:25 PM | Permalink | Comments (3)
Categories: The foreclosure mess
        

Paula M. Cino, director of energy and environmental policy at the National Multi Housing Council, a trade group for the apartment industry, has strong opinions on the topic, as you might imagine. I asked her to share in a Q&A.

Q. How does government support for homeownership compare with government support for renting?

Cino: Federal homeownership subsidies outnumber rental support 4 to 1 or about $230 billion to the renters’ $60 billion. If subsidies were adjusted to reflect the true distribution of households that rent vs. own, rental housing subsidies would have to increase by about $36 billion. The unbalanced nature of our housing policy is even more obvious when you consider that the richest 20 percent of the population claimed more than a third of the homeownership subsidies through the mortgage interest deduction.

Q. Why does it matter if the government offers more breaks and incentives for homeownership?

Cino: The current allocations simply don’t reflect the diversity of housing needs nationwide. One third of all Americans rent their housing. Moreover, changing demographics and consumer preferences show an increased demand for apartments. The U.S. Census Bureau’s Housing Vacancy Survey shows that 2.83 million new renter households were created between 2004 and 2008. In 2008 alone, 63 percent of net new households were renter-occupied.

For decades, married couples with children dominated housing markets. But today those families make up less than 25 percent of all households. Apartments are needed to accommodate the growing number of young professionals, empty-nesters and childless couples seeking smaller, centrally-located, more affordable homes that don’t necessitate a long-term financial commitment.

Q. What role do you think government policy played in the housing bubble and bust?

Continue reading "Q&A: Homeownership incentives, and what they mean for renters" »

Posted by Jamie Smith Hopkins at 9:51 AM | Permalink | Comments (0)
Categories: First-time buyer tax credit, Q&A, Renting, The foreclosure mess
        

Baltimore's housing commissioner, Paul T. Graziano, noted this week that he wishes the city got more than $5.8 million in federal Neighborhood Stabilization Program dollars to acquire and fix up bank-owned properties. It's a common refrain across the country, even from cities that got ten times that amount, because pretty much everyone is feeling overwhelmed by the scope of the problem.

City officials are estimating that $5.8 million will cover the cost of buying and rehabbing about 80 units, some to be resold to homeowners and some to be rented out. (That estimate is counting on money coming back into the pot from the resold units and allowing more work to be done.) But more than 2,700 city homes were sold at foreclosure auctions in 2009 alone, and hundreds (if not thousands) more are in danger of following suit.

I had a story about the program this week -- and about the fact that it's taken a long time (in a non-bureaucracy sense of the word) to get it off the ground -- but didn't have space to go into one of Graziano's points. It's an interesting one, namely that Baltimore probably would have fared a lot better if general vacancy and abandonment played a bigger role in how the federal government apportioned the $3.9 billion in stabilization money. (Vacancy is one factor, but foreclosure starts counted for more.)

"We have a lot of vacancies, probably more than most any other cities in the country -- proportionally or otherwise," Graziano said. "I'm happy in many ways that we don't have as many foreclosures [as some cities], but it's still a challenge. And the other vacancies are contributing significantly to our challenges."

A down note to start 2010, I know. Here's to a better new year than the old one.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (11)
Categories: The foreclosure mess
        

It used to be a largely unmeasured problem. But now we have some hard statistics on how often local renters are finding themselves caught up in foreclosure because their landlords fell behind.

It happens a lot.

Of the approximately 5,000 Baltimore properties starting the foreclosure process in the 12 months ending June 30, nearly 40 percent -- 1,900 -- were occupied by renters. That's according to the Baltimore Homeownership Preservation Coalition.

And the state Department of Housing and Community Development, which started a hot line in May for renters in this situation (877-775-0357), has been averaging almost 600 calls a month for help.

I have a story today on the subject, or more specifically about the seven-month-old Maryland law requiring lenders notify renters as they seek to foreclose, and the equally young federal law giving renters time post-foreclosure before lenders can order them out. (Attorneys working with tenants say that lenders, or their contractors, are frequently neglecting to mention this.)

The question I know some of you have is how often renters are innocent victims, and how often they contributed to the landlord's default by not paying. The state has interesting statistics on that topic:

Continue reading "Renters feel the sting of foreclosure" »

Posted by Jamie Smith Hopkins at 7:30 AM | Permalink | Comments (14)
Categories: Landlording, Renting, The foreclosure mess
        

Home for the holidays: Fannie Mae and Freddie Mac said Thursday that they won't evict anyone from a foreclosed home from Saturday through Jan. 3 -- a holiday break. Citigroup, meanwhile, announced a 30-day suspension from evictions and new foreclosures.

The Christian Science Monitor, reporting on Citigroup's decision, points out that this sort of move saves a lending institution from comparisons it might not like. For instance, Christmas Eve evictions on the other hand, "bonuses that the bankers are raking in" on the other.

Fewer interested in buying foreclosures: Forty-three percent of adults polled in a survey released this week by Trulia and RealtyTrac said they would be at least somewhat likely to buy a foreclosed home, down from 55 percent in May. Renters are more interested in buying a foreclosure than homeowners (57 percent vs. 38 percent). And -- not surprisingly -- more than 90 percent of prospective second-home buyers and investors are at least open to the idea of a foreclosure purchase.

For you fellow wonks: Just over 2,200 people were polled for the companies by Harris Interactive, which says no margin of error can be calculated because it was an online survey and not based on a probability sample.

More "shadow inventory": First American CoreLogic puts the number of off-the-market foreclosures and close-to-foreclosures at nearly 1.7 million units nationwide in September, the so-called "shadow inventory" that will presumably go up for sale in the future. That's a more than 50 percent increase from a year ago, largely because of a big build-up in seriously delinquent mortgages.

What First American calls the "visible supply" -- homes listed for sale -- totaled 3.8 million units in September, a 19 percent decrease from a year earlier.

Continue reading "Foreclosure news round-up" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: Housing stats, Real estate investing, The foreclosure mess
        

The housing slump, foreclosure crisis and constricted economy are omnipresent even -- or perhaps especially -- at this time of year, so I suppose I shouldn't be surprised about the Recession Gingerbread or the Default Carol.

The former is the brainchild of an artist who put together "Abandoned Gingerbread House Building Sites" in honor of all the abandoned actual homebuilding sites in Ireland. (You can find them in the U.S., too.) As gingerbread creator Andrew Salomone put it, they're "picturesque gingerbread-house decorations that will rot and eventually be thrown out much like the unfinished housing estates themselves." Joy to the world ...

Which brings us to "The 12 Months of Default." It warps "The Twelve Days of Christmas" to tell the tale of a couple sliding into foreclosure. ("On the 12th month of default, my true love said to me ... House sold at auction ... We need to vacate ... Cash for keys offer!" etc. etc.) It has, in a manner of speaking, a happy ending. Depending on your definition of happy.

Tip of the hat to fellow reporter and Consuming Interests blogger Liz F. Kay for noticing the gingerbread, and to Wonk reader Frank Rizzo for pointing me toward the carol.

Update: Marcy Shaffer suggests you check out her company's commercial real estate parody of "O Christmas Tree" ("You used to earn on cruise control" / "Now it's your turn to lose control").

Later this morning: a more upbeat way in which housing and the holidays intersect.

Posted by Jamie Smith Hopkins at 6:30 AM | Permalink | Comments (0)
Categories: Housing humor, The economy, The foreclosure mess
        

Some of you have wondered how many foreclosed homes are on the sidelines of the housing market, neither for sale nor in the process of being sold. Lender Processing Services, a mortgage-industry services provider that tracks nearly 45 million loans across the country, says the answer is nearly 30 percent ... of properties in foreclosure for 12 months.

Yikes.

That's "twice the level of the prior year," the firm noted this week in a report looking at data through the end of October.

On top of that, Lender Processing Services said, mortgage holders haven't started foreclosure proceedings on almost 30 percent of loans with at least six missed payments. Two years ago, it was 13 percent. (The Mortgage Bankers Association, seeing similar trends, said lenders are trying to work out modifications with borrowers.)

Nearly 13 percent of loans in Maryland were either delinquent or in the foreclosure inventory in October, according to Lender Processing Services. That's 14th highest in the nation.

I asked recently how rising delinquencies and foreclosures are affecting you. Here's what you said (keeping in mind that it was a "choose any that apply" poll):

Continue reading "Foreclosure "shadow inventory"" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (5)
Categories: Polls, The foreclosure mess
        

The orders were part of a continuing nationwide effort to crack down on loan-mod scams, which have flourished like mold in a damp basement as the housing-market crash worsened in the last two years.

Cease-and-desist orders went to Equity Recovery Services LLC, U.S. Equity Solutions LLC, Save My Home USA Co. Inc., GIAN Inc. and Help Modify Now Inc., along with affiliates and arms operating under other names. The orders were among 118 legal actions across the nation, the Federal Trade Commission said. (Here's a post about a previous wave of legal actions in July.)

Among the online complaints from consumers is this one: "Save My Home USA LOST my home!"

Stephen Prozeralik, assistant commissioner for enforcement at the state Department of Labor, Licensing and Regulation, said it's illegal in Maryland to charge upfront payments for loan-modification help. He recommends against going to any company that charges for such assistance -- he suggests a nonprofit housing counseling agency, the HOPE NOW Alliance or a direct call to your mortgage servicer -- but you definitely don't want to sign on with a firm demanding its fee before the work is done.

The problem is twofold: Homeowners who can't afford their mortgages really can't afford to spend several thousand dollars on mortgage help. But when firms take the money and do nothing, the state says, they're also robbing borrowers of valuable time that could have been used for actual loan-modification attempts.

"The majority that we're investigating, they're charging the fees and they're no service whatsoever for the money they've collected," Prozeralik said. "They essentially take the money and run. They don't contact the lenders. They have no ability or even intent to get a loan mod for the person."

Continue reading "Careful whom you call for mortgage help" »

Posted by Jamie Smith Hopkins at 7:30 AM | Permalink | Comments (9)
Categories: Mortgage fraud/scams, The foreclosure mess
        

Know 10 people with prime mortgages? Odds are that one of them is behind on the payments. That was the delinquency rate in Maryland and the U.S. at the end of September, an astonishingly high figure for borrowers who were supposed to be good credit risks. 

The Mortgage Bankers Association blamed unemployment, which last month hit 7.3 percent in Maryland and 10.2 percent on average nationwide. Falling home prices are another factor, the trade group notes.

So: Are we at the point where everyone is affected in some way by the rising tide of foreclosures and delinquencies? Enlighten us all by weighing in on this choose-all-that-apply poll:

Have a tale to tell? Please share.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (0)
Categories: Polls, The foreclosure mess
        

--134,923: Maryland homeowners behind on their mortgages at the end of June.

--163,479: Maryland foreclosures it predicts between this year and 2012. (If that comes to pass, it would be one in every seven homes with a mortgage, according to my quick check of Census Bureau data.)

The center has numbers for every state -- under the headline "The Impact of Bad Lending" -- and it's reminding us of this now because it's trying to rally support for the proposed Consumer Financial Protection Agency.

As real estate columnist Kenneth Harney notes, the agency would oversee real estate and mortgage matters, plus "credit cards, debit cards, consumer loans, payday loans, credit reporting agencies, debt collection, stored-value cards and even investment advisory and financial advisory services, to name only part of the list."

Continue reading "Foreclosures and financial protection" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: The foreclosure mess
        

By now you probably all know what a short sale is: a deal in which the lender allows a home to change hands for less than the balance on the mortgage, forgiving most or all of the difference.

For months, agents have said there are far more would-be short sales than closed deals. The lenders reject the offers, or they take so long to consider that buyers give up and move on. So I was curious to hear what Olivia Surge, who negotiates short sales on behalf of homeowners at the Law Offices of G. Russell Donaldson in Crofton, is seeing now.

Compared with 2007, when nine months could go by before lenders would even look at an offer, "things have gotten much, much better," she said. "But we're still slow and go."

Lenders are typically taking 30 to 90 days to acknowledge that they have an application for a short sale, she said. "They're so inundated," she said.

I talked to Surge for Sunday's story about the growing number of homeowners selling for less than their purchase prices. I only had space for a few of her observations in the article, but I've got all the space in the world here. And I think you'll be interested in hearing more of what she had to say about what works, who's eligible, whether lenders are forgiving all the debt and how frequently these deals are popping up.

Continue reading "Short sales" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (7)
Categories: Mortgages, The foreclosure mess
        

More supply means more downward pressure on prices, the firm notes:

For a number of reasons, banks have not been aggressively taking title to homes and selling them, which has resulted in very few distressed sales in comparison to the actual level of distress in the market. This delay in REO sales, along with historically low mortgage rates and an $8,000 tax credit, has helped to stabilize the housing market - temporarily.

It is very clear that price stabilization is temporary unless something is done.

What sort of "massive supply" numbers are we talking about? Pretty, um, massive: One out of every 10 U.S. homeowners is behind on mortgage payments, John Burns Real Estate estimates. Not one in 10 homeowners with mortgages. One in 10 homeowners, period.

I keep hearing from local real estate agents that they're seeing foreclosed homes that haven't been put on the market yet by lenders. Is this true near you?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (7)
Categories: The foreclosure mess
        

Home prices in the Baltimore metro area were among the weakest in the nation this summer, but there are some hopeful signs for frustrated sellers, according to a new report by a real estate data firm.

Prices rose a tenth of a percent in the metro area in the four months ending Sept. 25 vs. the previous three months, California-based Clear Capital said. That’s lower than all but two other major housing markets — Las Vegas and Tucson, Ariz.

But you'll notice that prices are up, not down. It’s the first break in price declines for the Baltimore area since the summer of 2007, the report said.

Kevin Marshall, president of Clear Capital, thinks earlier increases in other parts of the country had a psychological effect on Baltimore buyers.

Continue reading "Home prices ... up?" »

Posted by Jamie Smith Hopkins at 1:00 AM | Permalink | Comments (10)
Categories: Housing stats, The foreclosure mess
        

Stop me if you've heard this one before: Borrower needs help. Borrower goes to foreclosure-rescue business to get help. Borrower signs documents to get or start the process of getting the mortgage refinanced, only to discover later that the foreclosure-rescue specialists were really getting the home signed over to them.

Such fraud has happened across the country, both before and after the housing market went downhill. One local case just wrapped up in Baltimore City Circuit Court with a judgment ordering the defendants to pay just over $1 million in restitution and penalties.

The business associates, Michael K. Lewis, brother Earnest Lewis, Cheryl Brooke and Winston Thomas, pleaded guilty earlier in the year to criminal charges related to dozens of foreclosure-rescue scams. Michael Lewis was sentenced to 6 1/2 years in prison, Earnest Lewis to 4 1/2 years, Brooke to almost four years and Thomas to just over three years.

The Baltimore civil case, brought by the Consumer Protection Division of the Maryland Attorney General's Office, covered 13 properties, most in the Baltimore area. Once the homeowners unwittingly signed over their properties, Earnest Lewis pulled all their equity out with a new loan and split the money with the defendants, said Bill Gruhn, chief of the Consumer Protection Division.

"Some of the homeowners have moved," he said. "Other homeowners are in their homes and we were able to facilitate settlements" with the lenders.

Continue reading "Homeowner beware" »

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (1)
Categories: Mortgage fraud/scams, The foreclosure mess
        

If you like to know how we compare with the rest of the nation, the Brookings Institution's Metropolitan Policy Program has just the report for you: It ranks the 100 largest metro areas on economic and housing-market measures of health.

I wrote a story for today's paper about the economic stats -- we're 18th best, for instance, as measured by the recent change in employment. (As in, it's not as bad here as it is in 82 other places. Woohoo!) The Baltimore metro area was in or near the top quarter of metro areas on most of the economic measurements.

But what about the housing stats? Those are a different story.

Our 5.8 percent drop in home prices in the spring, compared with a year earlier, ranked us 73rd out of 100. (With 100 being worst, at least from a homeowner point of view.)

The metro area was 61st out of 100 for its share of bank-owned homes -- 2.84 for every 1,000 mortgageable properties. (The average for all metro areas was higher, but only because some big regions are so hard hit.) These homes, which were foreclosed on and taken back by lenders, are typically called "REOs" for "real estate owned."

Baltimore's worst ranking on the report: Measured by the change in bank-owned properties from the first quarter of the year to the second quarter, it was 83rd out of 100.

Continue reading "How Baltimore stacks up" »

Posted by Jamie Smith Hopkins at 9:41 AM | Permalink | Comments (5)
Categories: Housing stats, The economy, The foreclosure mess
        

A number of lenders -- plus housing counselors and attorneys -- are expected to be on hand at a foreclosure-prevention event in Baltimore County this Saturday, and you can still register for it today if you'd like to attend. The event, sponsored by Congressman Elijah E. Cummings, will run from 9 a.m. to 3 p.m. at Woodlawn High School, 1801 Woodlawn Drive in Gwynn Oak.

The event flyer (a PDF) has more details, including what documents you should bring. You can find the online registration form here.

UPDATE: Cummings' office says you can still register on Thursday, even though the form says the deadline is 9/9.

Posted by Jamie Smith Hopkins at 4:05 PM | Permalink | Comments (0)
Categories: Foreclosure help, The foreclosure mess
        

That's made some industry folks very nervous. In the "what goes up rapidly might reverse course and go splat" sense.

The Wall Street Journal reports today that rising defaults on FHA loans are endangering the agency's reserves:

Options for the agency could include politically unpalatable choices, such as asking for taxpayer funds to boost reserves or increasing the premiums borrowers pay for the insurance offered by the agency. Agency officials say if there is a shortfall, they don't have to do anything except report it to lawmakers. But some mortgage and housing analysts see trouble ahead. "They're probably going to need a bailout at some point because they're making loans in a riskier environment," says Edward Pinto, a mortgage-industry consultant and former chief credit officer at Fannie Mae. "...I've never seen an entity successfully outrun a situation like this."

Posted by Jamie Smith Hopkins at 8:53 AM | Permalink | Comments (14)
Categories: Mortgages, The foreclosure mess
        

One in eight -- that's how many Maryland borrowers were at least a month behind on their mortgage payments during the spring, according to new numbers.

What can you do if you're in that group?

The state says to call for help immediately -- before you're in trouble, even, if you're still current but see problems on the horizon. It has a foreclosure-help hot line -- 877-462-7555 -- to put you in touch with a nonprofit housing counseling agency near you. Or you can find the list of HUD-approved nonprofits here.

The struggle to get assistance from lenders has been well publicized, so I wondered how much success local foreclosure-prevention counselors are having. The state Department of Housing and Community Development said the nonprofits helped just over 4,500 people avoid foreclosure in the fiscal year that ended June 30. (That runs the gamut from people who received a repayment plan to those who got their mortgage refinanced, and includes folks who sold their homes.)

That "avoided foreclosure" group is up 33 percent from the previous fiscal year, the state says.

But nearly 13,700 in total saw counselors in the year ending June 30. So what happened to the nearly 9,200 who aren't on record as avoiding foreclosure? The state says some of those homeowners are still in counseling, some dropped out of the system and the rest ended up in foreclosure, bankruptcy or similarly depressing circumstances.

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (3)
Categories: Foreclosure help, The foreclosure mess
        

Economist Dean Baker with the Center for Economic and Policy Research says such a move will help keep vacant homes from piling up on the housing market and dragging down neighborhoods. His "right to rent" proposal suggests that homeowners-turned-tenants be guaranteed the option to stay in their homes for a "substantial" time, such as five to 10 years, as long as they pay market rent.

Many borrowers would have an easier time paying rent than a mortgage, Baker says, because rents are significantly lower than the ownership costs of the typical home purchased in many markets in 2006 and 2007. In the Baltimore metro area, he says, the monthly fair-market rent is $1,037 for a two-bedroom unit while the monthly ownership cost for a starter home is $1,666.

(The fair-market rent figure comes from HUD. Baker is calculating ownership costs by assuming that a home equivalent to a two-bedroom rental will be valued at 75 percent of the median home, and he's including property taxes, insurance and maintenance costs along with principal and interest. He assumes a 6 percent interest rate.)

The $629-a-month savings he calculates for struggling Baltimore-area homeowners becoming renters is more than some markets, like Cleveland ($126) and Philadelphia ($274). But it's less than pricey places like New York and Washington (both more than $1,000).

But what about the tax benefits of homeownership? He says owner-to-renter savings would dip to $475 a month in the Baltimore metro area if you take that into account, assuming a 25 percent income tax bracket.

Baker, who co-authored the July report with Hye Jin Rho, writes:

During ordinary years, homeowners would not gain much from having a right to rent, since the gap between ownership costs and rental costs is usually not very large. However, because of the run-up in house prices during the housing bubble years, ownership costs vastly exceeded rental costs in many bubble markets. ... Right to Rent offers the advantage that it could immediately benefit all homeowners facing foreclosure without any bureaucracy and would require no taxpayer dollars.

What do you think of this proposal? Does it make financial sense for a lender to turn landlord rather than home seller -- and would homeowners be willing to become renters to avoid a forced move?

Posted by Jamie Smith Hopkins at 7:00 AM | Permalink | Comments (8)
Categories: Renting, The foreclosure mess
        

Here's what the federal agency says about "Operation Loan Lies":

The FTC charged that the defendants falsely claimed that they would either obtain a mortgage loan modification or stop foreclosure, or both, and that some of the defendants falsely represented that they would give consumers refunds if they failed to do so. After charging consumers the equivalent of one month’s mortgage payment or more in advance, these companies often did little or nothing to help homeowners renegotiate their mortgages or stop foreclosure. After failing to provide the promised services, the defendants that promised refunds did not honor those promises.

Here's the full list (link opens a PDF), which includes the firms and players that Maryland went after. Several are run by attorneys.

The state Department of Labor, Licensing and Regulation offers suggestions for avoiding foreclosure-help scams, including this one: "Beware of any person or organization asking you to pay up-front fees in exchange for providing mortgage counseling services or modification of a delinquent loan."

Remember, HUD-approved nonprofits have counselors who help borrowers navigate their lenders' loan-modification process, and they do foreclosure-prevention work free of charge. Here's the list of Maryland housing counseling groups.

Posted by Jamie Smith Hopkins at 6:30 AM | Permalink | Comments (16)
Categories: Foreclosure help, Mortgage fraud/scams, The foreclosure mess
        

The number of Maryland borrowers in trouble on their mortgages keeps rising -- particularly among homeowners who were supposed to be better credit risks. Some 60,000 prime borrowers were at least one payment behind during the first quarter of the year, up 90 percent from a year earlier, according to the Mortgage Bankers Association. That includes people on the brink of losing their homes.

Maryland had about 15,000 fewer delinquent subprime loans than prime. And their numbers rose 44 percent from a year ago, or half as fast as the prime mortgages in trouble.

Subprime borrowers are still much more likely to get behind than prime, mind you. Practically 40 percent of Maryland's subprime loans are past due, including those the lenders are trying to foreclose on. Yes, four in every 10.

For prime loans, it's 7.2 percent -- less than one in 10.

But no more than 3.5 percent of Maryland prime loans were behind in the late '90s, when the housing market was normal and jobs were plentiful. That's a big, big change. We'd have 30,000 fewer loans in various stages of delinquency if the ones in trouble still added up to 3.5 percent of the state's prime mortgages.

Lorraine Mirabella has a story today about the mortgage delinquencies. Economists are blaming the continued job losses.

As it happens, Maryland borrowers weren't struggling nearly as much during the early '80s double-dip recessions and the early '90s recession. Among all borrowers, delinquencies didn't top 5.5 percent between 1980 and 1982 or 1990 and 1991.

But delinquencies got pretty high -- peaking at nearly 8.5 percent -- in the late '90s and early part of this decade. And not because of the 2001 recession, either. Because FHA mortgages (government insured, and therefore not counted in either prime or subprime) were going bad at a frantic pace in Baltimore. That was during the spike in illegal flipping that landed people in jail for mortgage fraud.

Depressing to think that now it's worse. The share of all Maryland mortgages in trouble? More than 11 percent.

Posted by Jamie Smith Hopkins at 10:59 AM | Permalink | Comments (14)
Categories: The foreclosure mess
        

Eighteen percent of home sales in the Baltimore metro area in the last year were "distress" transactions -- either foreclosures or short sales. So says a new report from Zillow, the real estate information site. 

That's not helping prices any. Home values in the first three months of the year dropped 11.5 percent vs. the same period in '08, according to Zillow. That's a decline to early '05 levels of about $252,000, though the decreases vary depending on the type of house. Cheaper properties shed 7 percent of value while the priciest homes lost twice as much, the company says.

That matches up with Zillow's estimates of how local jurisdictions fared. Baltimore City home values dropped the least -- about 6 percent vs. a year ago -- while expensive Howard County declined the most (16 percent).

The company relies on its "Zestimates," which means these figures are estimates of all home values, not just the price of recently sold properties.

Home values declined faster nationally than they did in the metro area, dropping about 14 percent, Zillow says.

Other stats:

--Nearly 14 percent of homeowners in the Baltimore metro area are "underwater," their property values having dropped below the amount they owe on their mortgages. That's depressing, but Zillow estimates that the percentage of U.S. homeowners in the same situation is 22 percent.

--As you might guess, people who bought in 2006 and 2007 are the most likely to be underwater. More than half the Baltimore-area homeowners of that vintage -- the ones with mortgages, at least -- owe more on their loans than their properties are worth, according to Zillow.

--Folks who bought in the Baltimore area in 2004 are (as a group) still doing all right. Zillow says the typical '04 buyer has equity of almost $60,000.

--Homes in the metro area are collectively worth $30 billion less than they were a year ago, Zillow says.

Posted by Jamie Smith Hopkins at 3:00 AM | Permalink | Comments (7)
Categories: Housing stats, The foreclosure mess
        

No. 1 for risk: Riverside-San Bernardino-Ontario, Calif. It's an area that tops a lot of "problem" lists related to housing.

These rankings, based on economic factors such as unemployment and the direction of home prices, are for the first three months of the year. The Baltimore metro area was a bit lower on the risk list at the end of last year -- 76th.

The Washington metro area, meanwhile, was judged a much riskier 25th. But that's an improvement from the end of last year, when it was 13th.

Here's what First American CoreLogic says about mortgage troubles nationwide:

The continuing decline in house prices has created a self-reinforcing feedback loop, where lower prices lead to more defaults and excess housing inventory, which in turn cause demand to decline and prices to fall further, and so on. This downward cycle poses substantial ongoing difficulties for the U.S. economy, not least of which are its devastating effects on personal wealth and consumer spending. Until home prices and the economy stabilize, mortgage risk will remain very high.

Posted by Jamie Smith Hopkins at 10:33 AM | Permalink | Comments (0)
Categories: The foreclosure mess
        

First interesting number: 11.9 percent. That was the "national mover rate" in the United States last year, a record low. The Census Bureau has tracked the rate since 1948. (The actual number of people moving was 35.2 million, down 3.5 million from the year before "and the smallest number of residents to move since 1962.")

Second interesting number: 34.1 percent. That's the share of people defaulting on Fannie Mae or Freddie Mac loans in January who gave "curtailment of income" as the reason, according to the Federal Housing Finance Agency. "Excessive obligations" came in next at 19.8 percent, followed by unemployment (8.1 percent), illness (6.5 percent) and marital problems (3.5 percent). (Those were the most common reasons, but there were others.)

Third interesting number: $16.3 million. That's how much K Bank, an Owings Mills company that a number of rehabbers turned to for loans, lost during the fourth quarter. The Federal Deposit Insurance Corp. said Friday that it has required the bank to "stop issuing construction and development loans and raise more capital," Andrea K. Walker reports today.

Fourth interesting number -- OK, numbers: $360,000, $360,000 and $420,000. That's how much Scots Glen condos sold for at auction yesterday after a lender foreclosed on builder Dale Thompson, according to Realtor Pat Hiban. Hiban says on his blog:

The 420k was the former model with 4 finished levels and an elevator. The model was last listed at 740k and the other two were in the mid 600's. ...

The lots in Highland drew even more bidders. Out of the 7 lots for sale, 4 sold at prices acceptable to the bank. The sale prices on the lots were 250k,255k,290k and 295k. The other 3 got bids of 150-180k and Columbia Bank chose not to accept those. It was quite an experience and it was good to see so many serious buyers there in earnest.

At one point the auctioneer yelled out "These are going for way less than the market!!!" and the guy next to me yelled back "Your looking at the market buddy!!! This is your market, right here right now!!!"

Thanks to David Hobby for pointing out Hiban's post -- I would have missed it otherwise.

Have other interesting housing-related numbers to share? Comment away.

Posted by Jamie Smith Hopkins at 10:33 AM | Permalink | Comments (4)
Categories: Housing stats, New developments, The foreclosure mess
        

It's not just homeowners who have to worry about foreclosure -- builders do, too.

As Lorraine Mirabella reports today, "Two separate lenders have foreclosed on 35 of Dale Thompson Builders' unsold homes, building lots and unfinished houses in Columbia's Scot's Glen townhouse development. One lender also foreclosed on seven lots in a neighborhood of $1 million homes in western Howard County, according to public records detailing property auctions."

As the price tag suggests, these are upscale homes. You can see a photo of Scot's Glen -- and a map showing the numerous unsold properties -- on Dale Thompson Builders' website. The company is local, based in Howard County.

It's a tough time to sell, but that's not the only issue facing homebuilders. It's also not an easy time to keep the financing flowing for a homebuilding project.

Posted by Jamie Smith Hopkins at 8:07 AM | Permalink | Comments (2)
Categories: New developments, The foreclosure mess
        

The foreclosure bill that did pass was HB 640, which "allows local governments to pass ordinances requiring lenders to report foreclosure filings to local governments within five days of filing them, instead of two weeks before evicting tenants," the Daily Record says.

There's a delicate balance between protecting the rights of tenants in a foreclosure situation -- if they were paying their rent, they're innocent victims -- and the rights of lenders, who have repeatedly said they don't want to be landlords.

What do you think is the right balance?

Posted by Jamie Smith Hopkins at 11:05 AM | Permalink | Comments (4)
Categories: Renting, The foreclosure mess
        

Nearly $4 billion is supposed to flow to neighborhoods across the country to deal with the effects of vacant foreclosures, part of the package Congress passed last year to try to stabilize the housing market. Columbia-based Enterprise Community Partners, one of the organizations that pressed to have that money included in the bill, released a report today about how cities, counties and states say they'll put it to use.

Analyzing "action plans" for more than half the money, Enterprise says 56 percent of the dollars are earmarked for foreclosure purchase and rehab, 21 percent for financing homebuying, 13 percent for redevelopment, 6 percent for demolition and 4 percent for land banking. (That's of the money not going to administrative costs.)

Most of the jurisdictions intend to stretch those dollars by adding other sources of taxpayer money or getting funds from private sources -- foundations, businesses and the like.

A sizable chunk of the money going to Maryland as well as directly to local jurisdictions -- including Baltimore City and Prince George's County -- is intended for purchase and rehab. The applications from the state and jurisdictions suggest the money will touch 1,500 homes in one way or another, Enterprise says.

Enterprise is a nonprofit builder and financier of affordable housing. So why does it care about foreclosures? This is its answer:

Foreclosures can cause a downward spiral of disinvestment, leading to yet more foreclosures. Thus, as foreclosures rise nationwide, communities decline. Enterprise and many other community development organizations have been working for decades to build high-quality, safe and stable neighborhoods. Therefore, our role in solving the national foreclosure crisis is to stabilize communities and design innovative solutions to ensure that this never happens again.

Posted by Jamie Smith Hopkins at 2:16 PM | Permalink | Comments (1)
Categories: The foreclosure mess
        

He usually works from Annapolis southward, though he's represented foreclosures farther north in the Baltimore area as well.

Q: How long have you been a real estate agent?

Licensed, I've been in the business for two years. (My mother has been in the business for 12 -- I worked with her as her assistant for a time.) …

It was a simple twist of fate, really. I used to do audio engineering work for a band, and I had an accident on the job where I broke my fingers in 23 places. I decided it was time to get out.

Q: Holy cow -- how did that happen?

Backstage, after a show. … I got in [real estate] right as the market was tanking, which might be less than opportune, but when you get lemons, you make lemonade.

Q: What's the lemonade?

Foreclosures. … Everybody wants a foreclosure right now. Even when they don't want a foreclosure, they think they want a foreclosure. If I had a dollar for everybody who said, 'I want a foreclosure for half-price that needs no work,' I'd be a rich man.

The problem with foreclosures is, it's always a double-edged sword. They always need some work.

Q: What sort of condition are the foreclosed homes usually in?

Continue reading "Q&A: Jonathan Benya, real estate agent" »

Posted by Jamie Smith Hopkins at 10:05 AM | Permalink | Comments (5)
Categories: Q&A, The foreclosure mess
        

Two pieces of recent mortgage-default news I thought you might want to know about:

First, the travails of FHA, the go-to place for borrowers with small down payments. The Federal Housing Administration insures FHA mortgages, which means it's on the hook if those loans go bad. Now its market share has shot up to about 30 percent -- thanks in large part to the death of subprime and no-money-down options -- and it's being swamped with problem loans. Some borrowers are missing payments immediately.

As The Wall Street Journal reports, this has raised the specter of another taxpayer bailout -- or changes for future borrowers:

If defaults drain the FHA's insurance fund, the Obama administration will have to decide whether to ask Congress for taxpayer money or raise the premiums it charges to borrowers. That decision will be spelled out in President Barack Obama's 2010 budget, Housing and Urban Development Secretary Shaun Donovan told lawmakers.

The other news: a glimpse into what works when lenders modify mortgages to try to keep borrowers from ending up in foreclosure.

The Office of the Comptroller of the Currency and the Office of Thrift Supervision, which track two-thirds of U.S. mortgages in quarterly reports, said "re-default rates" on modified loans last year "were consistently lower for modifications that resulted in lower monthly payments."

When modifications decreased monthly payments by more than 10 percent, only about 23 percent of the loans became seriously delinquent six months later. By contrast, some 51 percent of the loans in which payments remained unchanged were seriously delinquent after six months. The comparable number for loan modifications in which payments increased was 46 percent.

Posted by Jamie Smith Hopkins at 9:06 AM | Permalink | Comments (5)
Categories: Mortgages, The foreclosure mess
        

The good news is that 89 percent of Maryland borrowers weren't behind on their mortgages at the end of last year. The bad news? Only 89 percent of Maryland borrowers weren't behind on their mortgages at the end of last year.

That's the smallest share since the Mortgage Bankers Association began keeping track 30 years ago, and it means more than 100,000 borrowers in trouble.

A record percentage of prime and subprime mortgages in the state weren't current -- either behind a bit or to the point that the lenders were trying to foreclose. The prime group is actually larger than the subprime -- 56,000 vs. 46,000 -- but there are a lot more prime borrowers in the state than subprime.

The share of Maryland subprime loans in trouble is staggering. Take a guess. Go ahead, I'll wait.

Waiting ...

Waiting ...

OK: Almost 40 percent.

Some 6.7 percent of prime mortgages in Maryland are past-due or in the foreclosure process, a much smaller share than subprime but still unusually high. It was 3.7 percent as recently as the beginning of last year.

You can find national delinquency statistics here.

If you'll recall, delinquencies and foreclosures began shooting up as a result of problematic lending standards and falling home values. Lorraine Mirabella reports in today's mortgage delinquency story that the new problem is the one that would normally be to blame for foreclosure:

"Employment is the issue," Jay Brinkmann, MBA's chief economist, said during a conference call. "It's not an issue with changes in payment structure or payment resets. As jobs go away, you first see this show up in" subprime, fixed-rate lending. Then it works its way up to the less-risky prime loans.

Posted by Jamie Smith Hopkins at 8:08 AM | Permalink | Comments (7)
Categories: The foreclosure mess