February 22, 2012

A 'responsible homeowner' reward

You may have heard homeowners underwater on their mortgages but not behind on the payments ask, "So where's my bailout?" (You may in fact have said it yourself.)

Some companies are answering, "Right here."

About 20,000 homeowners nationwide, including 500 in Maryland, are enrolled in the Responsible Homeowner Reward program, which pays borrowers incentives to stay current on their mortgage. The homeowners were offered the future cash payments by their mortgage servicer, mortgage owner or private mortgage insurer -- about a dozen companies are participating all told.

Frank Pallotta, managing partner of the Rumson, N.J.-based Loan Value Group, which created and administers the Responsible Homeowner Reward program, says participants include the PMI Group and GMAC Mortgage.

The dollar amounts vary, but the basic idea is this: Stay current on your mortgage, get a cash payment at an agreed-upon time -- when you refinance or sell, for instance. The program aims to prevent "strategic default" -- where borrowers who can afford the payments decide they're throwing good money after bad and simply walk away -- by offsetting some of the lost value.

"For years and years, the mindset was, people pay their mortgage because it was the moral thing to do," Pallotta said. "Well, it might have been, people pay their mortgage because they have equity. Once that equity is gone, you need to replace it or you will experience a higher default rate."

A borrower who's never missed a payment but owes 50 percent more on his mortgage than the home is worth "is as much a risk to the owner of that loan" as a more modestly underwater borrower who's two months behind, he contends. "The question becomes, 'Why am I going to make this payment? I'm so far underwater,'" he said.

Continue reading "A 'responsible homeowner' reward" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Mortgages, The foreclosure mess, Underwater

February 17, 2012

What the robo-signing settlement means for all borrowers

If you're not in trouble on a mortgage and didn't lose your home to foreclosure in the last few years, you might think the national settlement between state attorneys general and big mortgage servicers has nothing to do with you.

But the settlement includes a 42-page directive intended to broadly improve mortgage-servicing practices, which critics contend are the pits.

Though the settlement applies only to the big players that signed on (Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial/GMAC), the Maryland attorney general's office says the federal government could eventually make all federal institutions play by these servicing rules.

Here's a taste of what they require:

o Better handling of borrowers' payments. Servicers must "promptly" record payments and post them within two days. If a borrower makes almost all of a scheduled payment -- within $50 of the amount due -- then the servicer must apply it and at least one more such payment to the mortgage, rather than shunting it to a "suspense account" and letting interest and late fees mount.

Continue reading "What the robo-signing settlement means for all borrowers" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (5)
Categories: Mortgage servicing, Mortgages, The foreclosure mess

February 9, 2012

Md. foreclosures since 2006: Almost 50,000

Mortgage firms have foreclosed on about 49,600 homes in Maryland since the final days of the inflating housing bubble in January 2006, real estate data firm CoreLogic says. That's about 23 homes per day.

Just over 20,000 of those completed foreclosures were on homes in the Baltimore metro area, the company says. (National numbers here.)

It's difficult to get good statistics on the number of done-deal foreclosures. The Mortgage Bankers Association's quarterly survey of delinquent mortgages tracks most of the market, but only to the point of the foreclosure process pre-auction. Not every homeowner who starts down the road to foreclosure ends up losing his or her property. And sometimes homes go in and out of that process several times.

Factoid: Mortgage servicers foreclosed on 3,400 homes statewide last year, about 1,400 of them in the Baltimore region. That's well under the six-year average -- not surprising. We've seen the effects of slowdowns in the wake of the robo-signing revelations in a variety of different measures. This is just the latest.

Speaking of robo-signing: Maryland Attorney General Douglas F. Gansler decided to sign on to the settlement with banks over such practices, a deal that gives Maryland nearly $1 billion for various purposes -- including principal reduction -- but means his office cannot pursue civil liability claims involving mortgage origination or servicing misconduct.

More in Hanah Cho's story here. (Many thanks to Hanah for handling this while I'm out.)

Posted by Jamie Smith Hopkins at 8:05 AM | | Comments (0)
Categories: The foreclosure mess

February 6, 2012

Proposal would help state keep banks from getting homeowner tax breaks

A reader wrote in the other day because she discovered that her former neighbor's house, foreclosed on several years ago, is still listed in public records as if he owns it and lives there. She wondered whether the foreclosing bank has been reaping property tax breaks all this time because the home is on the books as owner-occupied.

This is not an unusual problem. State officials say mortgage servicers are taking months, sometimes years, to take title to foreclosed property, leaving it in a sort of limbo that makes it difficult for neighbors and officials to determine who's actually responsible for the property.

But I don't think anyone knows just how many times this has happened -- or how much money local jurisdictions have lost as a result of Homestead Property Tax Credits doled out after the homeowner who qualified became a former homeowner. The state Department of Assessments and Taxation relies on title transfers to strip the credits from properties.

State Sen. Richard F. Colburn, an Eastern Shore Republican, tried last year to require deed recordation within 60 days after a foreclosure is ratified by the court, but the bill died in committee.

Now legislation before the Senate judicial proceedings committee would give the assessments agency another way to figure out which homes aren't homestead-eligible because they've been foreclosed on.

Continue reading "Proposal would help state keep banks from getting homeowner tax breaks" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Property taxes, The foreclosure mess

February 2, 2012

Having trouble finding a Baltimore foreclosure to buy? Here's why

If you're trying to buy a foreclosure in the city and feel like your choices aren't what they were a year ago, it's not your imagination. While there were more short sales on the market last year than in 2010, bank-owned homes for sale (the purple line in the graph below) took a steep drop:




The data comes from Metropolitan Regional Information Systems' stats arm, RealEstate Business Intelligence. Though it probably won't come as a complete shock to anyone following the news about robo-signing, it's a striking chart nonetheless.

Here's the change in actual sales of distress properties:

Continue reading "Having trouble finding a Baltimore foreclosure to buy? Here's why" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: Distress sales, The foreclosure mess

January 31, 2012

Decent income, little savings?

Maryland is a high-income state. But it's also got a big share of defaulted mortgages, delinquent loans of all sorts and outsized credit-card debt, according to a new study by the Corporation for Enterprise Development.

What gives? Some of it is probably housing costs. Two-thirds of states have a smaller percentage of "house poor" homeowners, people spending 30 percent or more of their before-tax income on their mortgage, property taxes and other ownership expenses.

But we could probably do better. Sure, if you're between jobs, it's awfully hard to save. And if you've already locked in a high mortgage payment that strains your budget, your options might seem limited. Still, chances are there's something you can do.

Continue reading "Decent income, little savings?" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Savings/downpayment, The foreclosure mess

January 30, 2012

More incentives for principal reduction

The Treasury Department is trying to get more mortgage servicers to reduce the principal of struggling borrowers by tripling the incentive it pays for such a move -- and offering to pay financiers Fannie Mae and Freddie Mac, too.

Fannie and Freddie are essentially government-owned. As you can imagine, this new twist strikes some as the equivalent of Uncle Sam tossing money from his left hand to his right.

Of course, calls by Congressional Democrats for more principal reduction have so far had no effect on Fannie and Freddie, never mind their ownership status. Their independent oversight agency insisted shortly before last week's Treasury announcement that "principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure." (The Federal Housing Finance Agency said Friday that it will do another analysis to account for the new payments.)

The deal being offered: For every dollar knocked off a borrower's principal, Treasury will fork over between 18 and 63 cents.

A state task force recently recommended principal reductions in which homeowners, in exchange for no longer being underwater, would agree to share any profits if they sell or refinance during the following nine years. Shortly before Treasury made its announcement, I chatted with a local loan officer who thinks the financial industry will have to move in that direction.

Continue reading "More incentives for principal reduction" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Mortgages, The foreclosure mess

January 26, 2012

'Stealing Trust' screening event in Baltimore

If you haven't had your recommended daily dose of outrage, here's an upcoming source: The Maryland Consumer Rights Coalition is showing its "Stealing Trust" documentary at the Enoch Pratt Free Library's Central location in downtown Baltimore next Wednesday, Feb. 1.

The group's film focuses on local residents who lost their homes, savings "and even their capacity to trust others" through abusive financial practices. Some fought back.

The free screening, co-sponsored by St. Ambrose Housing Aid Center, the Baltimore Homeownership Preservation Coalition and the Maryland Department of Housing and Community Development, will include new details about foreclosure-prevention efforts and offer homeowners a chance to ask questions about the foreclosure crisis.

The event is scheduled for 6 p.m. The library is at 400 Cathedral St.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Mortgage fraud/scams, The foreclosure mess

January 24, 2012

What N.Y., Del. and a few other states are doing about mortgage misconduct

State attorneys general gathered in Chicago or by conference call Monday to go over possible terms for a deal with large banks over foreclosure wrongdoing, but several states are pursuing their own courses -- to the cheers of liberal groups and consumers who want bankers to be sued rather than settled with.

Here's a quick rundown:

New York Attorney General Eric T. Schneiderman launched his own mortgage probe. In an opinion piece he wrote with Delaware Attorney General Beau Biden in November, the two men said that what was needed is "a more comprehensive investigation before the financial institutions at the heart of the crisis are granted broad releases from liability." It's not just about foreclosures or the housing market, they said, but also about the way mortgages were securitized.

"Any real effort to repair the damage caused by the collapse of the housing bubble must address the injury in both sectors," they wrote in the Politico piece. "Tens of millions of homeowners and millions of investors — including retirees with money in pension and mutual funds — were devastated by this manmade catastrophe."

Biden, the Delaware AG, had just filed suit against the mortgage registrar MERS when the piece appeared. Here's the press release announcing the lawsuit, and here's the complaint itself. MERS contends there's no merit to the suit, which alleges deceptive practices.

Massachusetts Attorney General Martha Coakley, meanwhile, sued five banks in December for "their roles in allegedly pursuing illegal foreclosures." (Complaint here.)

Continue reading "What N.Y., Del. and a few other states are doing about mortgage misconduct" »

Posted by Jamie Smith Hopkins at 8:14 AM | | Comments (2)
Categories: The foreclosure mess

January 19, 2012

Principal reduction among suggestions by state task force

Recommendations from the state's newest foreclosure task force include a form of principal reduction, an expansion to foreclosure mediation and tax incentives for foreclosure purchasers -- among many other suggestions.

Here's the report, and here's my story on the subject. The bottom line is that some of the suggestions are for new laws, but most aren't -- they're "best practice" recommendations that the state hopes to encourage mortgage servicers to follow. (The Maryland Bankers Association, which sat on the task force, says members are interested in giving the ideas a try.)

The task force suggested an option for court-supervised mediation before a foreclosure case is filed — if both the homeowner and servicer agree — because the further behind a borrower gets, the harder it is to work out a loan modification or other foreclosure alternative. Currently, homeowners can require their servicer to show up for mediation, but only after foreclosure proceedings begin.

A "Neighborhood Conservation Tax Credit" recommended by the task force would try to counteract vacancy problems by offering an incentive for people to buy a foreclosure and move in. The task force suggests state legislation that would give local governments the ability to create property tax credits for use in communities that need the assistance.

The principal-reduction idea is on the "best practices" side of the scale, something that wouldn't be mandated by law. The task force suggests reducing mortgage principal for borrowers whose home values have dropped below the amount they owe, but not in a one-fell-swoop way. Here's the suggestion:

Continue reading "Principal reduction among suggestions by state task force" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: The foreclosure mess

December 15, 2011

Nonprofits trying to blunt impact of foreclosures on neighborhoods having trouble finding some to buy

Healthy Neighborhoods is trying to get several hundred foreclosed Baltimore homes rehabbed and back in the hands of homeowners. The hitch? Something few people anticipated when Congress authorized funds to cushion the foreclosure crisis's effect on neighborhoods.

"There's not a lot of foreclosures out there," says Lisa Evans, a senior program officer at the Baltimore nonprofit.

It's a not a problem-solved situation -- thousands and thousands of local homeowners are far behind on their mortgages. What happened is that the foreclosure apparatus all but shut down after the robo-signing scandal last year, and it's only recently showed signs of revving up again.

Healthy Neighborhoods won $26 million in federal Neighborhood Stabilization Program 2 funds to coordinate the effort to acquire and fix up city homes. Four development partners, mostly nonprofits, are doing the rehab work.

Half the money needs to be spent by next February, which Evans says shouldn't be a problem -- all but $200,000 already has been. The rest must be spent by February 2013, a tricky task if bank-owned properties remain scarce.

Continue reading "Nonprofits trying to blunt impact of foreclosures on neighborhoods having trouble finding some to buy" »

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

December 2, 2011

Santa won't be bringing Fannie, Freddie eviction notices (but some banks are getting sued for the holidays)

Mortgage giants Fannie Mae and Freddie Mac both announced yesterday that they'll put a freeze on foreclosure evictions from Dec. 19 through Jan. 2, a temporary Christmas present of sorts.

The mortgage industry is generally loath to toss people out at the end of the year, whether out of compassion or because images of "Homeless for the Holidays" headlines are dancing in officials' heads. Several large financial companies, including Bank of America and Wells Fargo, told CNNMoney that they would suspend or "avoid" evictions around Christmas.

"The holidays are meant for families to spend time together, especially if they’ve gone through the stress of financial challenges and foreclosure," Terry Edwards, an executive vice president at Fannie Mae, said in a statement. "No family should have to give up their home during this holiday season."

The Fannie and Freddie moratoriums on lockouts apply only to occupied homes.

While we're on the subject of foreclosure: The Massachusetts attorney general yesterday sued five big banks and mortgage-registrar MERS, alleging that they pursued "illegal foreclosures on properties in Massachusetts as well as deceptive loan servicing."

Continue reading "Santa won't be bringing Fannie, Freddie eviction notices (but some banks are getting sued for the holidays)" »

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

November 21, 2011

Time needed to sell all Md.'s foreclosures: 21 years

At the rate homes are going on the foreclosure block in Maryland these days, it would take 21 years -- yes, years -- before the current "pipeline" of homes in danger of foreclosure are all sold.

That's according to industry consultant LPS Applied Analytics, which shows a dramatic drop in the number of Maryland foreclosure sales (repossessions or other involuntary transfers) after the robo-signing revelations last fall. That's pushed the state's time-to-sell figure skyward to the fourth-highest nationwide.

This seems poised to change, with warnings of impending Maryland foreclosure cases spiking in November. But here's how things stood as of September:

LPS Applied Analytics says the owners of about 105,000 Maryland homes were at least 90 days behind on their payments, including those with foreclosure cases filed against them. That number hadn't grown much over the year. But foreclosure sales dropped 80 percent -- from an average of about 2,000 a month statewide to about 400.

Why? Foreclosures went from flood to trickle after news that mortgage-servicer employees were signing foreclosure documents for courts assembly-line-style, without having any idea if the information was accurate -- and that some foreclosure attorneys were outsourcing the signing of their names to other people, among other alleged problems. States where foreclosure is a court case, not a non-judicial affair, have seen their collective time-to-sell pipeline double since then.

But Maryland's rose fivefold, from about four years in 2010. Perhaps some state-specific reactions to robo-signing made mortgage servicers more cautious about filing cases:

Continue reading "Time needed to sell all Md.'s foreclosures: 21 years" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (8)
Categories: The foreclosure mess

November 18, 2011

Spike in Md. foreclosure-warning notices this month

More than 18,000 Maryland homeowners have received formal warnings from their mortgage servicers so far this month that a foreclosure case could be filed against them in as little as 45 days.

That sounds like a big number, and it sure is after about a year of mostly suppressed activity as a result of the robo-signing scandal. Fewer than 11,000 notices of intent to file for foreclosure were sent to Marylanders in all of November 2010, according to the state.

Maryland regulators believe the big increase is a sign that some of the backlog created when revelations of robo-signing ground the foreclosure apparatus to a crawl could be starting to hit now. (They also say that October changes to the state's foreclosure-mediation rulebook seem to have prompted more filing from attorneys who were waiting for certainty about how it would look.)

More in today's story.

While I was at it, I asked for data on the state's opt-in foreclosure-mediation program, which has drawn relatively few applications from homeowners.

Sometimes the borrowers don't show up or don't bring paperwork. Frequently the mortgage servicers won't agree to a foreclosure alternative. But state records suggest that 40 percent of cases end with a positive or positive-ish result for the homeowner, from a loan modification to a better-than-eviction exit strategy such as a short sale or cash for keys.

The state's housing officials say homeowners have the best results if they've sought counseling from a nonprofit foreclosure-prevention group and/or arrive with an attorney. Housing counselors are helping link homeowners with free or low-cost legal assistance for that purpose.

Have you been to mediation? How did it go?

Final food for thought: The Center for Responsible Lending says the foreclosure crisis has cut a swath through the poor, middle class and affluent alike, and it isn't even half over.

Posted by Jamie Smith Hopkins at 7:15 AM | | Comments (0)
Categories: The foreclosure mess

November 15, 2011

Fannie Mae to struggling borrowers: Come see us in Greenbelt

Got a mortgage held by mortgage-financing giant Fannie Mae? If you're trying to get help with it and you're not having any luck by phone, you now have a face-to-face option.

Fannie Mae last week opened a "Mortgage Help Center" in Greenbelt that's targeted at the Baltimore-Washington area. It's the 12th such center in the country, the company says.

Spokesman Andrew Wilson said Fannie Mae has worked with about 9,000 homeowners in the 11 that have already been operating, and 60 percent "have been able to stay in their home."

"Many of the others can achieve what we call a graceful exit, where they avoid foreclosure through a short sale or deed-in-lieu of foreclosure," he wrote in an email.

To make an appointment at the Greenbelt center, call 866-442-9376, Wilson said. (You can check here to see if Fannie Mae owns your loan. But the company says anyone can call, and staffers will send homeowners without Fannie Mae mortgages to HUD-approved counseling agencies.)

Some mortgage servicers have been opening centers or holding convention-center-type events. If you've been to anything like this, weigh in -- did it work for you?

In other mortgage financing news, Fannie Mae just asked for $7.8 billion more from taxpayers to cover losses, the head of the agency that oversees Fannie and Freddie Mac (both in government conservatorship) is defending the bonuses paid to execs last year and Ginnie Mae -- the lesser-known mortgage-bond issuer -- is now bigger than Freddie.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Foreclosure help, Mortgages, The foreclosure mess

November 7, 2011

John Evan Miller: How Baltimore and Md. stack up on foreclosures

Today, guest poster John Evan Miller -- who writes for the ForeclosureDeals blog -- brings good news and bad news about foreclosures in our area. He's been writing about real estate for years and has a graduate certificate in international real estate.

Take it away, John:



Those of us who have been in the real estate industry for any significant amount of time know one thing about today’s market: It’s a mess.

Across the country, from Maine to California (and even Alaska and Hawaii), the real estate market has been besieged by successive waves of foreclosures that have decimated neighborhoods, depressed home values and sent millions of Americans searching for new living arrangements.

How does the state of Maryland – and the city of Baltimore – stack up when compared to foreclosures in the rest of the country?

First, the good news.  A review of available data reveals that the situation is not as dire as it is elsewhere in the country. Nevada, for example, has by far the highest foreclosure rate, with one out of every 118 housing units receiving a foreclosure notice in September. In contrast, according to the state Department of Housing and Community Development, Maryland’s foreclosure rate was a relatively-small one out of every 720 housing units – good for the 9th best rate in the country.

Continue reading "John Evan Miller: How Baltimore and Md. stack up on foreclosures" »

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

October 19, 2011

Overhaul planned for Fannie, Freddie foreclosure-attorney network

Fannie Mae and Freddie Mac are a big part of the mortgage market. So it probably won't shock you to know that some of the robo-signing and general rule-breaking in foreclosure cases was done by mortgage servicers and attorneys handling Fannie and Freddie loans.

Now the federal agency overseeing the two mortgage financiers says they must make improvements to their current system for how their servicers select foreclosure attorneys, an announcement that comes after U.S. Rep. Elijah E. Cummings of Baltimore pressed for reform.

The Federal Housing Finance Agency said Tuesday that Fannie and Freddie must "transition away" from their current system of law firms approved for servicers' use to a setup in which servicers choose firms that "meet certain minimum, uniform criteria." The agency said that is in line with its April order that the two companies improve their requirements for servicers handling delinquent loans.

"FHFA believes these efforts will lead to greater transparency and benefit delinquent borrowers who become subject to the foreclosure process," the agency said in a statement.

Continue reading "Overhaul planned for Fannie, Freddie foreclosure-attorney network " »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: The foreclosure mess

October 17, 2011

One in four homes in Baltimore region selling for a loss

Twenty-five percent of homes that sold in the Baltimore region over the summer changed hands for less than their owners paid for them, up from 21 percent a year earlier, real estate search site Zillow says.

The share of homes selling at a loss is down from the spring, however, when it peaked at nearly 28 percent. (Zillow shows the percentage of losses generally spiking in the first half of the year, dipping in the summer and then heading back upward.)

The situation is worse nationally, with just over a third of homes -- 34 percent -- selling for a loss.

The calculation excludes foreclosures. Zillow crunched transactions from June through August, putting the most weight on sales in the most recent of the three months.

Oh, and it looked at the new sales price vs. the previous price, so that doesn't include homes that were a net loss for the owners after taking into account transaction expenses (like transfer taxes and real estate commissions) or money spent on renovations.

So what's the breakdown at a more local level? It varies a lot, as you might expect, though most places are seeing losses rise.

Continue reading "One in four homes in Baltimore region selling for a loss" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (9)
Categories: Housing stats, The foreclosure mess, Underwater

September 30, 2011

One day left for Emergency Mortgage Assistance program

An emergency-loan program intended to help homeowners avoid foreclosure nationwide is likely to end up at best making half as many loans as Congress budgeted for -- $400 million to $500 million rather than $1 billion. But in Maryland, state housing officials have processed so many loans that they got about $20 million more to keep on going.

Today's the deadline to finish. Leaders at the state Department of Housing and Community Development say they're working frenetically to try to get every bit of the nearly $57 million committed, because what isn't approved for Emergency Mortgage Assistance loans by the end of the day must be handed back to the feds.

More in today's story.

One piece of the tale is that the U.S. Department of Housing and Urban Development didn't start taking applications for the forgivable-loan program until June 20 in most of the country, a short window before the Congressionally mandated deadline to match the money with homeowners who qualified for it. (The deadline to actually apply was earlier this month.)

HUD spokesman Lemar Wooley said the agency went as fast as it could.

"As with any new program, it took some time to get it up and running," Wooley wrote in an email. He said the agency had to write regulations, identify contractors, put fiscal controls in place "and ensure the program was being run fairly."

Maryland and four other states were allowed to run their own versions of the federal Emergency Homeowners' Loan Program because they successfully argued that they had "substantially similar" ones already in place. (Pennsylvania's program was the model for the federal effort.) All five states think they can make enough loans to use their money up, Wooley said.

Maryland started taking applications about two-and-a-half months before HUD did elsewhere, which helped the state get more loans done.

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (0)
Categories: Foreclosure help, The foreclosure mess

September 29, 2011

Firm: Baltimore-area 'shadow inventory' at 50,000 homes

Thousands of homes are on the market in the Baltimore region. But as the commercials say, wait -- there’s more.

Tens of thousands of Baltimore-area homeowners are behind on their mortgage payments. At least some of their homes will end up on the market too, either as short sales or repossessed foreclosures.

California-based John Burns Real Estate Consulting, which does market research for homebuilders and banks, estimates this "shadow inventory" in the Baltimore region at 50,000 homes as of June. That’s how many properties the company believes will eventually become distress sales but aren’t yet listed.

"That equates to 14 months of supply based on the average resale sales volume for the area over the last 10 years," Wayne Yamano, a vice president at John Burns, said in an email. "The U.S. average is about 9 months of shadow inventory in comparison."

The sales volume was much larger for most of the past 10 years than it’s been in the last few. At the pace of June sales, it would take 21 months -- almost two years -- to find buyers for 50,000 homes.

Continue reading "Firm: Baltimore-area 'shadow inventory' at 50,000 homes" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (17)
Categories: Distress sales, Housing stats, The foreclosure mess

September 22, 2011

Foreclosure crisis ebbing more slowly in Baltimore area than most regions

The Baltimore region is middle of the pack among large metro areas for its percentage of mortgages that are seriously delinquent -- 90 days or more behind. But our area saw a smaller improvement from the beginning of 2010 to the beginning of this year than most places.

Among the 100 largest metro areas, the serious delinquency rate dropped faster in 77 other regions than in the Baltimore area, according to figures from, which analyzed LPS Applied Analytics data.

Our region is among a half-dozen with the smallest declines -- a tenth of a percentage point. The Baltimore area's rate dropped to 8.4 percent in March from 8.5 percent in March 2010. Five regions showed no change. Twelve had increasing rates of serious delinquency.

The result is that the Baltimore area went from having the 44th lowest delinquency rate among the 100 largest regions to having the 54th lowest.

The metro areas with the biggest decreases in serious delinquency were all in worse shape than the Baltimore region and still are. Riverside, Calif., for instance, saw its rate fall to 14.6 percent from 18.7 percent.

But Grand Rapids, Mich., tied for the ninth largest drop, started off with the same rate as Baltimore's and ended up at 6.6 percent in March, a drop of nearly 2 percentage points.

Serious delinquency includes loans wending their way through foreclosure but not yet auctioned off.

It's not always clear why an area's rate is dropping. It could be more homeowners getting out of immediate trouble -- landing a job after months of unemployment, say, or negotiating lower monthly payments. But the seriously delinquent group can also shrink as homes are taken back by lenders. (Real estate data firm CoreLogic noted this type of maybe-or-maybe-not improvement in a recent report about negative equity.)

Why an area's rate isn't dropping, though, is usually more clear-cut. The employment situation has a lot to do with it.

Not much has changed here on that count. About 7,800 more people in the Baltimore metro area were employed in March than a year earlier, an increase of about half a percent, according to federal estimates.

That's unfortunately a drop in the bucket: about 73,000 more Marylanders were working three years ago. The gap between where we are now and where we would be if employment levels were equal to pre-recession days is huge nationwide.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: The foreclosure mess

September 19, 2011

Open houses for rehabbed foreclosures on Saturday

Among the federal government's stimulus spending is money to help nonprofits acquire and rehabbing foreclosed homes, an effort to keep neighborhoods from falling apart as the housing crisis drags on.

You can see some of those results on Saturday.

Healthy Neighborhoods, a Baltimore nonprofit, is holding an event with open houses on Sept. 24 from 10 a.m. to 2 p.m. to get prospective buyers to take a look. In addition to renovated homes, it has foreclosures in the not-yet-fixed stage that can be purchased by buyers who want to do that work themselves. More than 100 homes are available, the group says.

The properties are located in Belair-Edison, Better Waverly, Coldstream Homestead Montebello, Ednor Gardens, Patterson Park and neighboring McElderry Park, Old Goucher and Reservoir Hill. Eligible buyers can get up to $6,000 in closing-cost assistance for one of the rehabs. Eligible purchasers of a foreclosure still in need of fixing can get an interest free, forgivable loan (a loan that converts to a grant over time) of up to $25,000.

That help is part of the National Stabilization Program, which sets income requirements. A household of one can't make more than $71,000, for instance, while a three-person family can make up to $91,250. And sorry, investors: You've got to live in the home, not rent it out, use it as a summer place, etc.

Healthy Neighborhood has more details.

The group will be holding its event at the Patterson Park Public Charter School's cafeteria, 2726 E. Baltimore St. 

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Renovation/rehab, The foreclosure mess

August 26, 2011

Chase opens Baltimore center for struggling borrowers

Chase, which is opening "homeownership centers" across the country to give struggling borrowers a location for face-to-face conversations, officially launched one in Baltimore Thursday. It's the first Chase homeownership center in the state, the company said.

Homeowners with mortgages serviced by Chase or EMC can meet with loan counselors at the center, at 1040 Park Avenue, Suite 210.

Some other big servicers have centers of their own. Bank of America's closest is in Alexandria, Va., which opened earlier this year.

Have you been to a loan-help center or workshop (such as Bank of America's three-day event at the Baltimore Convention Center in June)? Did it do you any good?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Foreclosure help, The foreclosure mess

August 23, 2011

Less improvement on the mortgage-delinquency front

The number of Maryland homeowners in trouble on their mortgages has been getting better -- modestly -- since last summer. But the pace of improvement is slowing down.

Borrowers who were at least one month behind during the spring dropped in numbers from a year earlier by 4 percent, according to new numbers from the Mortgage Bankers Association. The year-over-year decline was about 10 percent last fall and winter.

New delinquencies, borrowers just one month behind, actually rose year-over-year. The increase was slight, but that's the first time single-month delinquencies grew since summer 2009. The mortgage bankers' trade group blamed rising unemployment for a similar trend nationwide.

More details in this story, including Maryland's high ranking nationwide on seriously delinquent mortgages that aren't yet in the foreclosure process.

On a related note: The state has now approved just over 680 Emergency Mortgage Assistance loans for homeowners who are unemployed or suffered a drop in income. The no-interest, forgivable loans help cover past-due amounts and a portion of the monthly payments for up to two years.

Of the $40 million allocated by Congress to Maryland, almost $23 million has been committed to homeowners so far. The drop-dead deadline to approve funding for the loans is Sept. 30, so the state says homeowners must apply by no later than Sept. 15 to allow for processing. Earlier is better, state housing officials say, because the money is first come, first served.

More on how to apply here.

How is the foreclosure situation affecting you?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: The foreclosure mess

July 20, 2011

Would you believe ...

Here's a round of "can you believe this" for the real estate crowd:

o Remember robo-signing, which brought foreclosure sales to a halt last fall, prompted federal investigations and has left banks negotiating exactly how many billions of dollars they'll have to pay to settle the issue? The Associated Press says mortgage companies are still doing it. And, in a twist, largely on documents for refinancing and purchase mortgages rather than foreclosures. Politicians are calling for new hearings.

o You know those all-cash deals for homes? Some investors are taking that literally, skipping the checkbook and bringing dollar bills. "One guy came in with a Safeway bag with $10,000 in it and counted it out on the table," a California real estate agent told the San Jose Mercury News.

o Think people who bought their homes at the height of the bubble are the most likely group to ask way too much if they're listing it for sale now? Zillow says that distinction goes to the homeowners who bought after the June 2006 peak. "Sellers who bought post-bubble seem to think that since their home purchase occurred after the peak of the market, and thus home values were already significantly discounted relative to the peak, the seller escaped the worst of the bubble," Zillow's Steve Brownell writes. "The problem is that 'The Bubble' didn’t pop so much as steadily deflate for the better part of 5 years now, and current home values now represent what they were worth in 2003." 

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: The foreclosure mess

July 19, 2011

Art imitates foreclosure


Photo by Justine Maki


Colleague Justine Maki deserves brownie points, and actual brownies, for her dispatches about the lighter side of real estate. She's told us about an amusing open house and an auction of (not actually) a park. Today she returns for a guest piece about an unexpected bit of art:



When Steve Kilar wrote what journalists would call a "scene" piece about Artscape on Saturday, he included a little tidbit that Real Estate Wonk readers may find particularly funny:

The children moved on to a series of painted play houses, the plastic type from big-box stores for back yards. But these had been decorated in a variety of styles, fantasy versions of homes one might see driving around the city. ...
"He's especially taken with the little HUD home over there," Becky said of Will, who was playing in a small house plastered with foreclosure signs and a splintering pressboard roof. There was even an empty liquor bottle outside to complete the picture.

Artscape is known for displays that push the limits of taste or offer commentary on current events and society. The playhouses were generally brightly colored and inviting and surrounded by hoards of kids in various stages of exhaustion. The foreclosure house, as you can see in the photo, wasn’t exactly inviting though it was smack in the middle of the "neighborhood." When I stopped by, no kids were paying attention to it (but it also lacked an open door).

The very idea of a foreclosure among the castles and other playhouses made me think of that axiom "art imitates life" — in this case, not in a cheerful fashion.

This was the only foreclosure or housing-related display I came across at Artscape. Anybody see anything else?



Thanks, Justine!

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 on another subject, ask away right here.

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: Architecture/art, Guest post, The foreclosure mess

July 14, 2011

Clock ticking down for emergency-loan help to struggling homeowners


Better get a move on if you think you'd qualify for an emergency bridge loan to stave off foreclosure. The deadline is closing in.

The state has about $28 million remaining of the $40 million in federal funds, and two-and-a-half months left to commit it all. Applications for the Emergency Mortgage Assistance program that aren't approved by Sept. 30 -- not received, approved -- can't be funded.

The state Department of Housing and Community Development says its underwriting staff need about two weeks to process an application, so Sept. 15 is as long as you'd want to wait. Earlier is better, in case there are any hitches.

Maryland officials, nonprofit staffers and other volunteers knocked on doors yesterday morning in Baltimore's Ednor Gardens-Lakeside neighborhood as part of an outreach campaign. They visited 500 homes, leaving door hangers with information when no one was there. (The photograph above, taken by Rosa Cruz with the state housing department, shows volunteers from Civic Works. From left to right: Muhammed Shodeinde, Bridgette Canada and Terrell Binford.)

The no-interest, forgivable loans are for homeowners who lost their jobs, took a cut in pay or are dealing with a health crisis. You must be behind on your mortgage by three to 12 months. Here's how the program works: 

Continue reading "Clock ticking down for emergency-loan help to struggling homeowners" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (2)
Categories: Foreclosure help, The foreclosure mess

July 7, 2011

State inquiry into mortgage servicers finds "eye-opening" problems

What's causing mortgage-servicing errors, from misapplied payments to double-charging for homeowners' insurance?

At least part of the reason seems to be that the records aren't managed in a way that allows servicers to see everything about a loan's history in one place.

Maryland's Department of Labor, Licensing and Regulation saw this type of record-keeping problem again and again after launching an examination of servicers in the wake of robo-signing last fall.  That inquiry is still in the works.

Anne Balcer Norton, deputy commissioner of financial regulation at the labor department, said the state found that piecing together the pre- and post-default story of even one borrower requires servicers to pull information from multiple databases, including some outsourced to other firms.

State examiners went back and forth with servicers for months to get documentation that could provide a full picture, she said. Some material was never provided, despite multiple requests, and "you have to assume it’s because it does not exist," Norton said.

She said the experience has been "very eye-opening."

"It really does call into question the accuracy of the record-keeping in general," said Norton, who emphasized that she was speaking specifically about the state's inquiry, not the overall effort by state attorneys general across the country. (That nationwide inquiry/settlement is still in the works, but you can see the leaked settlement proposal from March right here.)

Continue reading "State inquiry into mortgage servicers finds "eye-opening" problems" »

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Categories: Mortgage servicing, Mortgages, The foreclosure mess

July 6, 2011

Mistakes were made, servicers' trade group says (and Justice Dept. arm offers examples)

Mortgage servicers and servicing critics agree on at least one point: The industry has made mistakes, and things should change. What's in dispute is the scope and type of problems -- and how often misbehavior plays a role.

David H. Stevens, president and chief executive of the Mortgage Bankers Association, a trade group whose members include servicers, talked with me for this week's story on the state of servicing and said he's supportive of the idea of nationwide mortgage servicing standards -- which seems likely to happen under the guidance of the new Consumer Financial Protection Bureau.

"Coming out with a common set of standards that applies to everybody, ideally applies to all states, would create a system in this country that would have integrity and protect consumers and be enforceable, and that's what we're lacking right now," said Stevens, former commissioner of the Federal Housing Administration. (He expressed concern about competing sets of rules, some in place, some in the works.)

On the subject of servicing problems, he said "mistakes were made, and they were made in a variety of different ways." He said servicers were caught off guard and overwhelmed by the extent of the housing crisis, though he said some companies were more adept than others.

The problems Stevens is talking about are the ones struggling borrowers are well acquainted with by now. He rattled off a list "from lack of trained resources, to being able to properly explain these new [assistance] programs that had been created, to operational challenges of handing off a borrower who calls a call center to someone knowledgeable about underwriting guidelines."

That all falls into the broad category of foreclosure-prevention assistance -- loan modifications, short sales and the like. Situations such as Lutherville doctor Anca Safta's -- where a servicer sent an intent-to-foreclose notice because it wasn't properly recognizing her on-time payments -- "would be an extreme rarity in the process," Stevens said. Loan-modification issues are "the more common challenges we have heard," he said.

Homeowner advocates say problems such as foreclosing on the wrong people, locking people out of their homes and throwing away their possessions when they weren't behind on any mortgage or weren't yet to the point of foreclosure auction, and charging inappropriate fees are more common than the industry acknowledges.

Continue reading "Mistakes were made, servicers' trade group says (and Justice Dept. arm offers examples)" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Mortgage servicing, Mortgages, The foreclosure mess

July 5, 2011

For Md. homeowner, a refinance request gone wrong

Angela Cottrell regrets ever calling her mortgage servicer to ask about refinancing options. What Wells Fargo suggested she do ultimately increased her loan balance and ruined her credit, she said.

Cottrell, who bought a Charles County home with her husband in 2005, couldn’t take advantage of lower interest rates with a traditional refinance in 2009 because their home’s value had dropped below the mortgage balance. When she heard about an Obama administration program allowing certain “underwater” borrowers to refinance, she said, she contacted Wells Fargo.

She said staffers there looked over her financial documents and told her she qualified for lower payments — but through a modification, not a refinance. The company enrolled her in a trial plan, only to declare months later that she wasn’t eligible because she made too much money.

Continue reading "For Md. homeowner, a refinance request gone wrong" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (5)
Categories: Mortgage servicing, Mortgages, The foreclosure mess

July 4, 2011

Mortgage servicing woes

When the brouhaha over foreclosure "robo-signing" hit last fall, mortgage servicers said the bogus court documents were just minor deviations from the rules and didn't change the fact that borrowers were way behind on their payments.

But it's increasingly clear now that servicing problems aren't limited to foreclosure documentation or to people who aren't paying.

Consider, for instance, Lutherville doctor Anca Safta, whose servicer threatened to start foreclosure proceedings this spring even though she'd never missed a payment. The company wasn't crediting her account because of an error in its records.

Or consider the Massachusetts couple whose Florida retirement home -- paid for in cash -- was broken into and cleaned out by a servicer's contractor last year in a case of mixed-up addresses.

You can read more in Sunday's story about mistakes and misbehavior. But there was lots of interesting stuff I couldn't fit in the story, and it seemed a shame not to share. For instance:

Borrowers (and some number of mortgage-less victims of the foreclosure crisis) aren't the only ones with complaints. Increasingly the pension plans, investment funds and other investors that bought loans as mortgage-backed securities are making it clear that they're unhappy with their servicers, too.

"As difficult as it may be to believe, many of the most sophisticated investors were as victimized and abused by the servicers and their affiliates as were many consumers," said Chris J. Katopis, executive director of the Association of Mortgage Investors, in May testimony to a Senate banking subcommittee.

Continue reading "Mortgage servicing woes" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Mortgage servicing, Mortgages, The foreclosure mess

June 29, 2011

A window into what happened to borrowers who got into trouble in '07

St. Ambrose Housing Aid Center in Baltimore saw more than 1,000 homeowners trying to avoid foreclosure in 2007, the first year of the long-running crisis. What has become of them since then, staffers wondered?

It's not at all an easy question to answer. Some borrowers came for advice but opted to work with their lenders on their own. Others disappeared mid-stream without explanation. Still others got loan modifications or other help through counselors' efforts, but St. Ambrose didn't know if those resolutions were really the end of the story -- a lot can change in a few years.

Leaders at the nonprofit housing-counseling group decided to sift through public records to try to figure out what happened. They were buoyed by the results, announced a few days ago.

Land records suggest that 60 percent of St. Ambrose's '07 class of struggling borrowers still owned their homes as of December, the nonprofit says. An additional 10 percent sold their homes for more than they paid, which St. Ambrose also counted as a win compared with foreclosure.

Twenty-four percent fell into categories St. Ambrose counted as negatives -- foreclosure, short sales and deeds-in-lieu of foreclosure. (Short sales and deeds-in-lieu are often characterized as better than foreclosure for borrowers, but the nonprofit thinks the main beneficiary is the mortgage holder.)

Data errors prevented St. Ambrose from determining the state of the remaining 6 percent of properties. 

Mark Benson, special assistant to the executive director at St. Ambrose, thinks that's a good track record and a sign that foreclosure-prevention counseling helps borrowers. But he's quick to acknowledge two issues that make it harder to draw absolute conclusions from the study.

Continue reading "A window into what happened to borrowers who got into trouble in '07" »

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

June 24, 2011

'Shadow inventory' dips, but still high

The so-called shadow inventory -- homes that aren't on the market now but soon could be thanks to the foreclosure crisis -- receded in April, according to real estate data firm CoreLogic.

The company estimates the total at 1.7 million homes nationwide, down from 1.9 million in April 2010. (Both numbers add up to a five-month supply of homes because the pace of sales was faster last spring, with the federal tax credit in effect, than it is now.) CoreLogic attributes the drop to a combination of fewer homeowners newly behind on payments and a "high level" of distress sales.

A few interesting tidbits:

o Homes whose owners are seriously delinquent on their payments but not in foreclosure account for almost half the shadow inventory. The rest -- in equal split -- are homes in the foreclosure process and properties repossessed by banks but not yet on the market.

o The shadow inventory plus all homes for sale -- the "visible" inventory -- added up to 5.7 million units in April. To put it another way: Three in every ten of those properties are in the shadow group.

o CoreLogic says shadow inventory has dropped 18 percent since peaking in January 2010. But its chief economist, Mark Fleming, expects several more years before total absorption "given the long timelines in processing and completing foreclosures."

Here's the question of the day, folks: Does the much-discussed shadow inventory make any difference to you? If you're thinking of buying, is this potential pipeline holding you back for now? Sellers, has it factored into your strategy at all?

June 20, 2011

Q&A: Purchasing foreclosures

Buying a home is complicated. When it's a foreclosure, though, the questions really multiply -- whether you're trying to purchase an REO (real-estate owned) property from a bank or you're thinking of bidding at a foreclosure auction.

Two settlement attorneys teamed up to answer common questions, including ones several of you submitted. Lee M. Snyder and Eric Oberer are colleagues at Mid-Atlantic Settlement Services. Lee has been practicing real estate law since 1969 and Eric -- a former city prosecutor -- joined Mid-Atlantic in 2005.

Take it away, Lee and Eric:



Question: Is there any way for a buyer to tell before getting under contract on an REO whether the institution already has the legal ability to go to settlement?

Answer: The land records of the county/city where the property is located are the best source of information as to who is in title. It is also possible to go onto the website for the state Department of Assessments and Taxation to determine who is in title according to their records. However, both of these sources can be as much as 60-90 days behind in indexing and therefore may not show that title has recently changed. Many times, the selling REO bank has seen the foreclosure procedure completed, sale ratified, etc., and the deed from the trustees to it has not yet been recorded or indexed but the bank lists the property for sale anyway.

Q: What issues do you see crop up on a regular basis with REO transactions – delays, etc. – that buyers should be aware of?

Continue reading "Q&A: Purchasing foreclosures" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: Auctions, Distress sales, Guest post, The foreclosure mess

June 3, 2011

BoA to struggling borrowers: Come see us in Baltimore

If you're a Bank of America borrower trying to avoid foreclosure and you're not getting anywhere by phone, you can try going to the Baltimore Convention Center today or tomorrow.

The company is in the midst of an outreach event that will pair homeowners with "home retention specialists" tasked with reviewing borrowers for foreclosure alternatives, including people who already have active loan-modification requests.

It's actually a three-day event, Thursday through Saturday, but I didn't get a heads up until late yesterday. Bank of America says it already contacted struggling homeowners within 100 miles of Baltimore -- all 27,000-plus.

If you go, prepare to stay at least two to three hours, the company says. And bring lots of documentation. Here's the list of what you'll need.

Also important: register here before you go.

Bank of America isn't the only financial institution holding convention-style foreclosure-prevention events. Have you attended one? Did it help? 

Posted by Jamie Smith Hopkins at 1:00 AM | | Comments (0)
Categories: The foreclosure mess

June 1, 2011

Md. urges struggling borrowers to apply for new program

The new Emergency Mortgage Assistance program -- which gives bridge loans to Maryland homeowners who are unemployed, underemployed or dealing with a medical crisis -- has had 350 applications so far, close to 90 of them to the point of approval.

But the state believes the $40 million it's been allocated by the federal government is enough to help nearly 1,200 people. And it only has until Sept. 30 to commit all that money.

That's why politicians congregated on Deborah Goldring's lawn Tuesday in the sweltering heat to urge more people to apply before it's too late.

Goldring, who lives in Baltimore's Lauraville neighborhood, is an enthusiastic supporter of the program after being approved for one of the no-interest loans, which will pay off her past-due amount and help cover her mortgage payments as she tries to get back on her feet. (She met both the unemployed and medical-crisis criteria -- her husband died in 2007 after a long illness, then she lost her job in late 2009 while still struggling to pay off all the medical bills.)

All her efforts to get a loan modification were for naught, she said, but the application process for the Emergency Mortgage Assistance program was much faster and more productive. As long as she can stay in the home, payment on the bridge loan will be deferred for five years -- at which point it disappears, essentially converting to a grant.

Here's a video of Goldring talking about her journey, with a bit of information about the program woven in:

Continue reading "Md. urges struggling borrowers to apply for new program" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (0)
Categories: Foreclosure help, The foreclosure mess

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:

Continue reading "A long road to loan modification for Maryland family" »

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

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."

Continue reading "Signature craziness" »

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

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

April 29, 2011

New guidelines for mortgage servicers could be good news for struggling borrowers

Mortgage servicers have been roundly criticized for their efforts -- or lack thereof -- to help delinquent homeowners avoid foreclosure. More than 2 million of the delinquent mortgages they're servicing are owned or guaranteed by Fannie Mae and Freddie Mac.

You can see how they could make a difference.

Their regulator, the Federal Housing Finance Agency, said yesterday that the mortgage giants will issue new rules for servicing troubled mortgages in hopes of doing just that. Servicers will get incentives for working with borrowers more quickly -- "earlier contact, more frequent communication, and prompt decisions" is how the agency's director puts it -- and will be hit with penalties if they don't perform well.

For instance: no more starting foreclosure proceedings while a borrower is working with the servicer on an alternative.

"The updated guidelines ... address the so-called 'dual track' by requiring servicers to contact borrowers as soon as they become delinquent and focus solely on remediating that delinquency," the agency said. "The foreclosure process may not commence if the borrower and servicer are engaged in a good-faith effort to resolve the delinquency. The servicer must conduct a formal review of each case to ensure a borrower has been considered for foreclosure alternatives before the loan is referred for foreclosure. Even after foreclosure processing begins, financial incentives are provided to encourage servicers to continue to help borrowers pursue a foreclosure alternative."

Full guidelines are expected later this spring or over the summer, but there's a link to Fannie and Freddie's own announcements from the FHFA release.

Anne Balcer Norton, the state's deputy commissioner of financial regulation, said by email that it looks like a good start to fixing "misaligned compensation incentives" that make servicers treat foreclosure as the best option.

Continue reading "New guidelines for mortgage servicers could be good news for struggling borrowers" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (10)
Categories: Foreclosure help, The foreclosure mess

April 26, 2011

FICO: Short sale no better for your credit score than foreclosure

For borrowers going through the frustration of trying to market their home as a short sale, the big selling point generally is the thought that it's not as bad -- from a credit-score perspective -- as a foreclosure.

But that doesn't appear to be true, the folks at FICO say.

The credit-score company says on its analytics blog that it compared the effect of both types of distress sales on the scores of three different types of consumers. A foreclosure and a short sale represented an equal hit to the FICO score of all three, FICO said. (Thanks to HousingWire for noticing.)

One commenter on that blog takes issue with the suggestion that it's all the same, arguing that someone who needs a security clearance would be out of luck with a foreclosure in their past and thus has a reason to push for a short sale. But it's not clear that defense officials see a difference, either.

Sheldon I. Cohen, an attorney who focuses on security-clearance issues, writes that the Department of Defense's Office of Hearings and Appeals has granted clearances to some with a short sale in their background and some with a foreclosure in their past, and it's also denied clearances to people who had a foreclosure or a short sale. The key is "good faith and moral behavior," he writes:

Continue reading "FICO: Short sale no better for your credit score than foreclosure" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Credit score, Distress sales, The foreclosure mess

April 4, 2011

Foreclosure aid for unemployed, underemployed now available

The Emergency Homeowner Loan Program was signed into law eight months ago, but the $1 billion in aid for unemployed and underemployed people facing foreclosure has just now reached the first few states.

Maryland's share is $40 million. The state announced Friday that it is taking applications.

Borrowers could receive as much as $50,000 in interest-free loans to pay off past-due amounts and to make up to two years of payments. They must have taken an income hit of at least 15 percent, be three to 12 months behind on their mortgage and have a "reasonable likelihood" of being able to get back on their feet.

The emergency help is like loan-to-grant money given to first-time homebuyers: No payments are due for five years, and every year the total is reduced by 20 percent until nothing is owed -- as long as the homeowner keeps the property and stays up-to-date on the mortgage during that time.

If you want to apply, you have to meet with a nonprofit housing counselor, the state says. Its approved list is here. You can also connect with a counselor by calling the state's foreclosure-prevention hot line, 877-462-7555. The state is calling its version of the program "Emergency Mortgage Assistance."

Elected officials and housing counselors talked to borrowers about the program at two events over the weekend, one in Baltimore and the other in Prince George's County. Organizers of the Baltimore event, Money Power Day, say a steady stream of homeowners met with foreclosure-prevention counselors to sort through their options.

Why the months-long delay in receiving the federal money, you might ask? (An August press release said the program would be launched "soon.")

Continue reading "Foreclosure aid for unemployed, underemployed now available" »

Posted by Jamie Smith Hopkins at 4:00 AM | | Comments (1)
Categories: Foreclosure help, The foreclosure mess

March 29, 2011

'Enormous backlog of foreclosures'

Alarming number of the day, courtesy of Lender Processing Services

"As of the end of February, foreclosure inventory levels stand at more than 30 times monthly foreclosure sales volume."

So even though U.S. mortgage delinquencies are declining, "an enormous backlog of foreclosures still exists with overhang at every level," the company said.

Other notable numbers from LPS:

Foreclosures on option ARMs -- also known as "neg am" because the minimum payment option causes negative amortization, increasing the amount borrowers owe -- have risen 23 percent over the last six months, "far more than any other product type."

Just over one-fifth of mortgages that were at least three months behind a year ago are now current.

Average delinquency for a loan in foreclosure: 537 days, a record.

LPS, which provides services to the mortgage industry that include default management, handles more than half the country's foreclosures. Like its mortgage-servicer clients, it has been hit with allegations of robo-signing and the like. The Florida Attorney General's Office launched an investigation last year.

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

March 24, 2011

Housing counselor: Mortgage servicers 'routinely and blatantly ignore HAMP guidelines'

Baltimore resident Michael F. Molloy's letter about a relative's struggles to get a loan modification prompted a lot of comments from readers and full-fledged commentary from a foreclosure-prevention counselor at St. Ambrose Housing Aid Center in Baltimore.

Counselor Bryan Sheldon argues: "It's not that there aren't programs available to assist most homeowners. The problem is that servicers and investors have no real need to follow program guidelines or assist borrowers in default."

The Obama administration's HAMP loan-modification program has been roundly criticized for the low number of homeowners assisted, but Sheldon contends that "many more may have been helped if mortgage servicers did not routinely and blatantly ignore HAMP guidelines."

Other links that might catch your interest:

The Center for Responsible Lending says it ran simulations of the foreclose-or-modify test used by servicers and determined that investors really do make out better with modifications, even though servicers -- who are supposed to be acting in investors' interests -- overwhelmingly opt to foreclose.

A Georgia jury awarded $21 million in damages to an Army staff sergeant who contended that a servicer hurt his credit by reporting him late on payments that it hadn't properly credited him for. The servicer, calling the award "grossly disproportionate to any damages ... sustained," promised to appeal. (Hat tip to the Consumerist for noticing this.)

And on a (slightly) more lighthearted note: Foreclosure buyers hire witches to cleanse properties of "bad vibes" (The Wall Street Journal)

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: Links, links, links, The foreclosure mess

March 21, 2011

Staving off the bank by 'renting'

The Protecting Tenants at Foreclosure Act keeps banks from tossing renters out of newly repossessed homes for at least 90 days -- longer, in many cases. But frequent commenter Josh Dowlut thinks homeowners who are about to be foreclosed on could use this law to their advantage, and he wants to spread the word.

Dowlut, who has worked in the mortgage business, ran for Congress last year as a Republican and is critical of the financial industry, called the law "a real weapon to fight the banks with" and laid out what he meant in an email interview:

"While you cannot stop the bank from taking legal ownership of your house, you can seriously delay their ability to take physical control of your house if you can get a signed lease with someone who is not your immediate family, for rent that is at least 70% of fair market value, and for a term not to exceed 2 years," he wrote. "Physical control and possession would remain with whoever is on the lease for the entire term of the lease, even after legal ownership transfers."

As long as the lease is "bona fide," the renter of record cannot legally be tossed out of the home until the term ends -- unless the property is sold to someone who intends to move in themselves, in which case the renter has 90 days to vacate. But it's usually the lender who buys back the property at foreclosure auction, and it sometimes takes a long while before the home is resold.

"My thought is homeowners could find a friend, or anyone who is sympathetic to their situation, perhaps even another homeowner facing foreclosure, to become the tenant of record," Dowlut said. Whether that tenant of record actually moves in or not doesn't seem to matter under the law, he added.

That would leave the homeowner paying the agreed-upon rent to the bank, which would likely be much less than the mortgage payment they couldn't afford, he said. A sort of do-it-yourself loan modification, except that the borrower would no longer own the home and would have to exit at the end of the lease.

I ran the idea past several attorneys. Matt Hill, a lawyer with the Public Justice Center in Baltimore who helps renters in foreclosure situations, said he has very occasionally run into people who seem to be trying something along these lines -- and he's not keen on it.

Continue reading "Staving off the bank by 'renting'" »

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

March 18, 2011

'Nothing has changed' in foreclosure world

As congressmen convened in Baltimore last week to talk about the "economic nightmare" that is the foreclosure crisis, city resident Michael F. Molloy said he tried -- without success -- to hand-deliver a letter about a relative's personal experience.

Instead, he shared it with me. His point: All the apparent effort "to protect consumers from predatory lending and mortgage companies" doesn't seem to have come to much. That was his impression after sitting through a mediation session, held earlier in the month, in which the lender was required to send a representative who could discuss foreclosure alternatives.

Here's most of his letter:


The attorney [for the mortgage servicer and investor] announced that she was unable to offer any reduction in fees, or other loan modification opportunities that would enable my relative to stay in her home. In other words the attorney came to the mediation meeting unwilling to mediate anything. They were just going through the motions.

My relative was ably represented by two attorneys from Maryland Legal Aid. I can just imagine how horrific this experience would have been had she had to do this on her own. Despite that, efforts to assist the struggling home owner are apparently not working when confronted with merciless mortgage companies and their investors. No amount of public shame has encouraged them to be the least bit flexible despite the damage to our communities.

Continue reading "'Nothing has changed' in foreclosure world" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (23)
Categories: The foreclosure mess

March 15, 2011

What renters need to know about foreclosure

If you're renting a home, don't assume foreclosure won't affect you.

As tenants across the country have discovered the last few years, you can end up with a bank wanting to throw you out if your landlord doesn't keep up with the mortgage payments. Some residents who never missed a rent payment have been caught completely by surprise.

The Baltimore Homeownership Preservation Coalition and the Public Justice Center are launching a new education campaign to put renters on guard and remind them of their rights if a foreclosing bank starts talking about eviction.

About 40 percent of Baltimore homes in the foreclosure process are investor-owned, so that does happen all the time. Some landlords get behind because their renters aren't paying, but others simply overextended themselves.

"Tenants are often the forgotten and unintended victims of foreclosure," Maryland Attorney General Douglas F. Gansler said in a statement about the campaign.

The key things to remember:

Continue reading "What renters need to know about foreclosure" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (3)
Categories: Renting, The foreclosure mess

March 9, 2011

Foreclosure irregularities -- and testimony

Didn't mean to leave you all to your own devices yesterday, but I was swamped with foreclosure coverage.

A congressional field hearing about the foreclosure crisis was held in Baltimore while I was deep into the reporting on an insider complaint about a foreclosure law firm, and I optimistically decided to do both at once.

Here's that story, in which a paralegal filed a complaint alleging that his former employer recorded more than 1,000 deeds for Maryland foreclosures with false signatures.

The congressional hearing gets short shrift, so you might be interested in seeing the written testimony -- especially from Baltimore homeowner Kevin Jerron Matthews, an Iraq war veteran who told the House Committee on Oversight and Government Reform that he took an oath to defend the Constitution and he's simply asking that he and other borrowers be assured their constitutional right to due process. (Matthews is represented by Baltimore-based Civil Justice and the University of Maryland School of Law's Consumer Protection Clinic.)

Congressmen and testifying elected officials also got into a debate about whether to improve or eliminate HAMP and other government programs aimed at preventing foreclosure (including the Emergency Homeowners' Loan Program, which isn't actually underway yet). What do you think?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (7)
Categories: The foreclosure mess

February 18, 2011

Distress sales in 2010

Foreclosures and short sales -- but particularly foreclosures -- were a sizable chunk of the Baltimore region's housing market last year. Nevada we're not, but distress sales increased across our metro area.

Here's the breakdown for 2010, with numbers pulled by Joseph T. "Jody" Landers III of the Greater Baltimore Board of Realtors from Metropolitan Regional Information Systems' multiple-listing service:

ForeclosuresShort salesDistress sales as a % of totalYoY chg in foreclosuresYoY chg in short sales
Anne Arundel Co.80137124%52%6%
Baltimore City1,81132340%62%66%
Baltimore Co.1,14639925%54%27%
Carroll Co.18310222%40%38%
Harford Co.52117928%112%38%
Howard Co.33124120%44%12%
Balt. metro area4,7931,61528%60%26%


The number of Maryland mortgages in default moved downward last year after several years of rapid escalation, as colleague Lorraine Mirabella reports.

How have you been affected by foreclosures and short sales -- if at all?

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (1)
Categories: Distress sales, Housing stats, The foreclosure mess

February 7, 2011

Live alongside a foreclosed home? Here's a stop-gap measure to keep pipes from bursting

Barbara in Baltimore County owns a condo directly underneath one working its way through foreclosure. Last winter, after the borrower in default moved out, the pipes froze, burst and flooded several other units, she says -- one so badly that the owner had to live elsewhere for months. (Barbara's unit was damaged, too, but only a small part of it.)

When the pipes burst, the bank hadn't yet taken the property back. "It never dawned on me it would go into another winter," she said. But lo, as the temperatures began to drop in October, the condo was still in not-quite-foreclosed limbo.

The solution to avoiding a repeat performance seemed obvious: Get the heat turned back on. But that was much easier said than done.

Her property manager declared that nothing could be done, she said. An attorney she hired couldn't even turn up the name of the foreclosing bank for her (in Maryland, the plaintiff in foreclosures is usually the law firm handling the case). She had already tried -- months earlier -- to pay the empty condo's electric bill herself, to no avail. She even called elected officials, for all the good it did. And she figured that going after the not-yet-former homeowner wouldn't get her anywhere.

A lot of people are probably finding themselves in the same situation, considering how many improperly winterized not-quite-foreclosures the country has. But take note: Barbara finally got results.

Here's how:

Continue reading "Live alongside a foreclosed home? Here's a stop-gap measure to keep pipes from bursting" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (12)
Categories: The foreclosure mess

February 2, 2011

Notable quotables on the mortgage mess

The federal Financial Crisis Inquiry Commission's new report on why things went so very, very wrong in the aughts includes testimony from a local loan-officer educator about what happened when lenders disconnected the risk of mortgages from the upfront reward of origination fees:

Under the radar, the lending and the financial services industry had mutated. In the past, lenders had avoided making unsound loans because they would be stuck with them in their loan portfolios. But because of the growth of securitization, it wasn’t even clear anymore who the lender was. The mortgages would be packaged, sliced, repackaged, insured, and sold as incomprehensibly complicated debt securities to an assortment of hungry investors. Now even the worst loans could find a buyer.

More loan sales meant higher profits for everyone in the chain. Business boomed for Christopher Cruise, a Maryland-based corporate educator who trained loan officers for companies that were expanding mortgage originations. He crisscrossed the nation, coaching about 10,000 loan originators a year in auditoriums and classrooms. His clients included many of the largest lenders—Countrywide, Ameriquest, and Ditech among them. Most of their new hires were young, with no mortgage experience, fresh out of school and with previous jobs “flipping burgers,” he told the FCIC. Given the right training, however, the best of them could “easily” earn millions.

“I was a sales and marketing trainer in terms of helping people to know how to sell these products to, in some cases, frankly unsophisticated and unsuspecting borrowers,” he said. He taught them the new playbook: “You had no incentive whatsoever to be concerned about the quality of the loan, whether it was suitable for the borrower or whether the loan performed. In fact, you were in a way encouraged not to worry about those macro issues.” He added, “I knew that the risk was being shunted off. I knew that we could be writing crap. But in the end it was like a game of musical chairs. Volume might go down but we were not going to be hurt.”

Two more excerpts from the report designed to make your blood boil:

Continue reading "Notable quotables on the mortgage mess" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: The foreclosure mess

Columbia foreclosure victim to get day in court

Kwaku Atta Poku, the Columbia resident who lost his home to foreclosure even though he never missed a mortgage payment, has had one setback after another in his quest for restitution. But this is a good week for him and his family: a U.S. District Court judge ruled that he's entitled to a trial.

See colleague Larry Carson's story here.

Atta Poku refinanced his mortgage in 2001 with the same lender who held his original $97,000 loan, Washington Mutual. But somehow, the money from the refinance transaction was not used to pay off the original mortgage. The title company that handled the transaction is defunct. So is WaMu. What exactly happened is a mystery.

Atta Poku's attorney has "repeatedly argued that Atta Poku never touched the refinancing check and was not at fault in any way," Carson reports. "Even the title company involved in the refinancing agreed that Atta Poku did nothing wrong in a court hearing on the case January 20, [the judge] said."

There's a lot of outrage about this situation, as you might imagine. One Sun reader commented, "If I were his judge I would award Mr. Atta Poku TWICE what he is suing for in punitive damages."

Here's the original Sun story about the foreclosure that took most everyone by surprise.

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (0)
Categories: The foreclosure mess

February 1, 2011

Foreclosure's effect on Baltimore schoolchildren



About 2,400 children attending Baltimore public schools lived in homes in foreclosure during the 2008-2009 academic year, up more than 20 percent from five years earlier, according to a new analysis by the Baltimore Neighborhoods Indicator Alliance.

It's not necessarily about their parents' failure to pay. Half the students whose homes were in foreclosure proceedings lived in rentals, a marked change from the pre-crisis years. In 2003, 2004 and 2005, less than 30 percent of foreclosure starts involved rented homes, according to the analysis, done by Matthew Kachura with the University of Baltimore-based alliance. (The research was conducted for the Open Society Institute.)

Above: a map showing the areas where foreclosures and public-school students intersected. Almost every school had at least one affected student in the 2008-09 year, but certain parts of the city have taken the brunt of the wallop.

Continue reading "Foreclosure's effect on Baltimore schoolchildren" »

Posted by Jamie Smith Hopkins at 6:00 AM | | Comments (4)
Categories: Schools, The foreclosure mess

January 19, 2011

GMAC drops some Maryland foreclosure cases

You could be excused for wondering what happened to robo-signing, which roared onto the scene last fall amid predictions of foreclosure gridlock and then seemed to tiptoe out of the collective consciousness. But it's not gone.

GMAC Mortgage said Tuesday that it is dropping about 250 foreclosure cases in Maryland because of "potentially defective" documentation.

More on that story here, including the back-and-forth about whether a class-action challenge by Civil Justice in Baltimore was a key factor in the dismissals.

It might seem like a small number of cases, compared with the total number of Maryland homeowners in foreclosure. (It's certainly smaller than the 10,000 dismissals the Firedoglake blog reported, without sources, over the holiday weekend.) But it raises the possibility that other mortgage servicers might feel compelled to drop cases, too, and start afresh. A similar challenge against Wells Fargo is pending.

Here's the original story about the challenges, which were filed as motions in two foreclosure cases rather than as fresh class-action lawsuits. Civil Justice's argument was that mortgage servicers must abide by the rules not only to uphold their borrowers' rights, but also to avoid "years and years of litigation concerning the title to properties."

"We have a huge title problem that needs to be solved," Phillip Robinson, executive director of Civil Justice, said at the time. "The only way to clear title is to dismiss cases and make [mortgage servicers] do it the right way."

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (4)
Categories: The foreclosure mess

December 21, 2010

A late addition for Maryland Mortgage Program

Maryland officials have been outspoken on the subject of foreclosure prevention, lecturing mortgage servicers to work with struggling borrowers and passing laws to try to make loan modifications more likely. But it wasn't until recently that the state's own mortgage program -- aimed at first-time homebuyers -- designed a modification option to lower monthly payments to an amount its borrowers in trouble could afford.

Three of those loan modifications have been approved so far. Four more have been OK'd by the state but are awaiting authorization from mortgage insurers. 

More here.

While we're on the subject of delinquencies and foreclosures, you might be interested in the results of a project by The Seattle Times and ProPublica that looked at three areas -- one of them Baltimore. Reporters there were frustrated by the lack of good information on the foreclosure crisis (amen to that) and compiled a random sample of foreclosure filings in Baltimore, Seattle and Phoenix from 2005 through 2008.

As you'd expect, the dataset shows "how the housing bubble and lower lending standards of the era reinforced each other, seducing many homeowners to get in over their heads." But there were significant differences by geography, the organizations wrote:

Continue reading "A late addition for Maryland Mortgage Program " »

Posted by Jamie Smith Hopkins at 10:50 AM | | Comments (2)
Categories: Foreclosure help, Mortgages, The foreclosure mess

December 1, 2010

Baltimore metro area's foreclosure rate

The Baltimore region's foreclosure rate ranks it in the middle among all metro areas, according to a new report -- a lot better than the hardest-hit places and a lot worse than the best-off spots.

Mortgages in the foreclosure process, meaning that lenders were trying to repossess the homes, accounted for 3.7 percent of all loans in Baltimore and its surrounding suburbs as of June. That's according to, an effort by Local Initiatives Support Corporation, the Urban Institute, the Center for Housing Policy and KnowledgePlex.

Our rate is lower than that of 192 metro areas and higher than 173.

Here are the communities at both extremes:

Continue reading "Baltimore metro area's foreclosure rate" »

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

November 23, 2010

Report: Two years of "shadow inventory" looming over Md.'s housing market

In today's topsy-turvy housing market, the number of homes that soon could be for sale is just as important to know as the number that actually are.

Here's why: The so-called "shadow inventory" of seriously delinquent borrowers whose properties are in danger of landing on the housing market in Maryland are so numerous that these homes would take a full two years to find buyers at August's pace of sales, according to a new report from real estate data firm CoreLogic.

That's the worst in the nation -- in part because Maryland has been hard-hit by the foreclosure crisis, but also because the pace of sales dropped faster here than in the country as a whole after the federal homebuyer tax credit expired.

CoreLogic, which calculated the shadow-inventory figure by analyzing the number of homes whose owners were at least three months behind on their mortgages, said the top states after Maryland (at 24.4 months) were New Jersey (24.1 months), Illinois (23 months), Florida (20.8 months) and Georgia (19.5 months).

As a region, the Baltimore metro area was somewhat better off than the state as a whole. Its 18.3 months of supply ranked it 17th among the 50 largest metro areas. (Miami was tops, at just over 33 months.)

"The weak demand for housing is significantly increasing the risk of further price declines in the housing market," Mark Fleming, CoreLogic's chief economist, said in a statement. "This is being exacerbated by a significant and growing shadow inventory that is likely to persist for some time due to the highly extended time-to-liquidation that servicers are currently experiencing."

Continue reading "Report: Two years of "shadow inventory" looming over Md.'s housing market" »

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

November 22, 2010

More than 140,000 behind on mortgage payments


Here's the mortgage mess, Maryland-style, in a snapshot -- a chart that shows the growth in the number of homes whose owners are at least one payment behind.

It's been trending down a bit this year, good news if that continues. The 3 percent drop in the summer was the first year-over-year decrease since 2006. But I'm not hearing a lot of optimism out there about the possibility of big improvement soon, given the state of unemployment.

(These figures, in case you're wondering, are drawn from a Mortgage Bankers Association survey that covers nearly 90 percent of loans outstanding. The statistics aren't grossed up, meaning that the tally above is most but not all delinquencies.)

From the beginning, some firms have profited off the crisis by taking homeowners' money to negotiate for loan modifications but doing little or nothing. The Federal Trade Commission issued new rules last week banning fees until a loan agreement is hammered out that the homeowner finds acceptable. It also announced that it had convinced a federal court to temporarily halt operations at a Halethorpe mortgage-relief company that the agency said was taking advantage of clients.

A mortgage investors' group, meanwhile, contends that mortgage servicers -- the organizations receiving modification requests -- are themselves profiting when they choose to foreclose.

Continue reading "More than 140,000 behind on mortgage payments" »

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

November 16, 2010

Abandoned homes aren't good neighbors

About 5,000 of Baltimore's vacant and uninhabitable homes are on mostly occupied blocks, the city says. When abandonment and residents intersect, things can get ugly.

A family in Wilson Park has been struggling for months and months with the vacant rowhouse next door, which damaged their house. The neighboring home's pipes burst early this year, flooding the Malaneys' basement. Last year, while it was still occupied, its roofing material ripped off during a storm, letting water into the Malaneys' walls and ceilings.

Read more about the Malaney family's woes here.

The city took the fairly unusual step in this case of spending $18,500 to replace the abandoned home's roof and remove moldy drywall, insulation and carpet, hoping that would help the Malaneys' situation when going after the owner proved fruitless. 

Housing officials say that's not an expense they can swing for most vacant properties. In the past three fiscal years, the city stabilized 26 abandoned properties -- half of them last year. More common: "partial" demolitions, where the city removes an unstable portion of a vacant property. It went that route with just over 450 homes in the last three fiscal years, 137 of them last year.

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (13)
Categories: The foreclosure mess, Vacancies

November 10, 2010

Homeowner, facing foreclosure, goes on hunger strike

A Baltimore homeowner who fell behind on her mortgage payments after her property taxes unexpectedly spiked protested in an attention-grabbing way this week: She went on a hunger strike.

Lauren Rymer started just after 7 a.m. Monday and spent an empty-stomach day camped out in Annapolis, trying to get an audience with Gov. Martin O'Malley and talking to passersby who wanted to share their stories of economic woe.

By the time she ate something at 5 p.m. Tuesday, she'd had a foreclosure alternative offered to her by the state housing department, talked to someone from O'Malley's office about the tax problem and given interviews to a bevvy of media from WBAL to the Huffington Post to MSNBC about her hope that elected officials will do more to help Americans avoid foreclosure.

"Awareness has been raised on this issue, so I feel like the strike was worth it," she wrote on her Hungry4Home Twitter feed Tuesday afternoon.

Rymer, 32, who works for a nonprofit in Baltimore, bought her two-bedroom home in Upper Fells Point four years ago. She said her monthly payment started off at $1,500, including taxes and insurance, which she could afford. But it jumped to $2,100 this year after her property taxes skyrocketed, she said, and that was beyond her ability to pay.

The state Department of Assessments and Taxation, which investigated at the O'Malley administration's request, says it's the result of a little-known exception to the tax break that caps homeowners' property-tax increases at 4 percent a year in the city.

Continue reading "Homeowner, facing foreclosure, goes on hunger strike" »

October 28, 2010

The foreclosure effect on home prices

It's pretty much a given that foreclosures are a drag on home prices. But how much, exactly?

A study by researchers at Harvard and MIT, which analyzed years of sales data in Massachusetts, estimated that foreclosed homes sell for an average of 27 percent less than non-foreclosure comps. They lower the value of homes around them to boot. A non-foreclosed home takes a 1 percent hit in price for each foreclosure within about 250 feet, the study suggests -- meaning the effect worsens as the number of nearby foreclosures mount.

Daniel Hartley, a research economist with the Federal Reserve Bank of Cleveland, references this study in a new paper that notes the trouble that foreclosures -- often ill-maintained, sometimes magnets for crime -- can cause in neighborhoods. "Disamenities," he calls them. On top of that, they're an addition to the supply of homes for sale at a time when there's a shortage of buyers.

His research suggests the price effect on neighborhoods differs, though:

Continue reading "The foreclosure effect on home prices" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (13)
Categories: The foreclosure mess

October 25, 2010

A demand to banks to provide proof of mortgage ownership

A union, tapping into discontent and anxiety about financial institutions' record-keeping on mortgage matters, has launched a webpage helping borrowers "demand to see the original note" that shows who owns their loan.

In two weeks, about 100,000 people have made requests through the site, according to the Service Employees International Union.

The site,, sums up the situation this way:

"Mortgages contain lots of paperwork – but only the original mortgage note with your signature is proof that you owe the debt. That’s why banks need the note to prove that they own the loan and can collect payments from you. The problem is, banks now buy and sell mortgages up and down Wall Street – slicing them up and repackaging them to sell to other banks. The bank you bought your mortgage from two years ago may not be the bank that owns it today. But, in all the shuffle, the mortgage notes often don’t get transferred along with your debt."

Stephen Lerner, director of SEIU's bank and finance campaign, says homeowners across the country "are wondering who owns their mortgage, can the bank prove they own the mortgage, are there original notes or not?" Financial institutions' responses to borrowers' requests have begun coming in, and they vary from "here's the documentation" to "we have to research this," he said.

"Legally, they have to respond," he added.

Continue reading "A demand to banks to provide proof of mortgage ownership" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: The foreclosure mess

October 20, 2010

Md. judges OK foreclosure audits

Maryland's highest court has given administrative judges across the state the green light to hire examiners to help scrutinize documents in potentially thousands of foreclosure cases

The Court of Appeals voted 6 to 0 in favor of the emergency proposal. (The seventh judge was feeling poorly and was not at the meeting.)

The committee that proposes rules to the court had recommended the move on Friday.

Some courts have already begun reviewing foreclosure cases -- particularly ones with "corrective affidavits" filed by two Maryland attorneys, in which they acknowledge that they had others reproduce their signatures for them on earlier affidavits. These documents, the written equivalent of court testimony, can't be signed on another's behalf.

Judges in Howard and Prince George's counties, where reviews are underway, said any help they can get to examine cases is appreciated. (The rules approved by the Court of Appeals Tuesday permit courts to pass the costs of examiners onto firms trying to foreclose, who cannot in turn pass the costs onto homeowners unless the documents in need of review were filed by the borrowers.)

Reader comments on the foreclosure drama have continued to run the gamut. Nehemiah wrote that borrowers who got behind on their payments "did NOT break the law. They may have made bad decisions but they did NOT break the law. These lenders & lawyers KNEW the law - KNEW the consequences and DID IT ANYWAY… They should be made an example of by our AG."

Reader elweedz says it's a molehill masquerading as a mountain: "Get a grip people. 99.9% of the foreclosures were legitimate because the homeowner wasnt paying their mortgage. Who gives a flip who signed some standard paperwork. For those that had a real error, it will get fixed."

And reader Josh Dowlut sees two sides to the story: "On the one hand, this has become hand to hand class warfare with the banks. It is reasonable to make them 'work for it' if they are going to try and take your home. On the other hand, this is only delaying the inevitable. These are procedural errors that will not result in any homeowner getting their mortgage or note voided."

Posted by Jamie Smith Hopkins at 12:01 AM | | Comments (7)
Categories: The foreclosure mess

October 16, 2010

Md.'s high court will weigh idea of foreclosure 'examiners'

Maryland's highest court will consider a proposal next week that could mean "massive audits" of documents filed by firms trying to foreclose on homeowners.

The committee that proposes rules for the courts, concerned about admissions that people are submitting what its chairman calls "bogus" affidavits, thinks there ought to be examiners looking closely at potentially thousands of case files.

Affidavits are key legal documents, and they're serious business. When you sign them, you're attesting under oath that you have personal knowledge of the facts therein. And you have to sign them yourself.

Unless you've been under a rock the last few weeks, or perhaps put your hands over your ears and cried "la la la" whenever you heard "foreclosure," you're probably already aware that loan-servicer employees have said they're signing so many foreclosure affidavits that they don't have personal knowledge of those therein facts. And two Maryland foreclosure attorneys acknowledged in court documents that their signatures on some affidavits were not in fact made by them.

Court rules committee chairman Alan M. Wilner said in a letter that an examination of affidavits could be required in thousands of files. (In a memo earlier this week, he said judges are "alarmed" by the potential scope of the problem.)

I realize that some of you are exasperated by the slowdown in foreclosures that these revelations have caused. "Who cares how lenders are foreclosing?" some readers have said. "The borrowers didn't pay -- what else matters?"

Homeowner advocates argue that some borrowers did pay or they paid more than they're getting credit for, etc., but let's set that aside for the moment to let Wilner, a retired judge, bring up a larger point:

"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," he wrote in a letter to the Court of Appeals, which will take up the rules proposal next Tuesday.

Continue reading "Md.'s high court will weigh idea of foreclosure 'examiners'" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (15)
Categories: The foreclosure mess

October 15, 2010

Who's signing the foreclosure documents?

The "robo-signers" we all keep hearing about were so dubbed because they signed thousands of foreclosure documents a month for mortgage servicers -- too many to personally verify the information included, as affidavits require.

Here's something different: Attorneys at two Maryland law firms handling foreclosures have acknowledged in court filings that they didn't actually sign their own affidavits, also a requirement. Others signed the attorneys' names for them.

Here's the original story, which ran Wednesday, and a follow-up.

So that's why I've neglected you all the past couple days. Sorry! Been a bit busy.

The reader reaction runs the gamut.

"Big deal. So one faceless employee signed for another faceless employee.  The fact remains that the homeowner defaulted.  Let's move this along and clear up this mess quickly," one reader wrote in the story comments.

Another commented that "failing to do due diligence is what got everyone into this mess. So yet again, no lessons learned by the banks or mortgage companies. I heard someone say this morning (and I agree) that since we bothered to bail out some of these institutions, the absolute least they could do in return is ensure they're *doing their work*."

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (12)
Categories: The foreclosure mess

October 5, 2010

Officials call for voluntary halt to Md. foreclosures

Amid the brouhaha over "robo-signing" mortgage firms comes a call for a temporary halt to foreclosures in Maryland.

Congressman Elijah E. Cummings, Attorney General Douglas F. Gansler and Gov. Martin O'Malley sent a joint letter Monday to seven of Maryland's largest mortgage servicers to conduct a review of their legal process and to stop foreclosing in the meantime. The trio want the firms to ensure that they're following state law, particularly that staffers signing affidavits for foreclosure cases actually reviewed the information they're attesting is correct.

Several servicers have suspended foreclosure proceedings in 23 states -- the ones where foreclosure is treated as a full-blown court case -- as a result of reports about executives who individually signed thousands of documents a month.

Here's the full story, with comments from servicers -- who say the information in question is accurate -- and an attorney who says he's had clients foreclosed on in error.

Here's the letter that the Maryland officials sent to servicers.

And here's Cummings' weekend letter to O'Malley and Gansler, asking for a 60-day foreclosure moratorium. An O'Malley spokesman said Monday that the governor was investigating the possibility of such a ban.

Posted by Jamie Smith Hopkins at 9:18 AM | | Comments (3)
Categories: The foreclosure mess

October 2, 2010

Foreclosure drama

You'd like to think that everyone in charge of overseeing legal documents crosses their t's and dots their i's, especially the folks who start foreclosure proceedings on people's homes.

But some of them are saying in sworn depositions that the only t-crossing and i-dotting they're doing is in their signatures as they sign like mad.

As The New York Times notes:

In depositions taken by lawyers for homeowners, executives at GMAC and Chase said they or their teams signed 10,000 or more affidavits and related documents a month. That did not give them time to review the cases.

Defense lawyers say the disclosures are symptomatic of the carelessness, if not outright fraud, that lenders have been exhibiting for years in their rush to file cases. Many necessary documents have disappeared, with defense lawyers saying the lenders often do not even have standing to foreclose.

On Friday, Bank of America announced that it will temporarily stop foreclosing in 23 states as it reviews its own processes.

Maryland isn't on that list, and I haven't seen it mentioned in other stories about "robo-signing" lenders. Perhaps that's because the state has a "quasi-judicial" foreclosure system, while the 23 states on the BoA list -- according to the Associated Press -- "use a lengthy court process."

Continue reading "Foreclosure drama" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (22)
Categories: The foreclosure mess

September 20, 2010

Report: Low level of 'distressed' home sales in Baltimore area

The Baltimore region's share of short sales and foreclosures might seem high to us local folks, but those "distressed" home sales pale in comparison to most of the nation's largest metro areas.

That's according to real estate information firm CoreLogic, which ranks the Baltimore metro area third lowest among the top 25 regions. The company says 18 percent of sales here in June were short sales or bank-owned properties, compared with about 60 percent in Las Vegas and Riverside, Calif. (ranked first and second, respectively).

Nassau, N.Y. is the lowest among the major markets, with just 5 percent of its home sales in June qualifying as "distressed."

June was a tricky month, with buyers settling to beat what was then the homebuyer tax credit deadline. CoreLogic says the government incentive gave a boost to non-distress sales, so it expects the share of short sales and bank-owned transactions will rise in the tax-credit-less future.

"With the high level of negative equity, pending price declines and weak labor and income, non-distressed sales will remain weak well into 2011," the company says in its report.

In a separate CoreLogic analysis, I noticed a double-take-inducing trend in July: Prices in a variety of states fell faster excluding distressed sales than including them. Which is the exact opposite of what you'd expect.

Prices held up better with distressed sales included in nearly a third of the country.

Continue reading "Report: Low level of 'distressed' home sales in Baltimore area" »

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

September 16, 2010

Walking away from mortgage OK, some say

People who decide to stop paying on an underwater mortgage and let the lender foreclose are the target of a lot of heated debate, but they might have more support out there than they think.

Just over a third of Americans polled by the Pew Research Center say "walking away" from a mortgage is an acceptable practice, at least in certain situations. Nineteen percent say it's OK, period, and 17 percent more say it depends on the circumstances, Pew said Wednesday.

The group surveyed 2,967 adults, both homeowners and renters.

A survey released in April by financier Fannie Mae, meanwhile, said all but 12 percent of respondents called it unacceptable to walk away from an underwater mortgage. (Fannie Mae, naturally, is in the anti-walk camp.)

Both economic research and the Pew survey find that just over 20 percent of borrowers -- about one in five -- are underwater, meaning they owe more than their homes are worth.

"Not surprisingly, how people fared financially during the Great Recession is linked to their views on walking away from a mortgage," Pew editor Rich Morin wrote in a piece about the poll.

Continue reading "Walking away from mortgage OK, some say" »

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

September 5, 2010

Walking away from home and mortgage

Many homeowners behind on their mortgages stopped paying because they simply didn't have the money. A growing number, though -- one in eight, by some counts -- defaulted on purpose.

They're generally far underwater on their mortgages and want their lenders to foreclose because they want out. When stories started popping up several years ago, they were all anecdotal because no one was attempting to count. Now researchers are finding that these walkaway borrowers are pretty numerous -- and debate is raging about whether it's a reasonable reaction to a difficult situation or a selfish move that damages neighborhoods.

I thought you all would like to get to know a walker. What triggers such a decision? What is life like afterward?

Wallace Farmer, who left his home in Baltimore this summer, agreed to share his experience. He's part of the community of commenters here, so some of you already know a bit of his story.

Boiling a complicated situation down, he came to the city five years ago with plans of living as an urban pioneer and owning one rental on the side as a long-term investment. He left with savings shot, credit ruined and not one or even two but rather three mortgages defaulted.

How he ended up with two investment properties when he only intended to have one, and why he cut ties with a home he loved, is a boom-and-bust tale. You'll find the story here.

Posted by Jamie Smith Hopkins at 8:24 AM | | Comments (19)
Categories: Mortgages, The foreclosure mess, Underwater

August 27, 2010

Things looking up for struggling Md. homeowners?

If you're struggling to pay your mortgage, the best help -- of course -- is a job with a good income. Failing that, homeowners often seek loan modifications or other assistance from their lenders, but many have complained that the process is Kafkaesque.

If this describes your life, see if one or both of these options might help:

Mediation. Owner-occupiers in Maryland can ask for court-supervised mediation with their lender if their foreclosure case started on or after July 1, when the new state law went into effect.

HOPE LoanPort. The web portal lets participating housing counselors and mortgage servicers nationwide trade loan-modification information electronically. The promise there is no more faxing the same paperwork over and over and over in the hope that it might actually reach someone who will put it in your file.

Here's what you need to know about each program:

Continue reading "Things looking up for struggling Md. homeowners?" »

Posted by Jamie Smith Hopkins at 9:38 AM | | Comments (10)
Categories: Foreclosure help, Mortgages, The foreclosure mess

Good news, bad news on the foreclosure front

New figures from the Mortgage Bankers Association offer hope that the foreclosure mess is easing, as well as reasons to be anxious that the worst is yet to come.

It's that kind of economy.

Good news: Fewer Marylanders were behind on their mortgages during the spring than in the winter. And the number wending their way through foreclosure proceedings dropped for the first time in four years.

Bad news: The number of newly delinquent borrowers rose -- and both the job market and housing market worsened after the spring.

Borrowers trying to avoid foreclosure do have two new options available.

There's the state's mediation law, which went into effect July 1 and requires that lenders sit down with borrowers if the borrowers request it. And there's HOPE LoanPort, a system that lets participating housing counselors and mortgage servicers trade loan-modification information electronically -- meaning no "we never received your faxed paperwork" excuses.

More details on both in a bit.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (1)
Categories: Mortgages, The foreclosure mess

August 23, 2010

Distress sales remaining steady

Ten percent of the homes for sale in Baltimore in the middle of the month were bank-owned foreclosures. That's exactly the same as it was a month earlier.

In fact, the share of listings that were "distress" -- foreclosures or short sales -- stayed steady across the region, from a low of 12 percent in Carroll County to a high of 22 percent in the city.

The percentage of these properties that are actually selling isn't changing much either, according to Metropolitan Regional Information Systems data analyzed by the Greater Baltimore Board of Realtors. 

"Unfortunately, or fortunately (depending on whether you view the glass as half full or half empty) the percentage of foreclosures and short sales has remained relatively constant over the past 4 months," Joseph T. "Jody" Landers III, executive vice president of the group, wrote me. "These data highlight the fact that the short sale process tends to drag on and on, while foreclosure sales are having an exaggerated affect on the market, and contributing to further price instability."

Though it's not a new trend, what's really striking is how popular foreclosures are. Particularly in the city. They're 10 percent of listings in Baltimore but 30 percent of all sales in the first seven months of the year. Four foreclosures are on the market per foreclosure sold -- a seller's market! -- compared with 14 for non-distress sales.

Short sales, now -- yikes:

Continue reading "Distress sales remaining steady" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (20)
Categories: Distress sales, The foreclosure mess

July 27, 2010

Tenants' rights when rentals go into foreclosure

Renting a home or apartment that's wending its way through the foreclosure process? The Public Justice Center in Baltimore is holding monthly workshops to explain your legal rights, from how long you can stay to details on negotiating a "cash-for-keys" deal with the owner's lender.

The next workshop is Aug. 17 at 6 p.m. at the center, 1 N. Charles St., Suite 200.

Call 410-625-9409 to reserve a spot. And remember to bring your lease, foreclosure information and any other relevant documents with you.

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

July 6, 2010

Foreclosure mediation in Md. -- and elsewhere

If you're a Maryland homeowner behind on your mortgage, you now have the right to ask for mediation when your lender starts foreclosure proceedings.

This rule change kicked in last Thursday, so it's too early -- way, way too early -- to know how well it will work. But with mediation/negotiation programs under way in all or part of 21 states, we might get a few clues from experiences elsewhere.

New Jersey, for instance. Like Maryland and most jurisdictions with mediation programs, the Garden State doesn't make sit-down meetings between borrowers and lenders mandatory but instead allows homeowners to opt in if they want to.

According to a mediation report by the Center for American Progress, about 50 percent of participants in that state are reaching settlement in their mediations, most of which allowed the borrowers to stay in their homes. But most struggling homeowners aren't in the mix -- because they're not opting in.

Continue reading "Foreclosure mediation in Md. -- and elsewhere" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (1)
Categories: Foreclosure help, The foreclosure mess

July 5, 2010

Strategic penalties for strategic defaulters

Fannie Mae wants people who walk away from their mortgages to pay -- in more ways than one.

Last month the mortgage financier said so-called "strategic defaulters" will be ineligible for a Fannie Mae-backed loan for seven years, and it vowed to pursue them for the amount owed if the home is in a state that allows deficiency judgments. (Maryland is one of them.)

Wonk reader Josh thought this would make an interesting jumping-off point for discussion. Should homeowners, or rather ex-homeowners, pay a penalty for sending their keys back to their lender and saying "so long"?

Fannie Mae, in case you're wondering, defines the borrowers it intends to go after as those "who walk-away and had the capacity to pay or did not complete a workout alternative in good faith."

Continue reading "Strategic penalties for strategic defaulters" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (21)
Categories: Mortgages, The foreclosure mess

June 7, 2010

Foreclosure as free rent

As some homeowners desperately try to stave off foreclosure, others are happy to take advantage of the possibilities. It's a numbers game: With lenders waiting longer and longer to repossess homes and kick out the former owners, months -- even years -- can go by with defaulted borrowers living in the properties mortgage- and rent-free.

The New York Times had an enlightening story on the subject last week, noting that one attorney in Florida has made a business of helping owners drag the process out as long as possible for just that purpose. He has 350 clients, and every week brings about 10 more.

Even for homeowners who aren't trying to prolong foreclosure, the time line has lengthened:

"The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics," the Times reports.

A crisis as large as this one will bring out all sorts of responses from people. Besides the foreclosure free-renters, you have homeowners who can't really afford their mortgages but are cutting corners everywhere else just to stay current. And homeowners who can afford their loans, but -- for various reasons, including plummeting home values -- have chosen to mail their keys back to their lender and walk, betting that the credit damage is worth it.

Not to mention homeowners who can afford their mortgages, are continuing to pay them and are steamed at the banks, the foreclosure free-renters and the strategic defaulters alike.

Talk about a mess.

Much has been said about whether homeowners should default on their mortgages from a financial standpoint. I'm curious what you think is the most ethical move for borrowers in these situations, and whether ethics and financial sense are in concert or at odds:

Person 1: Cannot possibly afford the mortgage payment. Might qualify for a loan modification.

Person 2: Can barely manage to pay the mortgage. Might qualify for a loan modification.

Person 3: Can afford the mortgage and doesn't qualify for a loan modification, but home's value has fallen 20 percent or more.


Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: The foreclosure mess

May 27, 2010

CSI: Mortgage banking

Mistakes were made in the run-up that ended with the housing market falling off a cliff -- that we know. Many mistakes by many people.

The Mortgage Bankers Association, aware that the finger of blame is often pointed toward its industry, commissioned Cliff Rossi with the University of Maryland to lay out the key lending problems in hopes that they don't get repeated down the road.

Rossi, managing director of UM's Center on Financial Policy and Corporate Governance, was once chief credit officer at Washington Mutual and chief risk officer at Countrywide Bank -- which both crashed headlong into the foreclosure crisis -- so he can speak from experience. Before that, he worked for Freddie Mac, Fannie Mae, the Treasury Department and the Office of Thrift Supervision.

He argues in the new report that the trend toward selling off the loans you originated, happily divesting yourself of any cares about the results, was not by itself to blame for "fueling excessive risk taking."

"The fact that many large mortgage portfolio lenders expanded their held-for-investment portfolios and retained large positions in senior tranches of mortgage securities before the crisis, and afterward experienced heavy credit losses suggests that other forces were at work beyond the originate-to-distribute model," he writes in the study.

Continue reading "CSI: Mortgage banking" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (10)
Categories: Mortgages, The foreclosure mess

May 25, 2010

Foreclosures and short sales in the Baltimore market

Four out of every 10 homes sold in Baltimore City during the first four months of the year were distress deals -- foreclosures or short sales.

That's a lot of distress working its way through the housing market.

The numbers come from an analysis of Metropolitan Regional Information Systems data by the Greater Baltimore Board of Realtors, a slice of which appeared in my mortgage delinquency story last week. I thought you might be interested to see more of these stats.

Foreclosures were significantly more popular among buyers than short sales, which isn't surprising given the uncertainty about how long banks will take to respond to short-sale offers. (The "short" in "short sale" refers to selling for less than the mortgage balance, not a nod to the time involved.) Across the Baltimore metro area, 23 percent of homes sold in the first four months of the year were foreclosures, compared with short sales at 8 percent.

It's an even bigger difference in the city. Foreclosures accounted for 35 percent of sales; short sales were 6 percent. (I'm assuming that interest in city foreclosures as real estate investments is driving those numbers.)

Here's a really interesting finding:

Continue reading "Foreclosures and short sales in the Baltimore market" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (10)
Categories: Housing stats, The foreclosure mess

May 24, 2010

A $25,000-plus incentive for foreclosure buyers

If you're going to buy a short sale, foreclosure or abandoned home in parts of Baltimore, you could be eligible for a $25,000 incentive.

A consortium led by Healthy Neighborhoods Inc. has $26 million in federal money to try to keep the foreclosure crisis from destabilizing neighborhoods, and it's planning to give some of it to buyers intending to reoccupy these homes.

The $25,000 starts out as a loan, with half of it converting to a grant over 10 years. The rest is paid back when you sell -- assuming the home's value increased.

If it didn't, "we will write off the mortgage so it doesn't get in the way of resale," said Mark Sissman, president of Healthy Neighborhoods.

Certain parts of certain neighborhoods are eligible: Belair-Edison, Better Waverly, Coldstream Homestead Montebello, Ednor Gardens-Lakeside, Reservoir Hill, Patterson Park/McElderry Park and Barclay/Old Goucher. Where, exactly, comes down to census tracts -- see here for more details.

The incentive is larger in Reservoir Hill -- "could be as much as six figures," Sissman said. "There will be loan-to-value issues there. It will simply cost more to buy and renovate than most banks will lend. It's the difference between a 1,200-square-foot house in Patterson Park and a 3,000-square-foot house in Reservoir Hill."

Like the home buyer tax credit, this incentive has income limits:

Continue reading "A $25,000-plus incentive for foreclosure buyers" »

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

May 20, 2010

Where the foreclosure crisis goes from here

Which way do you see the national foreclosure drama headed: Getting better? Or worse?

There was grist for both arguments in the first-quarter Mortgage Bankers Association numbers, released Wednesday.

On the one hand, Maryland's total delinquencies fell compared with the fourth quarter -- coming at a time when job numbers started growing again. The "but" waiting to strike at that bit of good news is that first-quarter delinquencies almost always fall compared with the fourth quarter, as some borrowers catch up from budgetary hits at the end of the year such as first heating bills. (An exception: Last year, when delinquencies rose in defiance of trends.)

On the "getting worse" side, Maryland homeowners whose lenders have started foreclosure proceedings now total 4 percent of all borrowers -- a record. The state's increase in foreclosure starts was one of the largest in the nation.

Of course, there's a "but" there, too. Mediation legislation was wending its way through the General Assembly during the first quarter, so some of that rise could be lenders deciding to start foreclosure proceedings with long-delinquent borrowers before anything took effect.

The Greater Baltimore Board of Realtors, meanwhile, crunched sales numbers to see how much of the market is bank-owned properties and short sales. It's significant. Check it out in today's mortgage delinquency story.

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (4)
Categories: The foreclosure mess

May 17, 2010

Do you have a foreclosure-avoidance success story?

There's lots of foreclosure woe out there. But one group is hoping to hear success stories.

If you avoided foreclosure, mortgage financier Fannie Mae would like to share your experience on a new foreclosure-prevention website it's launching.

It's soliciting stories of a variety of foreclosure alternatives -- loan modification, short sale, deed in lieu, etc. -- as a way of offering encouragement to homeowners looking for a way out.

Contact Kindall Rende at if you're interested in participating.

Posted by Jamie Smith Hopkins at 9:05 PM | | Comments (0)
Categories: Foreclosure help, The foreclosure mess

May 13, 2010

Underwater-borrower numbers stabilizing

The number of people in Maryland who owe more on their mortgages than their homes are worth appears to be stabilizing. So says CoreLogic -- the real estate information firm formally known as First American CoreLogic -- in its latest report on the country's underwater-borrower problem.

About 23 percent of borrowers in the state were upside down on their mortgages in March, same as in December, the company said this week. The share of folks who are close to underwater also remained steady at about 5 percent.

Maryland ranked ninth-highest in the country for its percentage of homeowners with negative equity, a slight improvement over the end of last year. (Idaho worsened, overtaking us and Virginia for seventh place.)

Like Maryland, the country's negative-equity situation remained essentially unchanged overall.

"As house prices grow again and borrowers pay down their mortgage debt negative equity levels will begin to diminish," Mark Fleming, CoreLogic's chief economist, said in a statement. "The typical underwater borrower is likely to regain their lost equity over the next five to seven years."

Maryland might be in the top 10 for negative equity, but it's a far cry from the underwater leaders. Here's the list:

Continue reading "Underwater-borrower numbers stabilizing" »

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

April 28, 2010

Q&A: Md.'s foreclosure mediation program

If you're a Maryland homeowner struggling with your mortgage, you might be curious -- extremely curious -- about the state's newly passed foreclosure mediation law. It takes effect for foreclosure cases filed on or after July 1.

Raymond A. Skinner, the state's secretary of housing and community development, offered details in a recent interview.

Question: What will change for homeowners and lenders?

Answer: What we’re trying to do is to put in place a process which is really kind of the last step before foreclosure can proceed. And it gives the homeowner a chance to sit down face to face with their lender or servicer with a neutral third party to see if something can be worked out before actually going to foreclosure. The law builds on what we had done in 2008, when we changed the foreclosure process and added more time and more notice for borrowers.

Q: What steps does the law add?

A: When the lender ... sends the notice of intent [to foreclose] to the borrower, they’ve got to include some additional things now under this new law. They must include a loss-mitigation application with instructions for how to complete it and where to send it. ... They also have to include information about various loss-mitigation programs, including the federal Home Affordable Modification Program -- the HAMP program -- and also specific information about the lender’s loss-mitigation programs. … In addition, they've got to send information about the state programs -- our HOPE program with the HOPE hot line number and the website.

Q: What comes next?

A: Before they can file an order to docket [a foreclosure case in the court system], they’ve got to file a loss-mitigation analysis. And basically, it’s an affidavit where the lender certifies that they’ve exhausted all loss-mitigation procedures or processes, and they could not find a way to give this particular borrower any kind of relief. And they’ve got to explain the reasons why they could not provide any relief.

Q: They have to be specific?

Continue reading "Q&A: Md.'s foreclosure mediation program" »

Posted by Jamie Smith Hopkins at 7:00 AM | | Comments (6)
Categories: Foreclosure help, Mortgages, Q&A, The foreclosure mess

April 23, 2010

Getting rich off the housing crisis -- in song form

Bet Against the American Dream from Alexander Hotz on Vimeo.

Because what credit default swaps really need are some jazz hands: The Avenue Q folks have put together a song to go with a This American Life story about a hedge fund that turned the collapse into cash. Catchy! ("The housing market's losing steam / And all we gotta do / To make our dreams come true / Is bet against the American Dream!")

On another note, The New York Times suggests that you use the "20" rule of thumb if you're deciding whether to buy or rent. That is, divide the home's sale price vs. a year's rent for a comparable place. If it's above 20, you're probably better off renting. Below, and you could be better off buying. (The Baltimore metro area, it says, dropped from 21 in 2005 to 18 last year.) Thoughts?

On yet another note, RelocateAmerica's Top 100 Places to Live in 2010 -- which this year focused on "communities poised for recovery and future growth" -- includes Baltimore.

Happy Friday.


April 20, 2010

'Normal' home sales vs. distress sales in Baltimore

Real estate information firm First American CoreLogic has good news and bad news for Baltimore-area residents trying to sell a home that's not a short sale or foreclosure.

The good news for sellers: Average sale prices are rising -- up 8 percent in January vs. two years earlier and up 13 percent vs. January 2009.

The bad news: You're not riding the wave of increased home sales.

Seventeen percent fewer traditional resales sold in January than a year earlier in the Baltimore metro area, says First American CoreLogic. Compared with two years ago, the drop in sales is about 50 percent.

But short sales, where owners need lender approval because they're underwater on their mortgage, are on the rise. These deals increased 18 percent year-over-year and have more than doubled in two years.

Bank-owned properties -- foreclosures -- bumped up a modest 1 percent year-over-year, but there were 75 percent more of these sales in January than two years earlier.

All told, distress sales made up a quarter of January home sales in the Baltimore metro area, First American CoreLogic says.

(Like traditional resales, sales of new homes were also down -- but not as much in recent months. The year-over-year drop was 6 percent.)

What about the average sale price for distress deals, you ask?

Continue reading "'Normal' home sales vs. distress sales in Baltimore" »

Posted by Jamie Smith Hopkins at 12:13 PM | | Comments (9)
Categories: Distress sales, The foreclosure mess

March 31, 2010

'Act of Congress' to sell house

Lenders often say they don't want to repossess houses. So you might expect that a borrower selling to avoid foreclosure -- and not via short sale -- would delight them.

But Bonnie Jordan, exactly that sort of borrower, says her lender endangered the sale of her Edgewater house by not promptly providing a key number: how much she owed.

"I've never seen anything quite like it before," said Diane Olsen, Jordan's real estate agent. "They just gave her the worst runaround."

Jordan said her title company contacted Chase for the payoff information Feb. 24 and several times afterward with no luck. Then Jordan tried, calling the company March 1 and many times afterward. Most of the time, she said, she left messages for people who didn't call back.

Once she was told that Chase didn't know the total because her case had been forwarded to a law firm, and so the number would include attorneys' fees. She said she called the law firm and was told first that it didn't have her information, and later that it didn't have any idea how long she might have to wait to get it.

Meanwhile, Jordan's March 12 closing date was closing in.

Continue reading "'Act of Congress' to sell house" »

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

March 30, 2010

Walking away from mortgage? Read this

One thing is frequently left out in all the discussion about whether it's smart to mail your keys to your lender and walk away if you're far underwater on your mortgage: More is at stake for you than how long it will take until you can qualify for another loan.

As personal finance columnist Eileen Ambrose notes, you could be setting yourself up for trouble down the road:

Indeed, in Maryland and the majority of states, walking away is no guarantee that mortgage debt won't come back to haunt you. These are so-called recourse states, where a lender can pursue you for any shortfall after it sells the house. So if you walk away from a $400,000 mortgage and the lender turns around and sells the house for $300,000, you can still be on the hook for $100,000.

The lender might not come calling to collect right away, but there's time -- generally three years afterward, and sometimes more.

The same is true of short sales, unless you negotiate with your lender not to come after you for the difference.

Do you have a debt forgiveness -- or lack of forgiveness -- tale?

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

March 29, 2010

Anti-fraud help for home buyers, refinancing owners

If you've bought a house or refinanced a mortgage, you signed a lot of paperwork. Did you understand every word? (Did you even read it?)

Civil Justice, a Baltimore nonprofit that offers legal help to people on real estate matters, has found the answer is a resounding no. Even among the well educated and high income.

Now it has a grant from the Governor's Office of Crime Control & Prevention to try to change that.

The new Maryland Mortgage Fraud Prevention Project will match eligible buyers and refinancing homeowners with pro bono attorneys, who will look over documents, explain them and help folks figure out whether it's actually a good idea to sign them.

"We know from the foreclosure crisis, and from all our representation over the years of people ... who get into bad loans or buy a house and it was property flipping, for example, that nobody had consulted an attorney who was going to be looking out for their best interests," said Diane Cipollone, manager of the project and an attorney with Civil Justice.

Her goal is broader than just getting some buyers and refinancing owners free legal assistance. She wants to change everyone's mindset, so the people who can afford to pay an attorney to look over mortgage documents and home-purchase contracts will do so.

"This is a legal document," she said. "This is a binding agreement. ... I think if we can change the way people think about this, we can avoid many future defaults."

The project is in the early stages. Civil Justice trained more than 90 attorneys (in person and by webinar) at the Federal Reserve Bank of Richmond's Baltimore branch last Friday. (UPDATE: Actually, it trained 54 attorneys. Not everyone who registered could make it.) It hopes to start pairing attorneys and clients in mid-April.

Here's who will qualify:

Continue reading "Anti-fraud help for home buyers, refinancing owners" »

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

March 27, 2010

HAMP: What the loan-mod changes mean

The Home Affordable Modification Program is aimed at keeping struggling borrowers from losing their homes, but the number who've had their loans permanently modified is a tiny percentage of the total the federal government believes is eligible.

Yesterday the Obama administration announced changes to HAMP in hopes of turning things around.

The HUD press release is ... well, not exactly clear-cut about what those changes are. So here's the translation offered by the Consumer Federation of America:

· Requiring participating servicers under HAMP to offer at least 3 months’ forbearance of mortgage debt for unemployed borrowers, and encouraging such assistance for up to 6 months.

· Requiring participating servicers to use principal reduction as a primary means of reducing borrowers’ payments where loans are more than 115 percent of the current home value.

· Offering borrowers that are current on their mortgages but with debts greater than their home’s current value the opportunity to refinance into a lower cost, long-term fixed rate mortgage insured through the FHA if the current lender will agree to reduce principal owed by at least 10 percent and the total combined debt including any second liens would be no greater than 115 percent after the refinancing.

· Requiring HAMP servicers to work with borrowers in bankruptcy on mortgage modifications, and waive the trial period for such modifications if consumers have been successfully performing under bankruptcy settlements.

· Increasing the incentives to get second lien holders to reduce their claims to facilitate modifications.

· Clarifying that HAMP servicers must suspend all foreclosure actions and notices for borrowers that have sought modifications or are in trial modification periods, and requiring a written certification that a borrower is not HAMP eligible before an attorney or trustee can conduct a foreclosure sale.

Barry Zigas, director of housing policy for the consumer federation, thinks these changes will make a difference.

"Borrowers who are unemployed and those that find their homes are worth far less than the remaining debt on them are now those driving delinquency and default numbers," he said in a statement.

Some offered a thumbs down. Dean Baker, co-director of the Center for Economic and Policy Research, is particularly critical. (Baker, if you'll recall, is the economist so convinced we were in a bubble earlier in the decade that he sold his home in 2004 to rent instead.)

Continue reading "HAMP: What the loan-mod changes mean" »

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

March 14, 2010

Fighting the foreclosure fight -- or withdrawing

Turning back foreclosure blight has not proved an easy task. Government and nonprofit leaders are hoping a "neighborhood stabilization boot camp" -- which kicks off today at Harvard University with officials from a dozen regions, including Baltimore -- will help improve the response.

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 | | Comments (3)
Categories: The economy, The foreclosure mess

February 25, 2010

Underwater Md. homeowners

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 | | Comments (8)
Categories: Mortgages, The economy, The foreclosure mess

February 20, 2010

A decade of delinquencies

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 | | Comments (2)
Categories: The foreclosure mess

February 10, 2010

What happens when a borrower gets behind

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 | | Comments (8)
Categories: Mortgages, The foreclosure mess

February 1, 2010

What foreclosure mediation could look like for homeowners

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 | | Comments (5)
Categories: Foreclosure help, The foreclosure mess

January 30, 2010

The landscape of foreclosure



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 | | Comments (8)
Categories: The foreclosure mess

January 28, 2010

Spotting loan-modification scams

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.

Anne Arundel reverses course on short sales

Anne Arundel County, which had been taxing short sales on the amount the buyer paid plus any of the seller's forgiven debt, said yesterday that it will now levy its recordation tax on just the sales price.

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."


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

January 25, 2010

Foreclosure prevention event Feb. 6

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 | | Comments (0)
Categories: Foreclosure help, The foreclosure mess

January 13, 2010

A few hours left at Wells Fargo loan-mod event

Wells Fargo is in its final day of a mortgage-help event in Baltimore for struggling borrowers, and I just heard from an attorney who went with clients that it's been truly helpful.

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 | | Comments (1)
Categories: Mortgages, The foreclosure mess

January 8, 2010

A Consuming Interests poll you'd be interested in

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 | | Comments (1)
Categories: Mortgages, The foreclosure mess

Wachovia/Wells Fargo borrowers: an event for you

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 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 | | Comments (2)
Categories: Mortgages, The foreclosure mess

January 7, 2010

Firm: Baltimore home prices down 8.8%

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 | | Comments (3)
Categories: Housing stats, The foreclosure mess

January 6, 2010

City's suit against Wells Fargo is no more

As Tricia Bishop reports, a federal court has dismissed Baltimore v. Wells Fargo. The judge did not find plausible the city's argument that the company caused millions of dollars in damages through predatory mortgage lending practices.

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 | | Comments (3)
Categories: The foreclosure mess

Q&A: Homeownership incentives, and what they mean for renters

Years of efforts by Democrats and Republicans alike to promote homeownership for everyone have come in for their share of criticism in these post-bubble days, now that we've seen what can happen when no attention is given to whether prospective buyers are financially ready or the loans they're getting are reasonable for their life situations.

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" »

January 1, 2010

Foreclosures and abandonment

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 | | Comments (11)
Categories: The foreclosure mess

December 30, 2009

Renters feel the sting of foreclosure

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 | | Comments (14)
Categories: Landlording, Renting, The foreclosure mess

December 18, 2009

Foreclosure news round-up

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" »

December 17, 2009

Holiday black humor

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 | | Comments (0)
Categories: Housing humor, The economy, The foreclosure mess

December 4, 2009

Foreclosure "shadow inventory"

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.


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 | | Comments (5)
Categories: Polls, The foreclosure mess

November 25, 2009

Careful whom you call for mortgage help

If someone offers to help modify your mortgage for the low-low upfront fee of $3,500, run for the hills. That was the state of Maryland's advice Tuesday as it issued cease-and-desist orders to five loan-modification companies, firms it alleges took that sort of money from hundreds of cash-strapped homeowners and then did absolutely nothing.

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 | | Comments (9)
Categories: Mortgage fraud/scams, The foreclosure mess

November 22, 2009

Foreclosure ripple effects

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 | | Comments (0)
Categories: Polls, The foreclosure mess

October 29, 2009

Foreclosures and financial protection

The Center for Responsible Lending, a watchdog group that predicted the national implosion of subprime loans before it happened, has a few numbers it wants you to think about:

--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 | | Comments (3)
Categories: The foreclosure mess

October 12, 2009

Short sales

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 | | Comments (7)
Categories: Mortgages, The foreclosure mess

October 8, 2009

Rocky road ahead for the housing market, firm warns

John Burns Real Estate Consulting, a California firm that analyzes the U.S. housing market, is not part of the chattering class that thinks the bottom is here or near. The company warns in its most recent newsletter that it sees a "massive supply of homes" coming down the pike via foreclosure.

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 | | Comments (7)
Categories: The foreclosure mess

October 7, 2009

Home prices ... up?

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 | | Comments (10)
Categories: Housing stats, The foreclosure mess

September 30, 2009

Homeowner beware

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 | | Comments (1)
Categories: Mortgage fraud/scams, The foreclosure mess

September 15, 2009

How Baltimore stacks up

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 | | Comments (5)
Categories: Housing stats, The economy, The foreclosure mess

September 9, 2009

Mortgage troubles? Meet with a lender Saturday

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 | | Comments (0)
Categories: Foreclosure help, The foreclosure mess

September 4, 2009

Next on the bailout parade: FHA?

FHA loans, the use of which dwindled during the housing bubble as conventional-mortgage money flowed like water, are a huge part of the market now that subprime has imploded and prime loans are harder to get. Forty percent of the home sales in the Baltimore metro area in July were financed with mortgages insured by the Federal Housing Administration.

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 | | Comments (14)
Categories: Mortgages, The foreclosure mess

August 21, 2009

Md. mortgage troubles

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 | | Comments (3)
Categories: Foreclosure help, The foreclosure mess

July 29, 2009

Lenders into landlords?

As the feds press lenders to avert foreclosures by modifying more mortgages, an economist at a Washington think tank has been advocating a different solution: Let the borrowers stay in their homes -- as renters.

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 | | Comments (8)
Categories: Renting, The foreclosure mess

July 17, 2009

A cease and desist on loan-modification 'help'

Maryland has issued cease-and-desist orders against 17 loan-modification companies, part of a nationwide effort to go after consultants the Federal Trade Commission alleges are "con artists" preying on homeowners in trouble.

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.

May 29, 2009

More Md. prime borrowers behind on mortgages

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 | | Comments (14)
Categories: The foreclosure mess

May 6, 2009

Distress transactions hit 18 percent; values fall

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 | | Comments (7)
Categories: Housing stats, The foreclosure mess

May 5, 2009

The risk of foreclosures in our region

First American CoreLogic, which judges "mortgage risk" in metro areas across the country, ranks the Baltimore metro area 71st for risk. Good news in that it's nowhere near the worst, though it's still among the one-fifth of metro areas that are riskiest.

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 | | Comments (0)
Categories: The foreclosure mess

April 25, 2009

A week's roundup of interesting real estate numbers

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 | | Comments (4)
Categories: Housing stats, New developments, The foreclosure mess

April 24, 2009

Foreclosed: newly built homes

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 | | Comments (2)
Categories: New developments, The foreclosure mess

April 14, 2009

Bill aimed at renters fails to pass

You may recall if you read this fair housing Q&A that the General Assembly was considering a bill to help tenants whose landlords get foreclosed on. HB 733 proposed that any lease would continue in force for three months after the foreclosure, unless it expired earlier. But that bill is dead, as The Daily Record reports.

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 | | Comments (4)
Categories: Renting, The foreclosure mess

April 9, 2009

Fighting foreclosure blight

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 | | Comments (1)
Categories: The foreclosure mess

April 6, 2009

Q&A: Jonathan Benya, real estate agent

Foreclosures are about 40 percent of Jonathan Benya's business -- either representing the banks or working with buyers. Benya, a Realtor with Century 21 New Millennium in La Plata, chatted with me recently about why he got into real estate after the boom and some of the wildest things he's seen inside bank-owned homes.

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 | | Comments (5)
Categories: Q&A, The foreclosure mess

April 4, 2009

Mortgage defaults

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.
In more than half of loan modifications last year, lenders kept payments the same or increased them, the agencies said. But more loan mods came with decreased payments by the end of 2008.
Posted by Jamie Smith Hopkins at 9:06 AM | | Comments (5)
Categories: Mortgages, The foreclosure mess

March 6, 2009

Maryland mortgage delinquencies

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 | | Comments (7)
Categories: The foreclosure mess
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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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