When is a victim not sympathetic?
July 30, 2008
Possibly when he or she lives for more than a year in a half-million dollar home while paying next to nothing.
In “Rescue is quirk of timing” in Wednesday’s edition of The (Baltimore) Sun, the lead anecdote is Veronica Peterson, a 45-year-old single mother of three who says she can’t keep up with the mortgage payments on a $545,000 house in Columbia. She says she expects an eviction notice any day. The story presents her as a victim of the foreclosure crisis.
However, that’s apparently not the full story. I’ll let the City Paper explain:
…in the comments section below the article, hundreds of readers pointed out what the Sun’s reporters and editors could not, apparently: that Peterson had no business in that house, and that she’s lived there for more than a year rent- and mortgage-free. “Where do you think we can get in on this deal?” one commenter, calling himself Henry Bowman, asked another.
The City Paper goes on to dissect the loan numbers:
The online court and land records show that Peterson closed on the house on Nov. 3, 2006, with two loans from Washington Mutual. The main mortgage, for $436,000, had a starting interest rate of 8.5 percent, adjusting in December of this year to the London Interbank Offered Rate plus 4.99 percent. The second loan, often called a “piggyback,” totaled $109,000 with an interest rate of 11.5 percent, according to The Sun.
Those two payments together would have totaled $3,386.17 per month. That’s before property taxes, upkeep, utilities, etc. Peterson would have to earn at least $50,000 per year just to make her house payments.
But it appears that Peterson made few–if any–payments. The foreclosure was filed July 31, 2007. The balance on the main note then was $435,735.86, plus unpaid interest accrued from Jan. 1, 2007, plus $1,005.72 in late charges. This suggests that Peterson made, at most, one payment on her house: the December, 2006 payment. Given the grace periods typical in home-mortgage business, it is at least as likely that her first payment was not due until January 2007, which would mean she has made zero payments.
Had she made all of her payments, Peterson would have spent about $64,335 so far. Had she rented a similar place, she would have been charged around $2,500 per month–a total of $47,500–since January 2007. Instead, she apparently paid nothing.
Not much of a “victim,” I’d say. I’m also shocked that someone would take out a mortgage for the full price of a home. Am I missing the down payment in this transaction?
JOE BACCHUS, Web Specialist
Sphere: Related ContentForeclosure brochures flying out the door
July 16, 2008
On June 30, a truck pulled up to the Maryland State Bar Association headquarters and delivered boxes of its newly updated public service brochure, “Foreclosure Proceedings in Maryland.” On July 1, the MSBA started handing them out. By July 15 — just two weeks later — it had gone through more than 1,000 of the 20,000 it had printed up.
And that doesn’t even include hits on the Web version, said MSBA spokeswoman Janet S. Eveleth, who called the response “unprecedented.”
The total includes about 800 brochures given out on request from the MSBA’s office and more than 200 passed out to lawyers attending last week’s MICPEL foreclosure course in Baltimore, Eveleth said.
MICPEL will repeat the “Nuts and Bolts” class this month and next in Rockville and Salisbury, with video replays scheduled for September and November. Scholarships are available for lawyers who volunteer with the Foreclosure Prevention Pro Bono Project.
The printed brochure doesn’t mention the pro bono project — “We didn’t want to do anything that might limit its shelf life,” Eveleth said — but the online version includes the state’s HOPE hotline, 877-462-7555.
BARBARA GRZINCIC, Managing Editor/Law
Sphere: Related ContentBell’s call to action on foreclosures
July 8, 2008
Noting that “foreclosure impacts everyone,” Court of Appeals Chief Judge Robert M. Bell sent letters to Maryland lawyers yesterday, calling on them to help citizens facing foreclosure.
As we wrote in June (subscriber-only link), the Foreclosure Prevention Pro Bono Project aims to train lawyers to help homeowners assert their rights under new foreclosure legislation that took effect on April 4.
According to the letter, Maryland is one of the 10 states hardest hit by the foreclosure crisis, with 11,000 foreclosures anticipated for 2008.
Lawyers can help either by directly representing homeowners through referral services, providing brief advice at public workshops or serving as of counsel to non-profit housing counseling agencies. Free MICPEL training is offered in collaboration with the Pro Bono Resource Center of Maryland for those willing to accept one pro bono foreclosure case or do 15 hours of pro bono legal services to the project.
Bell calls the program “one of the most important pro bono initiatives of our time.”
What do you think about the program, and the chief judge’s unprecedented endorsement of a single pro bono initiative?
CHRISTINA DORAN, Assistant Legal Editor
Sphere: Related ContentThe global pool of money
May 27, 2008
I try to listen to NPR podcasts regularly. I admit, it’s partly because I feel obligated as a Web-based journalist - but it’s also because the content is top-notch.
I’m a fan of This American Life, a weekly radio program (and cable TV show, now) out of Chicago. (It airs locally on WYPR, Sundays at 4 p.m.) The show excels at what the radio medium is best suited for: storytelling.
But this blog post isn’t about how great TAL is, it’s about a podcast I listened to last weekend (on the treadmill, no less) that knocked my socks off.
A couple weeks ago, TAL did a show entitled “The giant pool of money.” It was in collaboration with NPR news, and it explains the mortgage crisis by talking to the actual people who got everyone into this mess. Or, as they put it, “the human beings who accidentally created the international financial crisis.” You can listen to a promo here.
Now, most - if not all - of the readers of this blog probably understand what a NINA loan or a mortgage-backed security is better than I do, but there’s more to be reaped from the 60-minute episode than a global understanding of how the foreclosure crisis came about.
The show asserts that the subprime crisis has connected the people facing foreclosure and the higher-up finance guys. Along the chain there were bankers, brokers and homeowners, all of whom deluded themselves. During the program, the NPR producers ask (and answer) “How did it even work?” and “What were they thinking?”
This is how you would find out what it felt like to be Mike Gardner, a former bartender-turned-mortgage broker, during the so-called “Valentine’s Day massacre” at Silver State Mortgage, when the Nevada employer defaulted on its loans and, without warning, laid everyone off.
Give it a listen and tell me what you think.
JACKIE SAUTER, Web Editor
Sphere: Related ContentHOAs in need of bread
May 19, 2008
Where I grew up in Ellicott City, the Homeowners Association was King. Most decisions about changes to our neighborhood had to be cleared by the all-powerful HOA.
But their power might be draining (if we equate power with money, anyway).
Many HOAs’ access to cash just isn’t what it used to be. Forget pool upkeep or road repaving projects - some HOAs are scraping to meet the essential services such as trash removal. They’ve fallen victim, like so many others, to the foreclosure crisis. Homeowners are paying dues late or not at all.
The WSJ explains:
A growing number of homeowner and condominium associations across the country are raising their fees or putting the brakes on clubhouse improvements, new landscaping and other shared neighborhood amenities. The kitty is so low for some that essential services, such as building maintenance, electricity, trash removal and repairs have been cut.
As community residents lose their homes to foreclosure and new home building has slowed considerably, many of the roughly 300,000 neighborhood associations in the U.S. are grappling with shrunken budgets.
And, as one sage commenter at Poynter.org points out, some condo associations are dealing with an abundance of empty units - which means there are fewer homeowners to share the costs of vital projects.
JACKIE SAUTER, Web Editor
Sphere: Related ContentCan an ad campaign solve the foreclosure crisis?
May 6, 2008
Nationally, home values are still eroding and foreclosure filings are doubling, but thankfully, here in Maryland, we have a new ad campaign to save the day.
“Mortgage Late? Don’t Wait!”
Almost 700,000 postcards have been mailed to at-risk areas in the state with that message.
It’ll also appear on buses and rail cars in Baltimore and PG County. And that’s not all – a multimedia component will include radio and print advertising.
Because all people need is a little prompting, right?
JACKIE SAUTER, Web Editor
Sphere: Related ContentTrump as harbinger of housing doom?
April 16, 2008
Just when you thought having a five-fold increase in the number of foreclosures in Baltimore was a bad thing, America’s most well-known person-brand sees the silver lining.
Tapping into the investment opportunities available in light of people losing their homes, Donald Trump is prepared to show savvy investors how to take advantage of the situation.
Through his Trump University online courses, the Donald himself (through a team of instructors) is prepared to share his knowledge of finding “big money” in a series of introductory classes called the “Fast Track to Foreclosure Investing.”
Touting real estate as the new “it” investment — okay? — Trump University is offering free classes showing how to find foreclosed homes, track the cycle and secure funding.
And, it’s not like you’d be taking advantage of other peoples’ financial woes. Instead, you will “learn how to be a hero to homeowners who can’t afford their adjustable rate mortgage payment.”
According to a full page ad in Tuesday’s Baltimore Examiner, you even get a free “digital” copy of Trump’s “Catch The Wave: How Timing Can Make You a Fortune in Real Estate Today.”
Don’t worry though, for those skeptical that paying for full page ads and giving away digital copies doesn’t make financial sense, fine print at the bottom of the ad reminds people “products will be available for sale.”
BEN MOOK, Assistant Business Editor
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