House of Pain Graduation

For those of you long time readers, you will recall my past posts on 220 Bloomsbury Ave Catonsville, MD. 21228 (click here for previous posts). This first house in the House of Pain series has graduated from the continued pain and was sold last month.

Below are the details of the sales and listing history


The sale price last month was $490 which is a 3% gain over the 2004 sale price, but once you add inflation (put prior year $'s into 2008$'s) and compare apples to apples, the sale was an -11% loss over the 2004 purchase price. Since the last buyer purchased in 2004, spent at least $50k on upgrades and an spent an unknown amount of closing help, this house in back below 2004 price levels.

Lets look back at the listing prices for this house as it languished on the market for over 700+ days.



At the peak of the listing prices, the owner was clearly drinking the bubble flavor kool aid thinking they could double their purchase price in only 2 years while only putting in $50k worth of work to the home.

The irony to the sale of this house is I knew it was sold even before the settlement since the buyers mother contacted me. This leads me to believe they had read about this house on here and it maybe helped sell the home. Any opinions?

Banks are starting to capitulate; Hedge funds are buying up delinquent mortgages, positive steps toward accelerating price drops.

Over the past year the major investment banks that basically poisoned themselves by drinking there own koolaid are starting to finally write the bad loans it written down and mark to market.

Last Friday the national Australian national bank did what all the other banks have been took scared to do, mark down it’s mortgages to market.

National Australia made provisions equivalent to 90 percent of the value of its A$1.2 billion of collateralized debt obligations.

Wow 90% markdown on it’s US mortgages. That’s 10 cents on the dollar folks.

Now on Tuesday Merrill Lynch decided to mark down to around 5 cents on the dollar!

Over at Mr. Mortgage there is some good commentary on how the banks basically hung themselves.

Ok….so what’s this mean to me I’m sure your asking. This means the banks are finally admitting the problem and are starting to dump the assets. Now I do not believe all CDO’s and MBS’s are this bad. But it is a precedence that all the banks are likely to follow over the next quarter.

This is a good thing, it means the banks will get better faster. But it also means that the vultures are going to start sniffing around. The hedge funds are looking at this stuff now and are going to start to buy soon.

Guess who holds your mortgage now? It's your friendly neighborhood hedge fund.
Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar.
They are buying them from Wall Street investment banks eager to rid themselves of bad assets. Merrill Lynch & Co., for example, said this week it would sell mortgage-linked investments once valued at $30.6 billion for just $6.7 billion to Lone Star Funds, a distressed-debt investor in Dallas.
Many of the hedge funds, run by former Wall Street and lending industry executives, claim they can do a better job than banks or other investors of modifying mortgages at terms that consumers can afford.

"We're much easier to deal with than a bank," said Jacob Benaroya, managing partner of New Jersey-based Biltmore Capital Group, a hedge fund that's buying up to $100 million in mortgage debt per year. "We've bought (the loan) at enough of a discount that we can make special arrangements with the borrower."

However, the hedge funds acknowledge that the loans they purchase are often in such trouble that as many as two-thirds to one-half can't be salvaged. In that case, the fund obtains the property through foreclosure and tries to sell it off, or allows the borrower turn over the house keys in return for forgiving the outstanding mortgage balance.

Now this is an important moment in this crisis. The hedgies are private entities, not the cuddly incompetent government. They will do what the banks would not do, go through loans one at a time and figure out what they can salvage from it. They also will dump a non performing asset faster. If you think the banks were slow to drop prices on foreclosures it’s partially because they relied on local Realtors to set the price.

The problem with the local realtor is they are the fools in many cases who developed this stuff and they want to mark to fantasy. This is especially the case in the city with the rehabs in Canton, Patterson Park, Fells PT, Federal Hill, Pigtown, and Locust Point.

Many of these guys will hire their own Realtor to manage a portfolio in a region without conflicts of interest and will more aggressively drop prices to get them sold. They will give the realtor a bonus for speed sales. This will do the job of lowering overall values.

THIS IS PURE NUMBERS TO THEM!

The longer you carry a nonperforming asset the more money you cost the hedge fund so with buying assets at 10 cents on the dollar they can do things like bring it on the market at 30% below all the other listings on the street.

In the city the crash is going to be beyond what people can fathom right now because without all the bubble money and fraud, prices could not climb to it’s current levels due to taxes, lack of services(schools that work), and the demographic of the buyers.

The amount of DINKS(dual income no kids) is tiny compared to the # homes available. Prices in those neighborhoods will adjust to first time buyer prices. Since most of your first time buyers don’t have down payment money due to the massive loading of student loan and credit card debt it could cause major stagnation in prices for close to a decade.

Basically when this is all said and done all the appreciation for 10 years was squeezed into 4 years. Since most of those who bought on the idea of when they get married and have a kid escape to the county buying is not going to make as much sense as it did in the past couple years due to the transaction costs alone eating up and appreciation.

The newer stuff out in the burbs they will mark to income levels to get a deal done. Basically expect them to do an analysis of peoples incomes in a neighborhood and then use that to help set the price. The burbs will bottom before the city, but the pain will be felt as the baby boomers that have to sell will do what it takes to move as this region requires peak income earning just to live for many people.

There is a lot of phantom inventory out there, expect it to pick up in the spring of 2009.

Bush signs Bill, another wannabe in Columbia upset she isn’t getting bailed out.

Earlier this morning Bush signed the Housing bailout bill (or what I call extend the slump and prop up prices bill) without any fanfare. I’m sure part of the reason he signed it in private as it is going to remembered as one more thing that is a dent on the legacy of his administration.

Yet analysts say actions by Congress and the Bush administration aren't likely to stem the tide of foreclosures.

Mark Zandi, chief economist at Moody's Economy.com, projects that by the end of next year, nearly 2.8 million U.S. households will either face foreclosure, turn over their homes to their lender or sell the properties for less than their mortgage's value.

Under the bill Bush will sign, the FHA could insure $300 billion in refinanced
mortgages, which would be available to homeowners spending more than 31 percent of their income on their mortgage, and were current on their loans as of March. Banks also would have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.

Of that effort, Preston said, "I think it may be helpful on the margin but ultimately what we need is new homebuyers to come into this market and buy up the inventory of homes."

Prices on the other hand are continuing to move down, if you check out the latest Case-Shiller numbers and we are back to Spring 2004 levels in many of the large bubble markets. That’s about half way to come back into fundamentals.

Peter Schiff, president of Darien (Conn.) brokerage Euro Pacific Capital, said prices could slide to levels last seen before the housing boom began in the early 2000s.
"Demand is way below where it was eight years ago; supply is way above," Schiff said. "Why should prices be substantially higher than they were in 2000? The Dow isn't where it was in 2000. Stocks are worth less than they were. Why should real estate stand out as worth more?"

Good point Peter, and the fliptards in the city and the wannabe’s in the counties around Baltimore are learning right now that they can’t sell. If they want to sell they have to price below 2004 levels.

It’s interesting when you look at what is on the market right now and my antidotal feeling is the 70% of them are from 2005-2007 timeframe trying to get there 40% over what they paid. Yet incomes will be down for this year, in fact they are below 2000 levels when you take inflation into account. Take away 100% financing and fraud appraisals and your left with taking a bath on your sale to get out of your “prison” or stay in your cell for the next decade.

Part of the reason for this is the many many people like Veronica Peterson with her $545,000 Columbia house she lost to foreclosure.

This is the crap that upsets me more than anything about the state of the housing market. Those of us who play by the rules and work hard and make way more than this daycare center queen cannot buy. There are so many wannabe folks around this region, folks who watch the secret and get gulled into that hocus pocus go and ruin house values with a realtor and mortgage broker in the end fleecing me the taxpayer!

Just pulled the doc’s on the property at 4940 Fox grape terrace, Columbia, MD 21044 to see what’s so special that she needs my sympathy.
Purchase date: Nov 3rd 2006
First mortgage: $436,0000 2/28 ARM starting at 8.5% shocker WaMu!!!!(hint short this company, next IndyMac) adjusts to 10.5% in 2008 and 1% higher every year depending on libor.
Second mortgage (or the housing bubble creation money since when do you know a buyer that can put 20% down on a 575k house?): $109,000 also thru WaMu! Don’t see the APR some pages missing but appears to be a balloon loan.
Now I’m willing to bet if I go back to 2000 this house was probably worth around 200-250k.



This is a 2300sqft house built in 1972. Plenty of Baby boomers who will be selling in the next couple years around there....good luck you last couple buyers in this neighborhood.


Now if this is not a ponzi scheme I don’t know what is. This lady was left holding the bag while others saw what was happening and dumped the property. Everyone involved looked the other way so they could keep the money flowing. This includes the government because it wants the tax revenue. Those Howard county taxes have to go up higher than inflation in order to pay for all the social programs the burocrats think you need.
My feeling is this house is likely a 250k-275k house at the bottom. Be interesting to see the dumb buyer who buys it in foreclosure for probably 380k. We are not at a bottom yet folks, houses will correct to incomes.

Update: Looks like we have a follow-up from the City paper might want to check out.

Saturday sniplets

Been a wild week. We have seen the housing bill continue debate in congress to the point that they are meeting today(yes a Saturday!) to get this bill done. The distinguished men and women of Congress know that they HAVE to do something going into an election year. People are hurting in the pocketbook and worried about the future.

I just want to remind people that all this points back to the obvious, this housing bubble. All of the below would not be a problem if the banks had any type of risk management that had teeth in the face of all the greed.

First we have a shocking announcement that Chrysler is going to stop offering leases. (Hat tip Calculated Risk)

Chrysler LLC has started telling dealers it will no longer offer auto leases through its lending arm Chrysler Financial, people familiar with the matter said Friday.
...
Chrysler's announcement also comes as Chrysler Financial has been trying to persuade more than 20 banks to renew a $30 billion credit facility -- backed by car loans, leases and loans to dealers -- that was issued by the auto-finance company last year when it was carved out of the former DaimlerChrysler AG. The debt represents a sizable chunk of Chrysler Financial's $70 billion portfolio in working capital. The higher financing costs could further complicate the attempt by private-equity firm Cerberus Capital Management LP to turn around the auto maker.

Chrysler Financial is likely to see its borrowing costs rise in early August when it rolls over about $30 billion of short-term debt backed by the loans and leases it makes. That, in turn, will make it harder for the company to offer low-interest loans to buyers and for dealers to hold inventory.

This is freaking scary. These guys are at the point they are practically giving cars away to move inventory. They have dealer lots all over the country full of cars no one wants. Honestly I expect the Big 3 to consolidate as automobile sales fall through the floor. I know many people who bought cars, trucks, boats and motorcycles with HELOC's propping up the industry. Now we have record repo's that are the effect off this credit orgy.


In local news we have a mixed bag of good and bad news on local banks.

Here is a somewhat confusing article about slowing foreclosures in Baltimore. It appears the O'malley drag out the foreclosure so that we pro-long bubble law, has made it harder for Realty track to track foreclosures in the state.

In the Baltimore region, however, foreclosures were down nearly 20 percent from the first quarter. They were up nearly 106 percent from a year ago. Data shows 3,389 area homeowners facing foreclosure. RealtyTrac said its data for Baltimore may not be as high as reported due to collection changes or improvements.

Retail has become something of a canary of consumer mood. The malls are slow and stores are starting to close. Locally, Boscov's who entered the market when it bought up several Hecht's when Federated and May department stores merged, is having problems paying bills and suppliers are cutting them off. The first quarter of 2009 should be interesting.


Finally one of the negative effects is the slowdown of urban renewal, something really needed in this city.

Eighteen months ago, Reservoir Hill was a prime example of the progress that cities across the country have made reclaiming blighted neighborhoods as a nationwide housing boom helped lure homeowners and chase away crime. Now the mortgage crisis threatens to reverse those gains as foreclosures multiply, house prices plunge and vacancies rise.

Have fun at those open houses this weekend.

Housing Bill Adds Second Lien Amendment; DAPs to Be Eliminated

The house just passed it's $300 billion plus(that the minimum) housing bill today, with the Senate getting ready to pass on to a President Bush who will sign the bill. Here's some of the hightlights:

The Act would authorize the FHA to endorse up to $300 billion in new 30-year fixed rate mortgages for troubled subprime borrowers; the lender must, however, first write-down principal loan balances to 90 percent of current appraisal value.

It’s a proposition that in many cases would mean wiping out second lien holders, leading more than a few market participants to suggest recently that lenders would be unlikely to participate voluntarily — or, at the very least, that first lien holders would be held hostage by second lien holders.

This could get nasty as these banks are going to be fighting each other. The National City folks have to be shaking right now.

The House bill also adopts language from the Senate version of the package that would ban so-called seller-funded down-payment assistance programs; this was a hotly-contested area of difference when the Senate volleyed its version of the bill back to the House.

“We’re going to yield to the Senate on that,” House Financial Services Committee Chairman Barney Frank (D-MA) is quoted as saying in the Washington Post. “There are a lot of trade-offs in the bill.”

Seller-funded downpayment assistance allows property sellers, including largely home builders, to donate funds to a non-profit agency, which then “gifts” the funds to a borrower as a down payment on a new home. The non-profits make a tidy processing fee, while critics — and even government agencies such as the IRS — have for years blasted the practice as a legalized scam.

“These schemes also have the effect of artificially inflating nominal house prices, since the sale price is not the same as the amount netted, at the end of the day, by the seller,” noted Felix Salmon in his highly-read economics blog at Portfolio.com. “I’m sure that a lot of politicians and realtors reckon that house prices need all the artificial inflation they can get at the moment, but my feeling is that over the medium to long term, no good can come of [DAP programs].”

Here is a 10% drop in prices I did not originally count on. A lot of new homes were bought this way with home builders giving money to buyers through these non-profits. The IRS called it a scam and hated it. A lot of homes in the city basically lived on this type of assistance that realtors are going to have to go to sellers and basically explain the gig is up. Add that on top of the 10% write off and well if you bought before 2002 your probably ok but don't expect a windfall as we maybe heading for 2001 prices at this point when we bottom in 2 years.

Bubblemoney jobs gone; homes not selling for what they did before it burst. Guess what it's gone forever.

Yesterday’s Sun contained several articles on the current state of the economy and the effects of this credit fed housing bubble.

The lead story about the state of the economy and election contains the personal story about a mortgage broker who rode the bubble up and down and is now renting trying to get her life back together and focused on being an entrepreneur.

After graduation, a friend recommended the mortgage business. She "just showed up one day" in 2003 at the offices of Castle Point Mortgage in Elkridge and was hired on the spot.
Within four months, she rose from processing documents to selling, becoming the company's top producer.
Times were heady, with a boom-town mentality permeating the office cubicles. She learned to project maturity and confidence over the telephone by talking louder. She collected $241,000 during her first full year in sales. She wouldn't reach that figure again, but her commission-based income remained in six figures.
Her husband, Justin, took an administrative job in the office, earning only a fraction of what she made. Still, the couple had enough money for a $600,000 four-bedroom house in Hanover (monthly payment: $4,000), and a Porsche for Justin - later upgraded to a Maserati (monthly payment: $800). The couple vacationed in Miami and still saved plenty.

Now I know some of you especially when looking at the comments in the sun article are probably thinking how am I supposed to have sympathy for someone making 200k a year doing what is mostly clerical work in today’s world of desktop underwriting? To me I see someone who in a way lucked into a trend, figured it would last forever and also made some bad choices in personal relationships. (In the comments section Erin explains her separation)It’s interesting how once the money stops coming in things all fall apart.

I can tell this story a thousand times all around the metropolitan area, and it’s one of the reason houses when up so much especially in the 2005/2006 peak. The people who created this ponzi scheme started drinking their own koolaid. Now many of them are bag holders holding on via credit cards hoping that somehow some sucker is going to come along and overpay for a house when everyone knows that if you paying more than 2004 price in Baltimore now your WAY overpaying and just making the buyer rich and you house poor.
My guess is that she will eventually find something, probably not at the income level before because honestly the position of mortgage broker has the feeling of outsourced to India written all over it and what needs touched to be a clerical position. The new reality is the trend of continuing downward pressure on wages will depress house appreciation for much longer than people expect(hope). I wish her luck and hopefully she’s learned a lot of life lessons in the experience.

In the same day we had an article that to those of us bubbleheads know as common sense but to sellers is well a disheartening reality.

Here’s the list and guess what’s number one, PRICE!!!
1. Sale price is too high
2. Location is a turnoff
3. House has no visual pizzazz
4. Condition is critical
5. We just don't like it

Now I hate to sound preachy but price fixes all of the above. This will come up more and more as baby boomers realize that they need to sell and will cut the price to get that cash they need because they need that money to live on. As I pointed out before living in Maryland pretty much requires peak earnings to just survive for most folks.

Eastern Savings Bank

Eastern Savings Bank is not doing well these days according this news report.

The Eastern Savings Bank of Hunt Valley, MD was listed as having a Texas ratio of 222.74, meaning it had twice as many bad loans as assets and surplus.

Repeated calls seeking comment from Eastern were not returned.

If I had money in this local Maryland bank, I'd be quick about withdrawing it. FDIC could someday soon show up on a Friday evening at Eastern Savings Bank.

Remember FDIC is $100,000 per named relationship, not $100,000 per account for deposit accounts. Click here for more information. Be sure not to end up like the100's of customers at Indymac who got this backwards.

In other local bank news, it is reported that First Mariner Bank has an informal agreement with Federal Reserve Bank of Richmond to improve operations.

Many banks nationwide are suffering from the mortgage crisis, and of all Greater Baltimore's banks, First Mariner has taken one of the biggest hits. The bank lost $10 million last year and has an informal agreement with the Federal Reserve Bank of Richmond to improve operations. The last time the bank was in the black was in the first quarter of 2007, when it eked out a $100,000 profit. First Mariner got slammed on alternative-A loans, called "alt-A" loans -- mortgages to buyers who had decent credit but provided little or no verification that they had the income to pay back the loans. First Mariner sold the alt-A loans to investors, but had to buy back millions of dollars' worth of loans when borrowers defaulted on them.

Also in the article they talk about selling the Towson and Ocean City branches. Would it also be fair to speculate overhead jobs are at risk?

Feel free to send me anonymous tips regarding local businesses, banks, housing, etc...


UPDATE:
In fairness to Eastern Savings Bank I'm posting this link to a Baltimore Sun article where Eastern says it's sound. I've had a few dozen hits from this bank today so if anyone would like to send me an anonymous tip or official statement, I'd be glad to post it.

Baltimore County Maryland June 2008 Sales Analysis

Sales Analysis at this link or browse below

http://spreadsheets.google.com/pub?key=pOGnlvbfCjFLNV1RXhYVpUw

Fannie Mae and Freddie Mac insolvent?

First Bears Sterns, then Countrywide, and earlier this week Indy Mac. All gone. Rumors are floating around that Lehman Brothers is next. Interesting isn't it? How prices go up over 100% in 5 years with loans that people were unable to afford and somehow things would be fine. Seriously where were the risk management folks who work at these firms? Those of us who sold at the top saw this yet professional people paid to look for things like this missed it. Guess it goes to show you that human nature is greed overshadows stupidity.

Now we have both the Fed and Treasury saying in public that no one is too big to fail. This is code for "we know that all these banks are zombies and need to fail but we are trying to hold it together till after the election."

Today both Paulson and Bernanke are in front of the House Banking committee testifying on why they want more powers to do something in this environment. Congress is very reluctant to do anything as they are not sure what to do as this is a election year and doing nothing is better than doing something to make it worse.

Yesterday recently retired Fed Reserve President of St. Louis, Bill Poole came out and said the obviously that basically the GSE's Fannie and Freddie Mac are insolvent.

Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.

``Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in an interview.

This caused the stocks of both firms to start cliff diving this week to record lows as it's becoming inevitable that the Federal Government is going to have to bail them out and nationalize the firms.

This is HUGE. Like bigger than the bill for the Iraq war huge. This is stock market crash and will cause a depression huge.

If you think prices are dropping now, if these 2 firms go under homes drop to cash value. Not the normal 3x the value of the home as you leverage through a loan but what's in your pocket if you can find a buyer to give you cash. Basically your 300k home could theoretically drop to 60k. And that's if you can find someone with 60k in cash. It could take years and years for the system to recover from this as the banks would have to keep all home loans they make on there own books for the life of the loan.

Both CNN/Fortune and the Wall Street Journal discuss the scenarios and let me just say it's grim. This would likely lower the credit rating of the entire US government.

Makes you have to sit and wonder, in the face of this all if you have cash maybe it's a good idea to get it in a safe place and wait out this storm. Believe me real estate prices are not even at the cusp of a flattening they will drop way lower.

We have to many pressing issues coming up as a country and rescuing a bunch of speculators from the last couple years is going to go to the bottom of the list. Oh and you think we can bail out Fannie and Freddie without raising taxes? No way, they will go up, lowering housing prices more as people has less take home pay. Add in the fact this will also increase inflation as the dollar continues to go down in value and you have wonder where is this all going to end?

Livid discussion about Buyer/Seller reality over at Jamie's Blog

Just wanted to point out the very vivid discussion that's been going on today over at the Sun's Real Estate Wonk Blog. The topic is on the current standoff going on between buyers and sellers, especially it seems in the city. Looks like some folks that have bad expectations are going to be sorely upset as they are not going to make a fortune in real estate. I know it's hard for sellers to get this but the mindset has changed, the tools of the buyer are empowering them not you and unless your at 2003 prices your not going to find a sucker to be your bag holder.

Indy Mac stops taking loans.....the ALT-A meltdown begins

As we start the 3rd Quarter, I'm sure your happy realtor has been telling you the subprime crisis is over and that you need to buy because in Baltimore everything goes up forever because everyone is rich with excellent credit.
It does not matter that price went up over 100% in 5 years...we all are rolling in the dough.

Indymac halt retail and wholesale loans. (hat tip CR)
They also have a note to shareholders and stakeholders on the Indy Mac's blog that is well...grim.


In this environment, where either there are no bids for most of IMB’s mortgage loans and securities or the bid/ask spreads are abnormally wide, “fire-selling” assets would actually deplete capital further.





Well folks guess what? We are just starting the 4th inning. First we had the banks writing down the subprime portfolio's. This is your people who had problems paying bills or other situations that caused them to have a low credit score.
But actually that's just the beginning. The ALT-A loans are even bigger and could be the thing that brings down the whole system.

Those of you in the downtown neighborhoods are very familiar with these loans, in fact without them you would not see the 600k rowhome that less than a 5 years ago was going for 100k. Why? WELL it was all based on a bold faced LIE!

Alt-A or LIAR loans or Stated income loans are basically this. You tell the bank that you want to buy this property. You tell them that you make 200k but do not want to "prove" it because your a tax cheat hiding money from the IRS. Due to this goofy idea that the property will appreciate faster than what you really made a year(63k Baltimore metro median) you and the bank wink and nod at each other because your both under the impression that your going to get rich off the deal.

Suddenly you get called out on it. People wake up and ask, who in there right mind is going to pay 500k for a rowhome in Baltimore City?

I mean even if your married and making a combined 200k a year what are the chances with that income you don't have other loans and debt? Oh and 500k rowhome means you owe the city of Baltimore around 12000k a year in property taxes. That's an extra 1000 bucks a month on top of your outstanding lein. What about having a kid? City schools? C'mon they refuse to fix them because that would mean the people in charge would have to be fired thus meaning that they'd have to admit they are incompetent fools.

Oh and those of you still holding on the the 500k row mansions that were under construction for 700k 2 years ago........might as well give the keys back to the bank.....chances are that it might be a decade before you get a buyer. I can guarantee in a 2 years when the people that know what they are doing come in and do a rehab 2x as nice as yours and can sell it for under 300k your going to wish you lowered the price a long long time ago. The folks that wanted to buy are gone. What's left are people who do the math or folks that the banks will not give two nickels to rub together.

Happy 4th of July picnic discussion time

Just want to remind all of you on this Independence Day weekend as you go to picnics and talk to your neighbors and friends do not forget to bring up the fact that the worst of the housing market is yet to come.

Many of you folks on the sidelines 2 years ago were mocked, made fun of, looked at in disbelief that you could not afford to buy a house that met your expectations.

What a difference 2 years makes. Today those of us with cash saved up, no credit card or HELOC's bills up to our ears can be the seen as the smart ones, while the folks who you privately wondered how in the hell can they afford this place avoid the subject completly. Why? Because well they CANNOT afford the place.

I wanted to share some stats with you about Baltimore County today. Take a look at this story about the addition of government staff to help with the forecloures going on. The irony of all this is next year is going to be an interesting one for local governments. I predict layoffs as the transfer tax boom of the past couple years drops off the radar.


Baltimore County Q1 Foreclosure Events = 938

Baltimore County had 930 foreclosure events in the first quarter of 2008, a
9.5 percent dip from the end of 2007 when there were 1,028. But those numbers
are in contrast to a year ago, when first-quarter foreclosure events totaled
236.

Wait a minute.....I thought this only happened in the city?

“I’m receiving a lot of calls from people who never thought they would be
faced with foreclosure,” Foreman said.

Ok...well it only happens in the poor and predominently lower class African-American neighborhoods.

First-quarter foreclosures events were highest in Dundalk with 95. But
Randallstown and Owings Mills were second and fourth at 85 and 71. Reisterstown
tallied 31 in the first quarter. Together, the three northwest corridor
communities accounted for 20 percent of county foreclosures.

Reisterstown? I thought that was the land of millionares, that's where all the Raven's players live!

Harvey agrees. “We have heard from everyone. From very modest income homeowners
to folks with the $600,000 house in the valley. It also impacts your ability to
rent because of [bad] credit ratings.”

Yeah this is true but you cannot squeeze blood from a turnup. I mean how else are you going to pay off credit cards from Nordstrom and your lease on your Lexus?

Homeowners also need to take control and look at cutting spending,
officials say. “What are we willing to do to help ourselves? The programs will
help if we work together,” she said. “Buying a house is so important – the
biggest purchase you’ll make in your whole life – you need to educate yourself
before you buy a home.”

Have a good holiday folks and be safe the County and State Police are out in
force, need the revenues!

Former Raven McCrary taken by Real Estate Developer

Usually I do not miss stories like this one of former Baltimore Raven Mike McCrary being taken by a sleazy developer for over 3 million dollars.

Michael McCrary had known Edward Giannasca for half a decade, and, until the former Baltimore Raven realized that he'd been cheated out of millions, he thought of the longtime developer as a stand-up guy.

McCrary trusted Giannasca so much that, with few questions asked, he handed him a $3million check three years ago for a real estate project that would convert a building in New Orleans into condominiums.

Giannasca, though, betrayed that loyalty, pocketing along with his other partners about $12 million in insurance money after Hurricane Katrina spoiled the deal and telling McCrary that the insurance claim they'd filed had been denied, a Baltimore circuit judge ruled Wednesday.

The judge ordered Giannasca and others, including developer Stuart C. "Neil" Fisher, to pay $33 million in damages to McCrary, who says he'll use his experience as a cautionary tale for current and former NFL players.

So Mike like a lot of people drank the real estate koolaid and felt he had to get "in". Although this is obviously a lot of money and a more high profile case, the same thing happened thousands of times over the region in the last couple years.

I can relate to Mike as I also had to resort to hiring a lawyer to get back what was mine in a real estate deal. This happens way more often then most of you would think. It's why when you sign a boiler-plate MAR contract the realtors want to sign your rights away and go to mediation. Remember it's your contract and your money. Demand your right to sue in case something goes wrong. It's the only way to protect yourself and keep those who want to cut corners and helps remind those involved that they need to do the deal right.


Now I'd like to offer advice to those of you looking to buy real estate. Don't go in with just any old realtor. Get someone with a lot of experience and even then investigate and ask around. Real Estate seems to attract snakes and they are interested in their own bottom line, not necessarily yours.

"It was my first dealings in real estate, in terms of a major project. I learned a lot. I relied on a personal relationship and trusting the person, rather than on good business sense," McCrary said.