March 2010 – Page 3 – Jay's Real Estate Blog

Bailing out underwater homeowners

This is an excerpt from the Baltimore Sun ‘Second Opinion’ Blog, specifically Andy Green. Mr. Green points out the nearly 25% of all Maryland homeowners are underwater on their mortgages:

Today, the Obama administration is announcing a major new effort to stem the foreclosure crisis by focusing on two groups: the unemployed and the rapidly growing share of homeowners who owe more on their mortgages than their houses are worth. Getting banks to temporarily reduce payments for the unemployed — or to let them skip payments altogether for a time — fits in with many of the administration’s previous efforts to help those who find they are unable, because of the economic downturn, to meet their mortgage obligations. But the second part of the plan, helping those with so-called “underwater” mortgages reduce the amount of principal they owe, may be more difficult for many Americans to swallow.

The plan calls for the government to use $14 billion in Troubled Asset Relief Program money to provide incentives for banks to reduce the amount of principal homeowners owe and for the Federal Housing Administration to help underwater borrowers refinance into loans they can afford. New programs would also help borrowers who have second mortgages.

That may be galling to many who see it as a bailout of people who made bad decisions. In some cases, it is. But this is an occasion when we have to swallow our sense of economic justice out of self interest. Nearly a quarter of Maryland residents owe more on their mortgages than their homes are worth, the seventh-highest rate in the nation. In the Baltimore area, the figure is 17 percent. And nobody is forecasting the real estate market to rebound fast enough to change that in a major way for years. That means more homes are at risk of foreclosure, and more people are going to simply start walking away from their mortgages, risking a further cratering of the real estate market. If that happens, people who didn’t make foolish decisions and have kept up their obligations could be at risk if we don’t take action.

The key will be making sure we also enact sufficient regulatory reforms to make sure the excesses of the real estate boom aren’t repeated, just as the financial reform now working its way through Congress serves as some assurance that we won’t soon find ourselves bailing out investment banks again. But Treasury Secretary Timothy Geithner testified before Congress this week that the administration has no plan yet for how to reform Fannie Mae and Freddie Mac, the giant publicly backed companies that helped fuel the subprime mortgage boom; the White House has previously said that legislation dealing with that could be more than a year off. We can’t afford to wait that long.

Garrett County has the lowest foreclosure rate in Maryland – Gazette.net

Legislation requires lenders to help stem foreclosures
State had 10th highest rate in U.S. last month
by Kevin James Shay | Staff Writer

Foreclosures jumped to 5,732 in February across Maryland, up 9.6 percent from January and 80.5 percent from a year earlier, according to Irvine, Calif., data company RealtyTrac. Maryland’s rate of one foreclosure filing for every 407 households was the 10th highest in the nation, up from 13th in January and 16th a year ago.

Prince George’s County continues to lead the state in the number and rate of foreclosures with 1,789 filed last month, or one for every 179 households. Baltimore city and the counties of Frederick, Charles, Calvert and Kent also had foreclosure rates above the state average. Garrett County had the lowest rate in the state last month, with only eight foreclosures or one filing per 2,378 housing units.

Meanwhile, foreclosure filings across the nation slowed last month. They were down 2.3 percent from January and up only 6.2 percent from a year ago.

Lt. Gov. Anthony G. Brown (D) went on the offensive last week to lobby for legislation that would require lenders to work with homeowners to modify their loans before filing foreclosure orders. The businesses would have to send homeowners a detailed explanation of requirements for the lenders’ loan modification program and a loss mitigation application, among other items.

The lenders would have to file affidavits stating that a loan modification review had been done and the reasons they denied modifying the loan. They would also have to document that alternatives other than foreclosures were considered. Homeowners who have not received the loan modification review would be able to request a foreclosure mediation session.

“This legislation will provide homeowners a chance to explore any and all options to find a positive resolution and remain in their homes,” Brown said in a speech at the Ebenezer African Methodist Episcopal Church in Fort Washington, according to his office.

Kathleen Murphy, president and CEO of the Maryland Bankers Association, also testified last month, saying she was concerned that a loss mitigation analysis would be required before a foreclosure could be filed, according to an Associated Press report. A foreclosure filing often prompts borrowers to talk about loss mitigation, Murphy said.

Among states, Nevada’s rate of one per 102 households led the nation last month, while Vermont posted the lowest rate with one filing per 39,077 units.

Foreclosures in Maryland are increasing despite state officials claiming that a counseling and legal program has provided more than $5.5 million in assistance and helped about 11,000 homeowners avoid foreclosures since mid-2007. The state has also enacted other measures, such as a mortgage fraud protection law and a streamlined loss mitigation process with six of the largest servicers in Maryland.

Factors for the increase in foreclosures despite efforts to remedy the situation include the sour economy, according to a recent analysis by the state Department of Legislative Services.

“Despite the impact of extensive state legislative and consumer outreach efforts … total foreclosure activity in Maryland continues to increase as state residents feel the effects of rising unemployment and declining home values,” the department reported.

Home sales rise

The volume of existing homes sold in Maryland rose by almost 20 percent in February from February 2009, but the average sales price of about $280,000 was down by 7 percent, according to the Maryland Association of Realtors.

The extended and expanded federal homebuyer tax credit is helping fuel sales in Maryland, according to the trade group. The $8,000 credit for first-time homebuyers runs until April 30 for signed contracts and June 30 for closings. There is also a tax credit of up to $6,500 for certain existing homeowners who purchase a replacement principal residence.
If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

Deep Creek Lake now at normal level

Cumberland Times-News

— Deep Creek Lake at normal level

MCHENRY — Deep Creek Hydropower is now operating within the rule band established by the Maryland Department of the Environment to retain Deep Creek Lake at its appropriate level.

Last month, MDE approved a request from Brookfield Renewable Power, the owner of Deep Creek Hydropower, to lower the water level to accommodate the winter’s record snow pack and subsequent melting.

Brookfield also brought in seven “ice eaters” to break up and remove ice and reduce ice pressure on the spillway. MDE and the Maryland Department of Natural Resources worked closely with Brookfield to monitor the situation.

The analysis of water content in the snow pack and the lower than expected rainfall has made spring flooding this year unlikely.

Lake levels are posted at www.deepcreekhydro.com.

If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

State’s decision to ban booze comes as surprise

March 24, 2010

State’s decision to ban booze comes as surprise
Michael A. Sawyers
Cumberland Times-News

— CUMBERLAND — Local alcoholic beverage officials, merchants and recreationists agree that they had no idea the Maryland Department of Natural Resources had banned the possession and consumption of beer, wine and liquor in state forests until they read about it in Wednesday’s Times-News.

Maryland State Forester Steve Koehn said Tuesday that the policy was adopted because rowdy imbibers at times had ruined the camping experiences for others.

“We realize that some people will be annoyed with this regulation, but we believe that the greater good is being served,” Koehn said.

Contacted again on Wednesday, Koehn said his agency has ongoing authority to restrict alcohol use, thus a public hearing process was not needed for that action.

“We are informing people about the ban on a one-by-one basis when they call in to reserve a campsite,” Koehn said. “For those who use a self reservation system at the forest, we have posted signs at the camping pads.”

Koehn said information about the ban may also be put on the DNR Web site.

A similar ban has been in effect at state parks since last year and one is being drafted for wildlife management areas.

John Stakem, owner of Broadway Liquors in Frostburg and the president of the Allegany County Liquor Dealers Association, said Wednesday that the forest ban was news to him.

“I live in Frostburg and I know that 3 percent of the university students cause problems and 97 percent of the kids are good. It isn’t a 100-percent perfect world. Why regulate the people who do things the right way?” he said.

Stakem, who often attends Maryland General Assembly sessions in Annapolis to represent the alcoholic beverage industry, said he will study the new ban before deciding about any action he may take.

John Boal, sales manager for Western Maryland Distributing Co., said the forest service ban is likely to have a widespread local impact.

“We have four stores we distribute to near Green Ridge State Forest, including Bill’s Place,” Boal said. “This ban will hurt those stores and in turn hurt our business. That means it will hurt our drivers and sales representatives, all local people who spend their money locally.”

Bill’s Place owner Bill Schoenadel said the ban will ruin business at his Little Orleans establishment, tucked between the Potomac River and Green Ridge State Forest. Schoenadel operates a tavern there and sells take-out beer.

Schoenadel contends that there is nothing wrong with hunters or anglers drinking beer at their public campsites at the end of a day of recreation, something that has recently become illegal.

Sen. George Edwards said Wednesday from Annapolis that he considers the alcohol ban to be a major change.

“You would think with a big change in policy that the DNR would call some kind of public gathering and say ‘hey, this is what we’re doing and this is why we’re doing it,’ ” Edwards said. “At least people would have been on notice instead of learning about it after the fact. I didn’t know about it until now. If they want to be a transparent agency, this would have been a good opportunity for them to show it.

“I haven’t heard anything from the state forest people up home about this being a big problem. I guess now if you want to have a family picnic on the state grounds and you have a certain kind of cold drink you are breaking the law,” Edwards said.

Sid Turner, who owns Chestnut Ridge Liquor Store at Grantsville, said Wednesday that he showed the newspaper article to numerous customers.

“I got the same reaction from everybody,” Turner said. “They said ‘that’s (expletive deleted).’ ”

Turner said that the ban on alcohol at New Germany and Big Run state parks has already cut into his sales and he expects the ban at nearby Savage River State Forest to further decrease business.

Turner is also the vice president of the Citizens Rights and Heritage Group, a formalized organization that acts as a watchdog of state government actions that affect Garrett County.

“We will be bringing this up at our next meeting,” Turner said.

If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

More Garrett County seniors eligible for property tax break

Commissioners extend 50 percent credit

Megan Miller Cumberland Times-News

Cumberland — OAKLAND — A recent act by the Garrett County Commission could give more residents a tax credit on their county tax bills, starting this tax year.

Currently, county residents who qualify for the state Homeowners’ Property Tax Credit program, are 65 or older, and have lived in Garrett for at least 10 years, can also receive an additional credit of 25 percent of the state credit amount to apply to their county tax bill.

But the income threshold and tax bill guidelines to qualify for the state program left out a portion of Garrett’s low-income seniors who “probably suffer more than anyone else in trying to pay their taxes,” according to County Administrator Monty Pagenhardt.

Now residents who don’t meet the requirements for the state program can qualify for a county credit if they are 65 or older, have lived in Garrett for at least 10 years and have a combined gross household income of $25,000 or less. That extends a county credit to people whose incomes are low, but whose tax bills aren’t high enough to meet the state program guidelines.

“This goes over and above the state’s guidelines,” Pagenhardt said. “It’s not that much money for the county, about $8,300 in lost revenue, but the commissioners felt they wanted to do something to benefit that segment of county residents.”

Those seniors who qualify for the expanded county program will receive a 50 percent credit on their county real estate and landfill taxes, but their state taxes will not be affected.

Pagenhardt said the three commissioners agreed unanimously on the action, which makes about 32 more households eligible for county tax relief.

Wendy Yoder, director of financial services, said residents must still fill out the state application to be eligible for either the county and state credits or the new county credit program.

Applications are due by Sept. 1 for the tax bills that will come out in the summer, she said. The application forms are available online at http://www.dat.state.md.us/, at the State Department of Assessments and Taxation office in the Garrett County Courthouse, or by calling that office at (301) 334-1950 and requesting a form by mail.

For more information contact the county staff at (301) 334-8970.

If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

Deep Creek Lake now at normal level

Cumberland Times-News

— Deep Creek Lake at normal level

MCHENRY — Deep Creek Hydropower is now operating within the rule band established by the Maryland Department of the Environment to retain Deep Creek Lake at its appropriate level.

Last month, MDE approved a request from Brookfield Renewable Power, the owner of Deep Creek Hydropower, to lower the water level to accommodate the winter’s record snow pack and subsequent melting.

The analysis of water content in the snow pack and the lower than expected rainfall has made spring flooding this year unlikely.

Lake levels are posted at www.deepcreekhydro.com.

Spring time at the Wisp Ski Resort

: Wisp Ski Resort Deep Creek Lake

It’s that time of year…I’m starting to see some bare spots on the Wisp Ski Resort. Overall, it was a great ski season and a record winter for snowfall. Spring is here at Deep Creek Lake and the warmer weather (and rain) has led to some bare spots on the mountain. Virtually all of the snow that was here on the ground has melted now. It snowed yesterday, but there was no accumulation. Keep checking back for more info from the I Love Deep Creek blog!

If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

Spring time at Wisp Ski Resort

: Wisp Ski Resort Deep Creek Lake

If you are thinking of buying or selling real estate in Garrett County or Deep Creek Lake, Maryland, call Jay Ferguson of Railey Realty for all of your real estate needs! 877-563-5350

Investors Are Buying Houses Again

March 23, 2010 by cloeffler

Good news for the second-home market.

More home buyers are snapping up properties with cash, a trend driven in large part by investors returning to the market after four years of falling prices around the country.
The share of home sales involving all-cash transactions was 26% in January, up from 18% a year earlier, according to the National Association of Realtors. The figures come from a survey of members about their most recent transactions. Many home buyers also are paying cash, but investors are largely using cash so they can avoid paying interest charges on loans and get a larger return on their investment.

Other NAR data also show a pickup in investment activity.

Home purchases made by buyers identified as investors climbed to 17% in January, up from 15% in December and 12% in November.

“We bottomed out in 2008, and in late 2009, prices stabilized and investors have returned,” says Mark Fleming, chief economist at First American CoreLogic. “It’s a different type of investor going after foreclosed properties and expecting to hold on for longer time frames.”

Many investors say they’re financing their purchases with cash on hand, rather than borrowing.

Evan Spinrod of San Francisco bought three rental properties in November and February and now owns 21 in four states. The rent he collects gives him an 8.5% annual return on his investment. Some of his homes are worth about $165,000. “I’m still looking,” Spinrod says. “You can’t build these houses for the prices they’re selling them. I’ve always seen that the real wealth was in real estate. People have been sitting on cash, and there’s no interest from the bank (to pay).”

Leonard Baron, a real estate professor at San Diego State University, has bought three homes with cash in the

San Diego area in the past eight months, ranging in price from $100,000 to $130,000. He rents the properties.

Baron says now is an ideal time to make such purchases. “It’s because prices have dropped so much and rents really haven’t,” he says. “The deals were unbelievable.”

Some Realtors also say they’re seeing increased investor activity.

“Flippers, rehabbers, investors … are, in fact, buying,” says Lisa Johnson, with Coldwell Banker Residential Brokerage in Haverhill, Mass. “I’m getting builders who have stopped building and are instead buying up condos and single-family homes to fix them up and sell them. It’s a neat change I haven’t seen in four years.”

All-cash purchases also reflect a growing number of investors buying higher-end properties without credit, says NAR spokesman Walter Molony. That’s a sign that some investors see real estate prices as having nowhere to

go but up. All-cash offers give buyers a competitive edge on rival offers – even higher ones – that are dependent on financing. Cash deals can close faster and are less likely to fall through.

“You have to have cash to be able to close quickly and have negotiating power. Cash is king,” says Tanya Marchiol, president of Phoenix-based Team Investments, which buys about 70 properties a month with cash it raises from investors. “We do want to flip it or generate cash flow (through renting it out). Now is the time to buy for cash flow. We know the market is going to rebound.”

Some investors say the current real estate market is an ideal time to buy because homes are so low priced, they are bound to hold their value.

That’s the philosophy of Jim McClelland of Tinley Park, 111.

He is buying about 120 to 150 entrylevel homes in the Chicago area this year and owns a total of about 300 properties.

He says now is a good time to buy because properties going into foreclosure are no longer just one-bedroom, fixer-uppers but nicer, split-level brick homes with more bedrooms that will probably appreciate to a higher value.

That’s because so many prime-rate borrowers who bought more expensive homes have gone into foreclosure.

He puts about $60,000 into upgrading a property, then rents it out.

“Do I think this year will be a better time to invest than in 2009? Yes,” McClelland says. “There have always been foreclosures. The difference now is you get a better home for the same kind of money. You’re sitting on better inventory. People get into real estate for financial independence. It’s not a quick fix. It appreciates. It doesn’t happen overnight.”

By Stephanie Armour USA TODAY