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Economist: Foreclosure 'bloodbath' on horizon
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Related Topics: BALTIMORE
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An economist says if the state's economy falters and unemployment rises there will be increased blood in the water in respect to foreclosures.
BALTIMORE (Map, News) - With record foreclosures on both the prime and subprime market being reported, Maryland's foreclosure rate is among the lowest in the country.
“Maryland's foreclosure inventory rate of .5 percent and new foreclosure rate of .31 percent are well below the national rates of 1.19 percent and .57 percent,” said Doug Duncan, chief economist and senior vice president of research at the Mortgage Bankers Association.
But economists say those numbers will soon rise.
“Thus far the rate of foreclosures in Maryland has not had an effect overall because we have not yet seen a period of elevated foreclosure rates,” said Anirban Basu, an economists and principal of the Sage Policy Group. “However they are rising fast and the worst period is in front of us, not behind.
“Existing home sales in Maryland are down to a four year low cutting into home value and new home sales are up, but those numbers don't reflect the fact that builders are slashing prices to move inventory, which is not a good sign for the economy.”
Basu says that the increasing amount of housing stock in Maryland is due not to foreclosures, but “the resettling of adjustable mortgage rates and the fact that people can't make those high interest payments. In addition, people over did it on the amount of debt they took on, not only with homes, but car and credit card debt and loans with has translated into increased delinquencies, and sadly, involuntary [foreclosure] home sales.”
U.S. Sen. Chris Dodd, D-Conn., has called on the Federal Reserve Board to implement tougher guidelines on lending practices to avert a market crash.
“It is my hope that the Board... at a minimum requires originators to fully evaluate a borrower's ability to repay; requires escrows for taxes and insurance; and restricts the use of low- and no-documentation loans,” he said in a statement.
It is estimated that close to 70 percent of Americans own their own homes and many that qualified did so with adjustable rate loans or subprime loans whose high interest rates borrowers can no longer afford, according to the Maryland Bankers Association.
“The regulatory environment is shifting,” said Basu. “Borrowers who could have accessed credit in 2002-2003 can't anymore. The subprime market is virtually shutdown. If the state's economy falters and unemployment rises there will be increased blood in the water in respect to foreclosures.”
rchappelle@baltimoreexaminer.com
Comments from Examiner Readers
10:43 AM MST on Sat., Sep. 6, 2008 re: "Waiting-list for low-income housing open in Montgomery"
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Telisa said:
I am 17 years old. me and my 4month old daughter need a place to stay...we need help....how do i go about moving in a HUD property ASAP??
4 agree | 1 disagree
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Examiner Reader/Nadia said:
I have NO idea if you can help But Im going to take a shot at it - Last FRI there was Gun fire exchanged at my apartmnt complex right infront of my door. I have a month to month lease and have put in my 30 day notice to move out since i feel extremely unsafe. How can I move before the 30 days are up without being charged?
4 agree | 2 disagree
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Wai Yip Tung said:
By adding 60,000 units over 20 years, this housing 'boom' represent an annual growth rate of 0.77%.
6 agree | 7 disagree
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Examiner Reader said:
No matter Mr. Metcalf's take on the real estate market, i have lived in SF since 1979 and, to the best of my knowledge, not a single-building boom has significantly effected the price of housing one way or the other, however, clearly (and arguably, unfortunately) real estate "bubbles" have. Even today's Chronicle states the Assessor's office in SF is overhwelmed with homeowners seeking a re-assessemnent of property values because of falling prices. My guess is that has more to do with the real estate "bubble" bursting than available housing on the market.
7 agree | 5 disagree
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Robin Ficker Broker Robin Realty said:
The county this year increased property tax revenues 14% with another huge increase expected next year. Reduce spending, and hence the next for more tax increases, by $500,000.
10 agree | 7 disagree
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Examiner reader said:
Knapp might run against Leggett for County Executive? If that happened, Knapp would surely win. Given the choice of a fiscally irresponsible, clueless, pandering politition or a tool for the developers, the voters will probably choose the tool for the developers.
10 agree | 8 disagree
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Examiner Reader said:
Wow! It is unbelievable the amount of selfishness that I see in people who do live in these establishments. I suppose they have the mentality of give back to the community...but not on my block. Let me tell you...I ended up in this type of housing for a year. Thank GOD it was there! I relocated from LA to MD for a $120k/yr. job which I ended up being wrongfully terminated from when I caught pneumonia. As a single mother, an educated professional, worked in my field for 17 years...I was humbled. Don't let your fill yourself with so much gusto, God has a way of humbling those on their high horse.
6 agree | 5 disagree
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Examiner Reader said:
hello my name is korena i live in jhonson homes which is pha/lowincome i am looking to get a transfer out of philly how can i do that
5 agree | 6 disagree
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Examiner Reader said:
Yeah, that's exactly what we need, project thugs in nice new developments. I don't think so!
8 agree | 9 disagree
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Reader said:
Get a fix it man and stop whining!
9 agree | 13 disagree
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Examiner Reader said:
"Department of Labor, Licensing and Regulation" Run by Thomas Perez, ex chairman of the board of Casa de Md. I wonder if he allowed illegal aliens to fix or certify the roof.
9 agree | 11 disagree
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Norwood Apts Reader said:
As a tenant at the Norwood I take issue with your characterization of tenants as welfare seekers. These tenants are working class low income people who work service jobs in DC. Some tenants work in the mail room at the White House, waiters at Old Ebbitt Grill, or cleaning offices. These people are the ones who help our city run and we deserve to have a decent place to live. By decent I mean demanding a proper working elevator that does not take 31 days to repair.
375 agree | 261 disagree
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Examiner Reader said:
Columbia doesn't need anymore housing.....Most of the individuals at the meeting, are those seeking welfare and goverment funded housing........
299 agree | 280 disagree
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Examiner Reader said:
When will this new policy take place?
643 agree | 289 disagree
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Silver Springer said:
This is a remarkably important story and the Examiner deserves a lot of credit for digging it out. while bigger papers in Baltimore and Washington failed to do so. Mortgage regulators should have stopped the current binge of looney loans years ago. They failed to do so and now large numbers of homeowners are facing foreclosure -- and more will in the future. That's a terrible price to pay to sell more loans and to inflate short-term lender profits.
301 agree | 275 disagree
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