On Monday Mary Pat Clarke and Bill Henry presented a bill to extend the time between foreclosure and eviction from 14 days to 365 days! In the Sun article that covered the bill's introductory press conference there were two examples of people that this bill might help. One of these people is named Donna Hanks. ACORN just broke into Ms. Hanks' old home to protest her eviction that followed her house being foreclosed on. Here is an interesting quote from the Sun that describes her situation
"Hanks bought her 1,300-square-foot rowhouse in 2001 for $87,000, according to state property records. She filed for bankruptcy in July 2006, noting that she made about $25,000 a year working for a Baltimore hotel and that she had an outstanding claim against an insurer for a house fire, records show.
When U.S. Bank, based in Minneapolis, foreclosed last year, Hanks owed more than $262,000, court records show."
How did she end up owing all that money on a house that only cost $87,000 in 2001? Could Ms. Hanks have refinanced her loan in order to get some extra cash? According to a public document that you can find here Ms. Hanks took out a $123,000 loan on her house on September 8, 2004 while at the same time she still owed over $60,000 combined on two different mortgages on that same house. Where did all the money go? She drained the house of all of its equity and now she has to pay the piper. Do we want to reward this type of behavior? I do not think so. ACORN needs to pick a better "victim".
Back to the proposed bill:
Bill Cole is one of the few people on city council who does not support the proposed bill. Here is a quote from an email he sent me:
"I honestly believe that this will have a chilling effect on both lending and development in Baltimore City. Who on earth would want to lend knowing that they couldn't reclaim their property for a solid year AFTER the property has made it through the legal process.
The sponsors have the absolute best of intentions, but I think that it will have the exact opposite effect. I firmly believe that the time period they propose -- one year -- will make it next to impossible to find anybody willing to finance or refinance a mortgage. Who will that impact the most? Low-income and middle-class families.
I want to protect people from unscrupulous and predatory lenders as much as everybody else, but this is not the right approach."
I agree with everything that he said. Banks will avoid lending in Baltimore and we will have a nightmare scenario on our hands if this bill becomes law.
Comments
Just what you want to do is give a deadbeat an entire year to trash the house they no longer pay for. Who makes the property tax bill payment for that year? There are many questions and few answers.
why just a year? and why just homeowners, why not renters who don't pay as well? and why just homes - why not my cable bill - they "victimized" me by enticing me to get HBO and a DVR when i didnt need one. And how about that tax bill i got from the city - mind giving me another year to pay it (and another year after i don't pay it then)?
Thank you Bill Cole for standing up to this nonsense.
Bill Cole is 100% right. A one year period basically gives the individual a free house for a year and that makes no sense.
A better approach would be to work out a deal where the individual, after foreclosure, has the option of turning the title over to the bank and renting the house back from the bank. It would prevent a foreclosure and in turn prevent the property from becoming a drag on values in the neighborhood, keep a person from becoming homeless and give that person the oppurtunity to either find a new living arrangement and the bank to sell the house on the open market.
I too agree and have sent e-mails.
Politicians sometime just want to show they are doing something regardless of the outcome, that will never be linked to the initial action.
I think it is better to get the real estate market jump-started again by piggy backing on the Federal Stimulus $8k and offering tax phase-ins or abatements to first time buyers in the short term and focus on the overall tax rate in the long term.
I won't argue the commerical points here. Businesses are in business to make money, and they need customers to do that. But it seems to me that we are jumping on the wrong people. The American dream is to be a homeowner. Mortgage companies and banks provide the money to do that. Where is their responsiblity in this? Why did they make certain loans, especially given that the individuals did't make the kind of money or have the kind of economic stability needed to repay the loans banks gave them and mortgage companies set them up to get. My niece was one of those people. A mortgage coompany and its bank sold her a house in Columbia it was obvious she couldn't afford from the very beginning. Now she and her 5 children are basically homeless. I agree we need to re-think how we approach gaining a solution to this problem, but discomforting the businesses that caused it so that they could prosper is not my first consideration. They made billions screwing us into this position. I am for doing whatever is necessary to help their unwitting victims who are now in extremely dire straights.
Avon, before you jump on the blame the evil mortgage industry band wagon, research the Community Reinvestment Act of 1999. You will find that it was the liberals in congress under Clinton who passed that atrocious legislation which encouraged mortgage companies to lower their standards for qualifying for mortgages in order to allow lower income people to qualify. The result was what you described, that many ended up defaulting on their subprime mortgages. The larger result was that is artificially inflated housing prices (the infamous bubble) by driving up demand. As defaults increased over the following decade and some, including George Bush, were warning of the impending disaster, the likes of Barney Frank and ACORN were pointing the finger at the scapegoat mortgage industry. ACORN played a role here too, by bringing law suits against lenders who did not issue enough subprime loans. Essentially, they extorted the mortgage companies, who made huge contributions to ACORN.
Hey Ann Miller: before YOU jump on the "evil liberals" in Congress, YOU might want to know that according to housing experts, a large number of the subprime loans were NOT MADE UNDER THE CRA (Community Reinvestment Act), which, by the way, applies only to DEPOSITORY INSTITUTIONS.
Oh, and Ann: a study released earlier this year by a law firm that specialized in CRA compliance estimated that in the 15 most populous metropolitan areas, over 84% of subprime loans in 2006 were made by financial institutions NOT GOVERNED BY THE CRA.
Oooops, you say? Guess it was greedy capitalists, after all....how INCONVENIENT for you.
I'll make this easy for you -- ditto-form, as they say, like you get from Rush and the rest of wingnut hate radio: The CRA does NOT cover independent mortgage companies, which issued the VAST majority of the loans underlying the crisis.
Find another boogeyman, Ann Miller -- your dog don't hunt, and, quite frankly, I'm bored to tears of hearing this LIE repeated
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