By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore
In the words of sports writer, Dan Cook, “the opera ain’t over till the fat lady sings”, and the last act of our mortgage crisis tragedy is far from curtain close.
The New York Times released an alarming story earlier this month that while the subprime mess appears to be showing the first signs of stabilization, there are a new set of mortgage problems hurling our way—- Alt-A and prime mortgage defaults. That’s right, homeowners with good credit and lower risk loan terms on their mortgages are now falling delinquent on their payments and facing foreclosure in growing numbers.
The main reasons-- loans known as Alt-A, which allow people with good credit to procure mortgages based on their credit scores, without proof of income or assets. Furthermore, homeowners who took out prime loans during the housing boom four or five years ago, with low interest and no obligation to pay on the principal, are now facing higher interest rates and principal payments two or three times higher than they were once accustomed to. Add this to refinancing difficulties as lenders tighten their belts, rising costs of food and services as inflation climbs to a new high and the rollercoastering price of gasoline and we have an equation that offers no refuge for struggling homeowners.
Maryland has seen an increase in foreclosures of more than 17% over the last year, with one of the hardest hit areas being Baltimore City, which saw foreclosures increase by 30% in six months alone. To combat these climbing numbers, we launched three new programs in 2008, which aim to keep low to moderate income homeowners out of foreclosure, educate prospective homebuyers on how to navigate the market and make good decisions and offer fair, responsible lending opportunities for first time homebuyers as well as those in need of home rehab.
These programs are our Emergency Bridge Loan, Homebuyer and Financial Fitness Education and low interest mortgages for first time homebuyers, sponsored by the Community Development Administration (CDA), Neighborhood Housing Services of America (NHSA) and Provident Bank.
As foreclosure numbers continue to rise due to prime and Alt-A delinquencies, NHS of Baltimore expects to be at the forefront of lending and consumer education in order to keep families and individuals in their homes and help sustain the Baltimore region through homeownership. We are Housing and Urban Development (HUD) certified to counsel current and prospective homeowners on the correct course of action and offer help that is catered to suit their individual needs. Our staff offers friendly, professional support.
Need to talk to someone about your delinquency or foreclosure status? Want to register for a class? Give us a call today. 410-327-1200
Friday, August 15, 2008
Monday, August 11, 2008
New Housing Bill Provides Help, Quid Pro Quo Attached in Fine Print
By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore
After much debate, deliberation and political strong-arming, Congress passed the Housing and Economic Recovery Act of 2008 last week, in hopes of providing a windfall for thousands of Americans suffering from the current state of the economy and housing market.
The new bill will surely have a large affect on many of our clients here at NHS of Baltimore, especially clients looking to purchase their first home. One of the largest provisions in the bill provides a tax credit for first time homebuyers, of 10% of the total principal of their mortgage—up to $7,500. New homebuyers who opt to take this credit will receive a check, minus the difference of the taxes they owe at the end of the year. If you owe nothing, you receive the full amount. Spelled out, a free gift from the federal government.
But Wait. This isn’t the same kind of gift as the stimulus we all received in our mailboxes earlier this year. Quid pro quo— recipients are expected to pay this one back. Buyer beware, although the tax credit stands to help a great deal of people on their way to owning a home, it essentially adds more than $7000 to their debt load.
However it is important to point out, there is some leniency. The tax credit has no interest rate and the amount given is the amount owed back. Furthermore, recipients will have15 years to pay it back through a $500 surcharge on their taxes each year until paid.
The question is really a personal one. Are you, the homebuyer willing to add more onto your debt load and can you handle it? Will the extra $500 dollars on your taxes at the end of the year be an unbearable burden or a just a small price to pay for the help you’re receiving now?
Commenting on the provision, our own Cheryl Cassell, Assistant Director of Single Family Programs, said, "first time homebuyers should proceed cautiously with regard to the tax credit. They should fully understand the details and understand that although it has been labeled as a tax credit, it is really an interest free loan".
NHS of Baltimore began offering mortgages for first-time homeowners earlier this year through the Community Development Administration of Maryland and Neighborhood Housing Services of America. Our goal is to offer truly affordable mortgages that are sure to fit our client’s needs and debt capacity. Our housing counselors will advise clients on a case by case basis whether it would be prudent to accept the tax credit, based on their current financial ability to withstand more debt.
Will you be accepting the federal government's tax credit? Weigh in on our poll.
After much debate, deliberation and political strong-arming, Congress passed the Housing and Economic Recovery Act of 2008 last week, in hopes of providing a windfall for thousands of Americans suffering from the current state of the economy and housing market.
The new bill will surely have a large affect on many of our clients here at NHS of Baltimore, especially clients looking to purchase their first home. One of the largest provisions in the bill provides a tax credit for first time homebuyers, of 10% of the total principal of their mortgage—up to $7,500. New homebuyers who opt to take this credit will receive a check, minus the difference of the taxes they owe at the end of the year. If you owe nothing, you receive the full amount. Spelled out, a free gift from the federal government.
But Wait. This isn’t the same kind of gift as the stimulus we all received in our mailboxes earlier this year. Quid pro quo— recipients are expected to pay this one back. Buyer beware, although the tax credit stands to help a great deal of people on their way to owning a home, it essentially adds more than $7000 to their debt load.
However it is important to point out, there is some leniency. The tax credit has no interest rate and the amount given is the amount owed back. Furthermore, recipients will have15 years to pay it back through a $500 surcharge on their taxes each year until paid.
The question is really a personal one. Are you, the homebuyer willing to add more onto your debt load and can you handle it? Will the extra $500 dollars on your taxes at the end of the year be an unbearable burden or a just a small price to pay for the help you’re receiving now?
Commenting on the provision, our own Cheryl Cassell, Assistant Director of Single Family Programs, said, "first time homebuyers should proceed cautiously with regard to the tax credit. They should fully understand the details and understand that although it has been labeled as a tax credit, it is really an interest free loan".
NHS of Baltimore began offering mortgages for first-time homeowners earlier this year through the Community Development Administration of Maryland and Neighborhood Housing Services of America. Our goal is to offer truly affordable mortgages that are sure to fit our client’s needs and debt capacity. Our housing counselors will advise clients on a case by case basis whether it would be prudent to accept the tax credit, based on their current financial ability to withstand more debt.
Will you be accepting the federal government's tax credit? Weigh in on our poll.
Friday, August 8, 2008
Back To School For Some, Back To Reality For Many Others…
By: Jessica Schmidt, Philanthropy Manager, NHS of Baltimore
Yesterday I walked into a store, and I was quickly reminded of what time of year it was…Back to School time, that time of year where kids cringe just thinking about homework and the loss of their summer freedoms. Ahh childhood, when it seems like the biggest ordeal was which trapper keeper to pick, what color folders to buy, and who to sit next to at lunch. As I walked through I couldn’t help but think about kids that are facing much harder, and more adult decisions because of the current economy. Instead of what lunchbox to get, they worry whether food will fill them, instead of who to sit by on the bus, they worry if they have a home for the bus to drop them off at.
The foreclosure crisis certainly has had a ripple effect in communities and the numbers are staggering, but what does foreclosure mean for a child and their educational future? According to the Pew Charitable Trusts report on the states response to the foreclosure crisis, 1 in 26 households in Maryland will face foreclosure over the next two years, and nationally nearly 3.3 million mortgages may default in 2007 and 2008. This means that 1.95 million children and youths are at high risk of losing their homes nationwide. In Maryland it is projected that 43,200 children will lose their homes as a direct result of foreclosure, according to a study done by First Focus.
Across the country schools are seeing a rapidly growing number of homeless children in their classrooms, and the effect to their education and behavior is starting to show. According to the National Assessment of Educational Progress, students with two or more school changes in the previous year are half as likely to be proficient in reading as their peers, and a government study found that mobile third grade students were nearly twice as likely to perform below grade level in math, compared to those who had not changed school. Students that have to move because of foreclosure are at a distinct disadvantage educationally, and without a stable home environment their education can continue to suffer. How can they study English if their family can’t pay the BGE bill? How can they learn math if they have to spend the night in a shelter? How can they build relationships when they are switching schools every few months? Researchers have found that school and residential changes can reduce the likelihood of graduation by more than 50%.
Educational issues aside, a lack of stable housing can also lead to behavioral and health issues. A study done by the General Accounting Office (GAO) found that frequent movers were 77% more likely to have four or more behavioral problems than their counterparts who have a stable home environment. Other studies have shown that attending multiple elementary schools increases the likelihood of violent behavior in high school by 20%. Children’s health are also at risk, families facing a critical burden of housing costs have less income to afford health insurance and prescriptions, as well as nutritional meals. The GAO study also stated that stable housing has been shown to correlate with other health outcomes, among them better nutrition, and healthy body weight. In the long run children that come from families that own their home are 59% more likely to become homeowners, their children are 25% more likely to graduate from high school, and they are 116% more likely to graduate from college.
That’s a lot of numbers I realize, but it is very alarming when you really start to think about the long term effects of the current economy. Saving a family’s home today can save a child’s educational future 10 years down the road and can make them better homeowners for their children. For some of us we may be able to move on from the “Forclousure Crisis” and forget about it in a year or two, but for some families the wounds run deeper and take much longer and a lot more help to heal.
Want to know how you can help a Baltimore family? E-mail me at jschmidt@nhsbaltimore.com.
Yesterday I walked into a store, and I was quickly reminded of what time of year it was…Back to School time, that time of year where kids cringe just thinking about homework and the loss of their summer freedoms. Ahh childhood, when it seems like the biggest ordeal was which trapper keeper to pick, what color folders to buy, and who to sit next to at lunch. As I walked through I couldn’t help but think about kids that are facing much harder, and more adult decisions because of the current economy. Instead of what lunchbox to get, they worry whether food will fill them, instead of who to sit by on the bus, they worry if they have a home for the bus to drop them off at.
The foreclosure crisis certainly has had a ripple effect in communities and the numbers are staggering, but what does foreclosure mean for a child and their educational future? According to the Pew Charitable Trusts report on the states response to the foreclosure crisis, 1 in 26 households in Maryland will face foreclosure over the next two years, and nationally nearly 3.3 million mortgages may default in 2007 and 2008. This means that 1.95 million children and youths are at high risk of losing their homes nationwide. In Maryland it is projected that 43,200 children will lose their homes as a direct result of foreclosure, according to a study done by First Focus.
Across the country schools are seeing a rapidly growing number of homeless children in their classrooms, and the effect to their education and behavior is starting to show. According to the National Assessment of Educational Progress, students with two or more school changes in the previous year are half as likely to be proficient in reading as their peers, and a government study found that mobile third grade students were nearly twice as likely to perform below grade level in math, compared to those who had not changed school. Students that have to move because of foreclosure are at a distinct disadvantage educationally, and without a stable home environment their education can continue to suffer. How can they study English if their family can’t pay the BGE bill? How can they learn math if they have to spend the night in a shelter? How can they build relationships when they are switching schools every few months? Researchers have found that school and residential changes can reduce the likelihood of graduation by more than 50%.
Educational issues aside, a lack of stable housing can also lead to behavioral and health issues. A study done by the General Accounting Office (GAO) found that frequent movers were 77% more likely to have four or more behavioral problems than their counterparts who have a stable home environment. Other studies have shown that attending multiple elementary schools increases the likelihood of violent behavior in high school by 20%. Children’s health are also at risk, families facing a critical burden of housing costs have less income to afford health insurance and prescriptions, as well as nutritional meals. The GAO study also stated that stable housing has been shown to correlate with other health outcomes, among them better nutrition, and healthy body weight. In the long run children that come from families that own their home are 59% more likely to become homeowners, their children are 25% more likely to graduate from high school, and they are 116% more likely to graduate from college.
That’s a lot of numbers I realize, but it is very alarming when you really start to think about the long term effects of the current economy. Saving a family’s home today can save a child’s educational future 10 years down the road and can make them better homeowners for their children. For some of us we may be able to move on from the “Forclousure Crisis” and forget about it in a year or two, but for some families the wounds run deeper and take much longer and a lot more help to heal.
Want to know how you can help a Baltimore family? E-mail me at jschmidt@nhsbaltimore.com.
Monday, August 4, 2008
Invest a Lifetime in West Baltimore, Instead of Investing a Day Trip to First Mariner
By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore
Many of you may have heard, the city of Baltimore is considering the rebirth of the first Mariner Arena in hopes that a new event and concert venue on the west side will spark greater economic growth and revitalize neighborhoods in the area. Baltimore is expected to spend close to $300 million on the new arena.
As an advocate for neighborhood revitalization, I believe one of the central tenants of reversing decline and stimulating prosperity is to re-invest in some of the city’s most vulnerable neighborhoods, such as those in west Baltimore. My interest is always peaked when the city suggests pouring tax-payer money into new stadiums and event centers to attract tourism and business. Why aren’t we investing in rehabilitating vacant and blighted properties and creating more affordable housing, fixing inner-city schools and beefing up police protection?
These factors all play tremendous roles in bringing economic growth back into the area. If you build it, they will come? Not necessarily. This is not to say I don’t recognize the proposed value of the new arena. I understand that its presence will hopefully bring with it plenty of food, shopping, entertainment and business. However it is important to point out that while this will attract people into west Baltimore for a day or weekend trip, to participate in and benefit from the amenities the arena offers, it will not entice them to move into the surrounding neighborhoods permanently.
At the end of the day, we still have people going home and taking their valuable tax dollars and resources with them. People moving into the area to live, would spark investment from business and bring food, entertainment and shopping back. So why not re-invest in the neighborhoods of west Baltimore? Instead of giving people incentives to invest for a day, why not give them incentives to invest for life?
Want to weigh in? Use our survey to tell us your opinion.
Many of you may have heard, the city of Baltimore is considering the rebirth of the first Mariner Arena in hopes that a new event and concert venue on the west side will spark greater economic growth and revitalize neighborhoods in the area. Baltimore is expected to spend close to $300 million on the new arena.
As an advocate for neighborhood revitalization, I believe one of the central tenants of reversing decline and stimulating prosperity is to re-invest in some of the city’s most vulnerable neighborhoods, such as those in west Baltimore. My interest is always peaked when the city suggests pouring tax-payer money into new stadiums and event centers to attract tourism and business. Why aren’t we investing in rehabilitating vacant and blighted properties and creating more affordable housing, fixing inner-city schools and beefing up police protection?
These factors all play tremendous roles in bringing economic growth back into the area. If you build it, they will come? Not necessarily. This is not to say I don’t recognize the proposed value of the new arena. I understand that its presence will hopefully bring with it plenty of food, shopping, entertainment and business. However it is important to point out that while this will attract people into west Baltimore for a day or weekend trip, to participate in and benefit from the amenities the arena offers, it will not entice them to move into the surrounding neighborhoods permanently.
At the end of the day, we still have people going home and taking their valuable tax dollars and resources with them. People moving into the area to live, would spark investment from business and bring food, entertainment and shopping back. So why not re-invest in the neighborhoods of west Baltimore? Instead of giving people incentives to invest for a day, why not give them incentives to invest for life?
Want to weigh in? Use our survey to tell us your opinion.
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