NHSB Gives Testimony to City Council

Letter to the Taxation, Finance and Economic Development Committee
Organization: Neighborhood Housing Services of Baltimore
Testimony for Bill # CC 08-0037R
Written By: Alicia Schuller and Tanya Washington
January 22, 2009

History and Approach
Neighborhood Housing Services of Baltimore is a non-profit housing organization that has fought to provide access to the American dream of homeownership since its inception. Our mission to create and sustain homeownership opportunities through customized lending and consumer education insures successful homeownership.


Preventing Foreclosure as Apart of Our Mission
In July of 2007 we incorporated foreclosure prevention as a business line because we recognized the vast need for the service and the relevance foreclosure has to sustaining homeownership, a key part of our mission. We currently offer an emergency bridge loan of up to $5,000, which is meant to bridge the gap and buy time for the homeowner, while we refinance them into a lower rate or modify their loan with their bank.

Recent Trends in Clientele
The homeowners seeking our services are most commonly victims of sub-prime and exotic mortgages, such as 80/20 rate loans. Additionally, catastrophic life events including job loss, illness, death of a spouse, and simple over-extension of the borrower’s financial responsibilities have been the root cause of delinquencies we have seen. The core demographic of clients reaching out for our services is African American, single parent, head-of-household, women.

We currently maintain a waiting list of over 500 people who are in need of our foreclosure prevention services, however about half of those have failed to return required materials to move forward on their cases. Since July of 2007 NHS of Baltimore has counseled more than 170 families and individuals facing mortgage delinquencies and foreclosure. However, due to funding constraints, we have only been able to provide 39 households with the Emergency Bridge Loan. The demand for the loan has been so high that NHS of Baltimore depleted allocated monies for it by the December of 2008. We are currently exploring more funding options as the demand continues to be high.

It is imperative that state and federal officials recognize the large need for foreclosure prevention programs such as our own to insure that they continue to receive ample funding. The foreclosure and economic crisis is far from over, but it is clear that successful homeownership is not only key to making sustaining vibrant Baltimore neighborhoods, but in maintaining a strong and healthy economy.
Thank you,
Neighborhood Housing Services of Baltimore

5 Essentials to Winterizing Your Home

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

While there are many things you can do to winterize your home, NHS of Baltimore offers these 5 essential tips that will save you money and maximize your comfort during the winter season.

Insulate Your Attic:
Making sure your attic is properly and tightly insulated will trap more heat in the home and prevent it from escaping through the roof. Be sure your insulation is at least 12 inches thick.

Test and Inspect Your Furnace and Heating System:
Be sure to fire up your furnace at least once before Jack Frost pays a visit, to ensure it is working properly. Also, if you have central heating, have an inspector come to your home at least once a year to ensure that the ductwork is secure and firmly insulated.

Secure Your Windows:
Installing your storm windows when the temperatures begin to fall is an easy way to insulate your home. Replacing old and outdated windows is also important although it can be quite costly. If money is tight try budgeting to pay for a couple windows at a time.

Seal Leaky Areas:
Pinpoint the trouble areas in your home where you can feel drafts coming through. Door and window frames can be caulked easily and should be sealed on both the interior and exterior of your home. Use a door sweep underneath the opening of your door id air is entering through.

Clean Your Gutters:
Too much debris in your gutters when winter comes can cause major issues. It can clog drainage and prevent melting snow from running off properly and away from your home. Instead, it can back up and seep into the home causes water damage and others problems.

NHS of Baltimore offers low-interest, deferrable loans for housing rehab and maintenance to help pay for housing essentials such as new heating, new windows, new roofing and lots more.

NHS of Baltimore Helping People Avoid Foreclosure

By: Rena Somar, Homeownership Adviser, NHS of Baltimore

I am currently working with a client who called me on November 5th to help her with her mortgage. Her home was in foreclosure and scheduled to be sold on November 13th. I called her lender to work out some type of modification but they were not willing to work with her until she paid the legal fees. My client does not have an income because she is disabled and does not work. She is currently waiting on her disability check, which is backdated from 2006 due to a legal battle over pre-approval of her disability. Although she has since been approved, she will not receive her check for at least another month.

I called the Department of Housing and Community Development on November 6th and spoke with Jeanne Mullen, Manager of Single Family Collections, who asked me for certain documents, including written authorization from my client, giving me permission to work on her behalf. On November 7th I received a call from Gary Masseaux, Asset Management Officer of DHCD Delinquency Reports, who informed me that my client’s foreclosure sale date was stopped and they have given her 60 to 90 days to bring her mortgage current. This will give her enough time to receive her disability money and pay her mortgage in full.

Real Estate Market Still Safe in Some Places

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore
An article in Yahoo! today explained there are six places in the United States where the real estate markets continue to thrive and steadily grow. The lucky ones include:
1. Lancaster, PA.
2. Clarksville, TN.
3. Albuquerque, NM.
4. Burlington, VT.
5. Johnson City, TN.
6. Washington, D.C.
Read the full story for details on why these cities are weathering the storm…

NHS of Baltimore Offering Free Income Tax Preparation

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

Neighborhood Housing Services of Baltimore is pleased to announce we are offering free income tax preparation, during the upcoming season, for taxpayers making less than $42,000 a year. Services will begin in January and will be offered Tuesdays and Thursdays from 4:30pm-8:30pm, as well as Saturdays from 10:00am-5:00pm. Customers will have their taxes prepared by highly trained, well qualified volunteers. Spanish speaking accommodations are available Thursdays and Saturdays by appointment. This program will be made possible by NHS of Baltimore, the Baltimore Cash Campaign and the Volunteer Income Tax Assistance program (VITA). Call NHS of Baltimore and schedule an appointment today- 410-327-1200 Ext. 160. Or visit our website. VITA-- Volunteer Income Tax Assistance

$7,500 Homebuyer Tax Credit Needs Reworking

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

It’s no secret. The economic downturn facing the United States right now was triggered by carelessness in the mortgage lending markets. Congress recognized the need for immediate action earlier this summer when they passed the Housing and Economic Recovery, which among many things, offered a $7,500 dollar tax credit to first time homebuyers as a way to stimulate home sales. The question now is-- is it working?

According to an article released last week by the Washington Post, very few first time homeowners have taken advantage of Congress’ tax credit. The largest reason-- the credit essentially amounts to a zero interest, federal loan. Given the current state of the economic crisis, potential homebuyers are extremely weary of loading on more debt.

This is not a good sign for an economy that is in desperate need of pumping up the housing market before it will see an end to the financial mess. Congress is now considering a second rescue bill to shore up the rescue package passed in early October. In addition to more federal oversight and assistance for businesses, the bill would include even more money for homebuyers, upwards of $12,000. However, it is still unclear whether a repayment provision will be included. Many argue this summer's housing bill provided enough money, but needs to be reworked to exclude the repayment requirement.

Cheryl Cassell, our own Assistant Director of Single Family Programs believes the best remedy for the housing market is a tax incentive that does not include a payback provision. “Housing tax credits can be a “hit or miss” in stimulating the housing market. The most recent tax credit proved not to be attractive because of the [the repayment component]. Historically, first time homebuyers generally do not have sufficient savings for a significant down payment. As such, instead of a tax credit with a repayment stipulation; a down payment credit or down payment assistance program would be more effective in stimulating the housing market.”

Letter to the Editor About CRA

Dear Editor,

This letter is in response to Ed Duffy’s op-ed piece in the Baltimore Examiner, which blamed the current U.S. mortgage and financial crisis on lax lending policies that came as a result of the Community Reinvestment Act of 1977 (CRA). Nothing could be further from the truth.

The current financial crisis is not the result of the extension of credit to low- to moderate-income and highly concentrated minority communities as urged by the CRA. The CRA “is intended to encourage depository institutions to help meet the credit needs of the communities in which they operate.” Those markets can be served responsibly, without creating extraordinary risk for lenders. In fact, for thirty years, NeighborWorks® organizations like Neighborhood Housing Services of Baltimore have helped provide mortgage credit to low-income communities with stellar results.

Many reports appear to have overlooked the fact that the current financial distress is a recent phenomenon created largely by institutions that are not subject to CRA requirements. Over the last several years lending by mortgage bankers and other non-depository intermediaries has eclipsed the production of depository lenders, accounting for more than half of the mortgage loans originated over the past five years. Additionally, a review of data provided by mortgage lenders pursuant to the Home Mortgage Disclosure Act reveals that lenders that are not subject to oversight by a federal banking agency (i.e. not subject to CRA) originated over half of the higher-priced conventional mortgage loans reported in 2005.

CRA did not push banks and other institutions to make loans to unqualified borrowers nor did it encourage them to relax underwriting criteria to the point where they failed to consider a borrower’s capacity to repay the loan.

For more than three decades CRA has encouraged the extension of credit to those with less than perfect credit histories. We know these borrowers can be successful homeowners. A sample of NeighborWorks® network originated mortgages, and new data from state housing finance agency-originated loans shows that these loans made primarily to low- and middle-income households, with average to below-average credit scores, have foreclosure rates significantly better than subprime.

For example, according to the Mortgage Bankers Association, 4.26 percent of subprime loans began the foreclosure process in the second quarter this year. In contrast, the foreclosure start rate for loans within the NeighborWorks network was just 0.21 percent. In fact, NeighborWorks performance is better than the prime market, which was reported by the MBA at 0.61 percent for the same period.

Sincerely,

Felix Torres Colon, Executive Director
Neighborhood Housing Services of Baltimore

Suburban Decline Becoming a Reality

By: Alicia Schuller, Marketing Coordinator, NHS of Baltimore

One lonely, occupied home standing in a sea of abandoned row homes, stretching block after block— children and families sitting on their front steps next to graffitied shells of homes with boarded up windows and crumbling walls. Residents of Baltimore city are all too familiar with these images.

Surprisingly, the images that once plagued metropolitan centers are becoming increasingly common in the outlying suburbs. Yes, the suburbs. New studies and information on suburban decline indicate that McMansions are sitting vacant and acre large plots of land are going undeveloped. According to a story in the Baltimore Sun, many experts contribute this shift in paradigm to the rise of the housing boom and its consequential bust, followed by the current subprime mortgage and lending crisis.

Furthermore, the rising cost of fuel, food and other essentials have caused people to search for alternatives in order to tighten their belts. Urban centers offer public transportation and close proximity to work and leisurely needs, cutting down on commute times and gasoline consumption and putting more money back in the pockets of Americans. The trend of out-migration over the last 40 years appears to be reversing little by little. This is good news for cities and urban centers, however its not so good for the suburbs.

Studies consistently show that crime is higher in communities with a large percentage of vacant and abandoned housing and vacant McMansions and housing developments can no longer hide from this statistic. According to the Washington Post, homes that sit empty due to foreclosure or difficulty being sold by developers have become new safe havens for drug dealers and squatters. After a home is foreclosed, it could sit vacant and un-chaperoned for months before it is auctioned off. This allows drug dealers and traffickers to move into the home unnoticed, using it as a drug lab.

As foreclosures continue to rise, vacant housing in the suburbs is going to create more crime and social problems in suburban areas that have not typically seen these problems before.

Press Release:Low Income Borrowers Do Better With Homeownership Counseling

A new national loan performance analysis of mortgages made to low income homeowners who have participated in homeownerships education programs through NeighborWorks organizations like Neighborhood Housing Services of Baltimore, shows a foreclosure start rate that is 20 times less severe tan that for the subprime borrowers and three times better than the conventional conforming mortgage market.

“The facts tell the real story,” said Felix Torres, Executive Director of NHS of Baltimore. “The vast majority of mortgages facilitated by NHS of Baltimore and other NeighborWorks organizations across the nation are to buyers with low to moderate incomes and less than perfect credit scores. Yet by providing quality mortgage advice, these homeowners have been able to sustain homeownership during the most severe housing crisis since the Great Depression.”

Comparing foreclosure data provided by the Mortgage Bankers Association, NeighborWorks shows that while its own loan portfolio had a foreclosure start rate of 0.21% in the second quarter of 2008, the overall market’s foreclosure start rate was 1.08%, more than five times as great.

Moreover, NeighborWorks mortgages hold up very well against a comparison to only the conventional conforming market. According to the MBA, the foreclosure start rate for conventional conforming mortgages was 0.61% in the second quarter, compared again to 0.21% for NeighborWorks mortgages.

Between March 1st and June 30th of this year, NHS of Baltimore counselors saw 66 households that were facing foreclosure and of those they were able to refinance 5, modify 24, give an emergency bridge loan to 9, recommend legal action for 3 and initiate a forbearance/repayment plan for 10. Furthermore, NHS of Baltimore has hosted more than 600 households at our homeownership classes and out of those, 80 have become homeowners this year.

“NeighborWorks organizations like NHS of Baltimore have a track record of providing one-on-one mortgage advice, encouraging homebuyers to avoid loans that they can not afford for the long term,” said Kenneth D. Wade, CEO of NeighborWorks America. “That dedication to community stability and strength is the foundation of what we’re doing in the Baltimore region and more than 4,400 communities around the country everyday.”

NHS of Baltimore's Partnership With Travelers Insurance

NHS of Baltimore used the grant we received from Travelers to install flood lights and repair exterior lighting in eight backyards facing dark allies and as a result, endured a great deal of loitering and crime. Travelers also provided a seminar to the residents of the neighborhood on how to recognize potential risks in and around their homes and address them properly.

Since the new lighting has been installed, there has been a noticeably significant drop in loitering and crime occurring in the allies behind these homes.