When Properties Go Into Foreclosure, Who Pays?

Using Q3 2014 foreclosure data reported by the state DHCD, Maryland has held steady as the number-two state for foreclosure filings in 2014, just behind Florida. In fact, foreclosure filings in Maryland have increased since Q2 2014. To put this into context, foreclosure activity has declined nationwide by 15.9% since 2013, yet in Maryland, it has increased slightly, by 0.2%. That means a lot of Maryland families are still losing their homes, particularly in Baltimore City, where foreclosure activity increased from Q2 2014 to Q3. From the report:

Baltimore City with 1,838 filings had the second largest number of foreclosure events, accounting for 15.8 percent of the total. The City’s foreclosures edged up 1.1 percent above the previous quarter but fell 16.6 percent below last year.

Baltimore City Data Q3 2014

Baltimore City also had the second-highest percentage of mortgage defaults, and the third-highest number of foreclosure sales. Lender purchases of Baltimore City homes increased 22.7 over 2013, leading to a large increase of bank-owned homes in Baltimore City. In addition, 21 zip codes in Baltimore City fall into the three “Hot Spot” categories of Severe Foreclosure Activity (two zip codes: 21201 and 21223), Very High Foreclosure Activity (eight zip codes: 21206, 21218, 21213, 21206, 21216, 21217, 21214, 21225, and 21202) and High Foreclosure Activity (eleven zip codes: 21212, 21229, 21215, 21230, 21205, 21205, 21231, 21226, 21239, 21222, 21224). The zip code in Baltimore City that saw the most foreclosure activity overall in Q3 2014 was 21223, a zip code that includes a small part of Pigtown, but also a good chunk of SW and West Baltimore — neighborhoods that have been in decline for many years, and high foreclosure activity will only further the devaluation of properties and these communities.

Who Pays?

The short and simple answer is — we all do, as taxpayers.

Banks don’t have the greatest reputation for maintaining foreclosed homes, particularly in Baltimore City where many of these homes are located in neighborhoods where property values either maintained their historic stagnation, or fell dramatically after the artificial inflation “boom” of the mid-2000s. When property values decline, landlords and homeowners are more likely to walk away from their properties, leaving even more abandoned homes and less taxpayers to pick up the tab for the City’s property taxes. Many times, these homeowners leave the city altogether, decreasing the number of taxpayers overall. This is something Baltimore City can ill afford, particularly when the government is not investing in these communities or doing anything to proactively create a climate where moderate-income families can afford to stay in their homes, whether renters or homeowners. Also, when a bank does take the time to auction off a home it deems of value, in many communities, the home is snapped up by investors, who will then either hold onto it until such time the market improves (which could take years, if not decades, in some neighborhoods) or turn it into a poorly-maintained rental, furthering the costs to taxpayers.

Vacant house fire, Pigtown, 2013
Vacant house fire, Pigtown, 2013

Additionally, when banks fail to maintain the homes they are responsible for, they can further fall into disrepair, costing Baltimore taxpayers thousands of dollars per year for City maintenance, trash removal, additional police and fire services, and even demolition. In a  report issued by the US Fire Administration in 2010,  it was found that close to 28,000 vacant residential building fires are reported nationwide, with arson cited as the leading cause. In addition, property loss is cited at $900 million annually. Even more disturbing, the dollar amount for property loss on vacant structures is almost double that of the dollar amount for property loss for occupied structures.

Considering the number of vacant residential structures in Baltimore, we cannot afford to spend any more time issuing studies and reports — we know what the problem is, we know what to do about it. The time now in 2015 is to act, before we lose more taxpayers, more money, and more property.

What Can You Do About Bank-Owned Homes?

Again, a short and simple answer: Not much.

932 W Lombard Street, abandoned by Regions Bank after foreclosure.
932 W Lombard Street, abandoned by Regions Bank after foreclosure.

You can (and should) report suspicious activity to the police and file 311 complaints if you see that the home is falling into disrepair. But beyond that, it’s difficult to hold banks to even the most minimum of maintenance standards.

It’s difficult for residents to find actual foreclosure information on the “eyesore next door” — the Maryland State Department of Assessments and Taxation data is unreliable, and incomplete. Many foreclosed addresses still list the owner’s name instead of the bank, even when the home has completed the foreclosure process and was sold, either to the bank or another entity. It can take months, if not years, for that information to be updated — and that’s little comfort for neighbors who are being negatively impacted by these homes. There is a Maryland Foreclosure Registry, but it’s not available for public use — again, thwarting the efforts of community groups and individual residents who are stymied by vacant homes in their neighborhood.

Governments Can Act, and Residents Need to Hold Them Accountable!

One idea that’s been taking root, albeit slowly, across the country is for municipalities to require a foreclosure bond from banks, to assist in paying part of the additional costs mentioned above. As you can imagine, the process has been slow in developing, due to pushback from banks — some banks have even filed suit to stop the accountability process.

Baltimore City is facing a budget shortfall — due, in part, to under-performing “grand schemes” like the Horseshoe Casino, but foreclosures and abandoned homes are not helping the city’s budget, or taxpayers’ budgets. It’s time our government took a stand against negligence and decay — and took a stand in favor of taxpaying residents, by holding banks accountable for their neglect, and making them pay for the additional city services needed. This would take the burden off taxpayers, and allow for more investment in some of our more vulnerable neighborhoods.

What You Can Do Now

Ask your City Council representative to please support this idea, today! If you don’t know who your City Councilperson is, please go here and look up your address. Tell them you are no longer willing to foot the bill for negligent property owners, including banks, and there’s a way to hold them accountable and take the financial burden off taxpayers.

If you know of any foreclosed homes in your neighborhood that are not being maintained by the bank or new owners, please call 311 or file an online 311 complaint. If you receive no response or see any action being taken in a timely fashion, please send us an email.

 

A Tale of Three Cities

Baltimore City Hall
Baltimore City Hall

People make much of the idea of “two cities” in Baltimore — one, affluent and white, and the other is usually labeled as poor and black. This view leaves out the third group: the folks, black and white, who earn around the city’s median income of $40,000 or so, and have solid potential to be upwardly mobile over the long term. You know — the working families who don’t consider themselves rich or poor, just…somewhere in the middle trying to get by. They don’t qualify for housing assistance, and even if they did — they probably wouldn’t apply (who has the time to hold down a full-time job, run a household, raise kids or take care of elderly parents or an ailing spouse, and commit to the arduous process of applying for social services?), and there isn’t a whole lot of moderate-income housing for them anyway.

It’s not like I’m saying anything I haven’t said a million times before, and won’t keep saying  — but I have to wonder why, in a city with so much potential safe and affordable housing — we have so little of it.

One of the reasons is the US Department of Housing and Urban Development (HUD). This is the agency in charge of setting what they deem a “Fair Market Rent (FMR) for every Metropolitan Statistical Area (MSA). Our MSA includes Towson, Columbia, and all the other wealthy suburbs in between. The idea is to set the FMR at a level that would allow low- and very low-income renters who receive Section 8/Housing Choice Vouchers to move from their neighborhoods of concentrated poverty into areas of prosperity (and higher rents). This is problematic on multiple levels:

  • Most poor people, through either a lack of means or a desire to stay near jobs, family, and other support systems, don’t actually move far away if at all. It’s hard to leave family support and friends, particularly if a low-income family relies on family and friends for childcare and/or transportation. Also, many wealthier suburbs (and even wealthier city neighborhoods) don’t have adequate or reliable public transit, making it hard for low-income families to access jobs, childcare, doctors, or shopping.
  • Because the FMR is based on a geographic area that includes wealthier suburbs, the FMR is unreasonably high in many of our moderate- and low-income neighborhoods. To ask someone earning the median, or just on either side of the median, to pay $1250 a month (approximate FMR for a two-bedroom house or apartment in the Baltimore-Columbia-Towson MSA) without housing assistance in many of our neighborhoods drives out the stabilizing force that moderate-income working families bring. It also drives away their current and future tax dollars, and consumer spending.

Many of our city’s neighborhoods, despite news and other reports to the contrary, are either stagnating, or they’re becoming even more concentrated areas of poverty, as more prosperous neighborhoods receive development projects and other attention from the State and City governments. (See concentrated poverty map again, to reiterate this point.) Oftentimes, this is due to investors snapping up cheap and foreclosed homes to flip and turn into Section 8 rentals. In Pigtown, one LLC flipped one block of homes to another LLC, for around $19,000 each, further destabilizing home prices. Inexplicably, one of the homes is now on the market for $174,000, when many homes on surrounding streets are on the market for far less. How long before this block of homes is turned into Section 8 rentals, if they don’t sell? Turning them into rentals those with moderate incomes could afford would be the better course of action — it would add stability to a floundering neighborhood, and could potentially raise property values as these renters turn into buyers.

From a 2003 National Housing Institute/Shelterforce article:

During the past decade, speculators saw an opportunity in Patterson Park – and in the loopholes of the voucher program. They found they could snap up vacant rowhouses for as little as $10,000, give them a fresh coat of paint, pass Section 8 inspection, and start to rake in vouchers worth $700 a month, much more than the rentals would be worth on the private market. As groups of out-of-town investors got in on the deal, Section 8 families flooded into as many as 700 of Patterson Park’s rowhouses. The neighborhood became visibly poorer and shabbier as the landlords ignored maintenance. “The people buying here were not experienced property managers,” Rutkowski says. “They were accountants and lawyers in the suburbs.”

While Patterson Park has improved considerably since 2003, it still struggles with investor-owned low-income housing. Something that could have alleviated current and past problems — mixed-income housing, and the stability that moderate-income earners bring to the table.

Some encouraging news was reported in this morning’s Baltimore Sun: One development near the biopark in West Baltimore will have 20% of its planned units set aside for moderate- and low-income tenants. Whether this plan comes to fruition or not — that remains to be seen.

Making affordable housing for working families a top priority of City and State government needs to happen. Our city cannot afford to be divided in three — it needs to come together to find real solutions that aren’t tied to nice-sounding theories and campaign contributions. Solid investments in our neighborhoods, a commitment to making Baltimore a liveable city, and reworking of HUD’s FMR would be a great start. Let’s make this happen in 2015 — together.

wypr_logo

How Not to Do Social Media, WYPR Style

wypr_logoUPDATE: This morning (1/4/2015), I received the following missive from Tony Brandon, head of WYPR. Sadly, he seems to have dismissed the matter, and doesn’t seem to understand the seriousness of censorship by the media:

“WYPR has a policy of not blocking social media unless it is abusive or excessive. We are taking steps to de-couple Dan’s personal social media from WYPR’s.
Thanks
Tony”

__________________________________________

UPDATE: Some of us have been unblocked, but that’s not enough — WYPR owes us an apology, and they need to change either their policies, or staff, or both — to ensure this never happens again to anyone.

Any time the media tries to silence public discourse, it cannot be tolerated in even the slightest fashion. Particularly a media outlet that relies on public funding, via our tax dollars.

——————————————————-

If you’re active in Baltimore politics or city revitalization, you eventually find yourself on the outs with a few reporters or folks who don’t agree with what you’re doing. It happens — doesn’t make it right or wrong, it just happens. A bunch of us who are active on Twitter were blocked by Dan Rodricks, Baltimore Sun columnist and WYPR show host. Honestly, it didn’t bother me that much — Dan’s a funny guy…and by “funny” I mean, kind of an odd duck. But — it’s Baltimore. Lots of odd ducks here, and it kind of makes the city a more interesting place. So it’s been something I’ve laughed about.

However, after the City Paper wrote about us being blocked by Dan — and by no means is this list complete…Dan has caught the blocking bug, and you might be next!…the station that hosts Dan’s show also blocked us. WYPR is an NPR affiliate. One of those stations that claims to offer open viewpoints, and claims to foster open dialogue. Except…when you don’t agree with their viewpoint, I guess.

Detail of screenshot from WYPR's Twitter page
Detail of screenshot from WYPR’s Twitter page

I find being blocked by a media outlet more menacing than being blocked by Dan Rodricks. Why? Because Dan is a person — yes, he’s a media figure, but he’s still human and subject to the same flaws and grievances as the rest of us. In person, he’s quite an affable guy. The last time I saw Dan was my birthday last year. I was a guest on David Warnock’s show on WYPR, and Dan hugged me and wished me a happy birthday. No hard feelings on my part then, and none now.

But when a media outlet starts blocking people, simply because they have a different point of view, you have to wonder what else they’re doing to censor the viewpoints of others. Especially when that media outlet depends on the goodwill of its donors to stay in business — many of whom are also donors to Housing Policy Watch and other initiatives to make Baltimore City a better place for all residents. We work really hard to improve the lot of people across the city — most of whom we’ll never meet, but we do it because it’s what needs doing. We do it because we live here, too, and we care about what happens to our friends, our neighbors, and complete strangers across town. Are these voices that should be silenced by the media?

Does WYPR’s social media policy allow for this kind of blatant censorship? I find it rather ironic that their website claims to “contribute to a strong civil society and active community life, provide access to knowledge and culture, extend education, and offer varied viewpoints and sensibilities” while at the same time, blocking and censoring many varied viewpoints and sensibilities, with little to no regard for the bigger picture. And yes, these principles allegedly apply to their social media policy:  “These standards apply across all public media channels and platforms – broadcasting, online, social media, print, media devices, and in-person events.” (Emphasis in both quotes are mine. You can read all of the “Public Media Code of Integrity” on their website here.)  I have been a guest on many NPR shows, and never imagined I would find myself, along with friends and colleagues, blocked from the very media that’s encouraged my work from Day One.

Frankly, to allow this kind of disruption to public discourse is wrong, and sets a dangerous precedent — and it must be stopped. Whether WYPR’s leadership is behind this or not — it doesn’t matter. They’ve hired people who obviously believe this is how we conduct discourse in a civil society — and this cannot be allowed or encouraged.

Because you, dear reader, might be next.

Possible Changes to IRS Tax Code are Bad for Nonprofits

us_capitolOne of the biggest incentives available for charitable giving is in danger, due to a possible change to IRS Tax Code. President Obama has proposed a 28% cap on charitable donations by high-income donors. This could potentially reduce giving to nonprofits, and therefore reduce their effectiveness and ability to combat problems governments and other institutions are unwilling or unable to work on.

Those donors whose incomes exceed $200,000 (or $250,000 for joint filers would be affected by the change. Donors whose incomes exceed $1 million would be subject to the Buffet Rule, which imposes a 30% tax on those taxpayers. For them, the charitable deduction is the only available deduction.

Three other provisions in the tax code that encourage charitable giving were reinstated, as of December 19, but will be allowed to expire as of January 1, despite broad bipartisan support:

  • The IRA Charitable Rollover, which allows taxpayers 75 years and older to donate up to $100,000 from their retirement without incurring any taxes on the withdrawal.
  • A provision that allows for incentives to donate land conservation easements
  • A provision that encourages businesses, restaurants, and farmers to donate unused food

The much-touted “economic recovery” hasn’t reached many Americans, and removing incentives for taxpayers to donate to charitable causes is just wrong. If anything, we need to make charitable giving easier — governments are slashing budgets, and the additional capacity provided by our nonprofits is needed more than ever.

2014 Wrap-Up

Blighted vacant homes in BaltimoreAs 2014 draws to a close, I thought it would be a good idea to highlight some of the work that’s been happening over the past year. You can support this work by going here and making a tax-deductible contribution that will be matched by the Warnock Foundation.

A total of 263 posts were written, between this website and the Baltimore Slumlord Watch project’s website.

Of those posts, we managed to highlight a total of 234 blighted nuisance properties, and updated you on 25 properties that were written about over the years. 18 of those properties were or are in some stage of the receivership process. Other issues that we pushed to the forefront in 2014:

  • Affordable rental housing for working families
  • The failure of our city and state property records
  • Strengthening Maryland’s housing laws to allow for honest property owners to shine, while ridding us of the financial and personal burdens of dealing with the bad ones.
  • Highlighting historically significant properties, and properties that have stories behind them that are worth sharing.
  • Showcasing well-done rehabs, giving encouragement to those who want to own and rehab properties within the bounds of the law.
  • Sending more viable properties to Baltimore Housing, in order to move them into receivership.

A few other 2014 highlights:

  • Three projects were started in other cities to draw attention to lax code enforcement and nuisance properties, bringing the total number of BSW-inspired projects to seven nationwide.
  • Completed two neighborhood maps (crime and property transfers), showing property ownership types in relation to areas of high crime. Work continues on the citywide map, and we’ve added a second neighborhood to the neighborhood mapping project.
  • Assisted neighbors with 37 nuisance properties, resulting in citations and cleanup efforts through referral to city agencies like Baltimore Housing and DPW, and community groups.

You can read about the upcoming work we’d like to accomplish in 2015 here and here. None of this work could be accomplished without all of the residents who email and leave comments on both websites, send photos, call about nuisance properties, share our work on Facebook and Twitter, and of course — donate. Your financial contribution is so important to keeping both of these projects alive, and right now your donations are being doubled by a matching fund from the Warnock Foundation, allowing for even more accomplishments in 2015. Please donate today!

 

 

 

 

 

Looking Forward to 2015: The Year of the Neighborhoods!

A Baltimore neighborhood
A Baltimore neighborhood

2015 is bringing some interesting challenges, but with challenges come opportunities. I’ve decided that here at HPW, 2015 is going to be the Year of the Neighborhoods. We’ll be focusing on making our neighborhoods stronger and safer, and also cleaner. Projects and activities are being planned — if your neighborhood is interested in participating, sign up for the mailing list and stay tuned!

The most exciting project I want to get started on is a showcase of Baltimore’s industrial properties and history, starting in SW Baltimore. We have so many empty industrial buildings — why not get them back into use, and put residents back to work? Of course we can’t do this without support — so if you’d like to make a tax-deductible contribution, please do.

Looking forward to hearing from folks, particularly from residents on the western side of town — I want your ideas, your thoughts, your stories, and your participation! Let’s make Baltimore a better, stronger city for all its residents!

Weatherization and Help With Heating Costs

thermostatMany people in Baltimore, and across Maryland, live without heat during the winter due to high utility bills.  Making your home more energy-efficient, and getting help to lower those bills is critical — especially for those with young children, or seniors.  Follow the links below if you are in need, and please make sure your neighbors are safe this winter!

Weatherization Resources

Help With Utility Bills

Baltimore Office of Home Energy Programs (also information about weatherization)

Maryland Department of Human Resources Home Energy Programs (Statewide information)

Support City Council Bill 13-0293

Blighted vacant homes in Baltimore
Blighted vacant homes in Baltimore

Introduced in the Baltimore City Council by Councilman Henry (District 4), this bill would expand the definition of vacant houses, giving Baltimore Housing the ability to levy fines against blighted nuisance properties faster, and impose harsher penalties against owners who did not comply. (Source: WBAL)

Many of our vacant structures are owned by absentee landlords, banks, or holding companies that have no plans to fix the problems — and have allowed these homes to fall into disrepair. Expanding the city’s ability to fine these owners and hold them accountable should go a long way towards cleaning up some of our blighted neighborhoods.

Two things that also need to happen, in order for this to be a success:

  1. The bill, once law, needs to be enforced. That could mean a line-item increase in Baltimore Housing’s budget for additional qualified housing inspectors.
  2. If these properties are sold at a municipal tax sale when the owners don’t pay the fines, there needs to be strict vetting of the people purchasing the homes, as to not further the chain of irresponsible ownership.

If the city is prepared to do these two things, let’s support this bill and make sure it becomes law. Contact your City Council representative and let them know you want this to pass — and let them know you expect there to be a clear plan for disposition of the properties, once seized.

For City Council district contact information, go here.

 

As Temperatures Drop…

BCFD on Ward Street in Pigtown, 2013
BCFD on Ward Street in Pigtown, 2013

…instances of fatal fires and carbon monoxide poisoning go up.  Don’t add to these dreadful statistics — be proactive and keep your family safe.

Baltimore City residents can call 311 or go online to request smoke detectors. The fire department will bring and install them — for free. You should have one on every floor of the house, and make a plan for what happens should one go off in the middle of the night.

Carbon monoxide is an invisible, odorless gas that can be deadly. The biggest sources of carbon monoxide in the home are the furnace, cars left running in an attached garage, boilers, and dirty/blocked chimneys. Before using your fireplace, have your chimney checked for debris or cracks! You should also have a CO detector/alarm on every floor of the house. They can be purchased online or in stores for not a lot of money — and they save lives.

If you cannot afford your energy bills this winter, please don’t wait until your BGE is turned off for nonpayment.  Go here to get more information on energy assistance in Maryland. Using a kerosene heater increases your chances of fire and carbon monoxide poisoning exponentially, and using candles for lighting your home could result in a fatal fire. Your life, and that of your family and pets, is precious — don’t wait until you have an emergency to look for help.

There’s no shame in asking for help when you’ve hit a bump in the road. Job loss, foreclosure, health issues that resulted in astronomical medical bills, unexpected expenses — these things can happen to anyone. It’s better to get the help you need now, before winter comes and your home is unsafe.

Lastly, if you have neighbors who are elderly, particularly if they’re low-income, please check on them from time to time, and make sure they’re safe.

Great News!

We’re embarking on a huge fundraising push for HPW and the work we do here, and starting now — every donation you give will be matched by a foundation grant, up to $30,000.  One of the critical items on any organization’s fundraising list is grassroots support.  Residents and businesses — the economic challenges Baltimore faces, and has faced for the past two decades — those affect you, no matter which neighborhood you live or work!

Six years ago we started a conversation about vacant housing — one that has received national and international attention.  Now it’s time to make sure our city and state officials close the door to bad development and negligent property owners, and open the doors for people who want to make our city a better place to live, work, and play.  Your tax-deductible contribution is the only way we’re able to continue this work. For six years we’ve been (literally) in the city’s neighborhoods, and fighting hard for better transparency in government, better use of our tax dollars, and a better city overall.  With your help, we’ll be able to see a safer, stronger, city — especially with this matching grant!

Please consider making a tax-deductible contribution today!