Maryland Business

The most-read stories of 2010 by The Daily Record’s business reporting team mirror many of the big ongoing stories that have dominated the news since the economy cratered two years ago — failed banks, slot machine gambling, struggling commercial real estate developments, and City Hall politics.

1. Two Maryland banks closed by regulators – Ben Mook

Federal regulators closed two troubled Maryland banks, including one that was believed to have been the oldest black-owned financial institution in the state. Bay National Bank and Baltimore-based Ideal Federal Savings Bank Friday became the fourth and fifth Maryland banks to be closed over the last two years.

2. Baltimore’s FiOS chances getting slimmer – Staff and Wire reports

Verizon is nearing the end of its program to replace copper phone lines with optical fibers that provide much higher Internet speeds and TV service. Its focus is now on completing the network in the communities where it has already secured “franchises” — and that means major cities such as Baltimore and downtown Boston will be left without FiOS.

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Foreclosures, holiday shopping and troublesome text messages — these staples of the modern-day news diet dominated the list of the top 5 most-read business stories this week at The Daily Record’s website. There was also a very scary tornado that touched down in Baltimore; luckily, no one was hurt.

1. Former Baltimore Sun editor resigns from UNC over racy text messages

Journalism school Dean Jean Folkerts says she contacted the university’s lawyers after the student’s former boyfriend confronted Monty Cook about the texts.

2. Bank of America making changes in foreclosure process

Among the changes, the legal documents used in the process will each be reviewed by the signer and promptly notarized, said Barbara Desoer, president of the bank’s home loans division.

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Government-sponsored mortgage giants Freddie Mac and Fannie Mae have outlined a plan to combat any deficiencies they might encounter during the foreclosure process.

“The country’s housing finance system remains fragile and I intend to maintain our focus on addressing this issue in a manner that is fair to delinquent households, but also fair to servicers, mortgage investors, neighborhoods and most of all, is in the best interest of taxpayers and housing markets,” Federal Housing Finance Agency Acting Director Edward J. DeMarco said in a statement announcing the plan.

The FHFA released the plan as the “robo-signing” scandal continues to grow. The FHFA is the regulator and conservator of Fannie Mae and Freddie Mac, and the regulator of the 12 Federal Home Loan Banks. Fannie and Freddie provide more than $5.9 trillion for domestic mortgage markets and financial institutions.

The plan, which seems pretty straightforward, is:

1. Verify the process: Review the process and procedures and make sure they’re legal.
2. Remediate any problems
3. Refer suspicion of fraudulent activity
4. Avoid delays: “In the absence of identified process problems, foreclosures on mortgages for which the borrower has stopped payment, and for which foreclosure alternatives have been unsuccessful, should proceed without delay. Delays in foreclosures add cost and other burdens for communities, investors, and taxpayers,” the agency wrote.

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I took this picture Wednesday at the Baltimore Homeownership Preservation Coalition’s 2009 foreclosure prevention workshop.

The event was held at the classy Tremont Grand hotel, and after the opening remarks in a second floor ballroom, I noticed this table set up in the dimly-lit corner, beneath the grand staircase leading to the third floor.

Why did it stick out? Because it’s a booth run by Wells Fargo, the company that the city of Baltimore sued last year for “reverse-redlining,” or predatory lending practices directed toward Baltimore’s black community. Many of these loans, the city alleges, resulted in foreclosures and the further deterioration of some of Baltimore’s poorest neighborhoods.

So why is bank accused of accelerating the foreclosure crisis sponsoring an event to help mitigate the foreclosure crisis? Good PR, I imagine. But it also says something about the nonprofit and housing advocacy community’s feelings about Wells Fargo — that they’re innocent until proven guilty and that they’re not completely persona non grata.

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Last week, regulators asked banks to step up and suspend foreclosures until the Obama administration can put in place a plan to help homeowners.

Many others have asked for a moratorium on foreclosures over the last year or so, but the request from the Office of Thrift Supervision seemed to resonate with mortgage lenders, probably because lenders know that the government is going to put a plan in play shortly.

On Friday, Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp., Morgan Stanley and Wells Fargo & Co. all agreed to halt foreclosures — for various periods of time, but most through March 6 — allowing three weeks for the government to announce a plan and lenders to implement it.

Mortgage finance companies Fannie Mae and Freddie Mac also said Friday that foreclosures have been suspended through March 6 on occupied single-family homes and two- to four-unit properties, to provide homeowners time to work out a plan with their loan servicers.

On Tuesday, Pittsburgh-based PNC Financial Services Group Inc. — which has a strong presence in Maryland — jumped on the bandwagon and said it would halt foreclosures through March 13, or until the Obama administration starts its loan modification program.

Consumers Union, the publisher of Consumer Reports, seemed pleased with the moves by lenders, but said in a statement that the short-term solution should be extended to really help struggling homeowners.

“We need a comprehensive plan to help people keep their homes for the long term,” said Norma Garcia, senior attorney for Consumers Union. “When Treasury announces its formal plan, we’d like to see a moratorium on foreclosures for six months. It should be mandatory for all lenders and servicers. We think six months would give lenders the time needed to deal with the huge backlog of pending foreclosures.”

Stay tuned: President Barack Obama is expected to announce his administration’s plan for modifying mortgages Wednesday.

DANIELLE ULMAN, Business Writer

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Monthly foreclosure reports are becoming excruciatingly predictable, I think. They seem to me just to underscore the fact, which is becoming rapidly clearer, that Fort Myers, Fla.; Las Vegas; and various McMansion suburbs in Southern California, are not great places to own a house.

RealtyTrac’s January foreclosure numbers came out yesterday, and the good news is that Maryland reported a 16.72 percent drop from last month, although foreclosures are about flat compared to the same time last year. Nationally, foreclosures dropped about 10 percent.

Don’t be misled by the two Maryland columns with the zeroes in them, “NOD” (notice of default) and NTS (notice of trustee sale). Those are not the result of some sort of anti-foreclosure policy. Maryland law stipulates that the foreclosure process actually begins with the Lis Penden (LIS), or notification of a pending lawsuit, which is sent after a homeowner defaults on his or her mortgage. In other states, such as California, Nevada and Utah, less liberal real estate laws make it such that the first default gets the foreclosure ball rolling and puts a homeowner’s property in peril.

An interesting perspective on these recently-released numbers, I think, is this: In January, 274,399 houses went into foreclosure nationwide, while Bloomberg reports that last year saw only about 605,000 housing starts in the U.S. This points to a terrible ratio between new versus existing housing stock for potential first-time homebuyeres, and bodes terribly for those who depend on the construction industry.

ROBBIE WHELAN, Business Writer

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I try to listen to NPR podcasts regularly. I admit, it’s partly because I feel obligated as a Web-based journalist – but it’s also because the content is top-notch.

I’m a fan of This American Life, a weekly radio program (and cable TV show, now) out of Chicago. (It airs locally on WYPR, Sundays at 4 p.m.) The show excels at what the radio medium is best suited for: storytelling.

But this blog post isn’t about how great TAL is, it’s about a podcast I listened to last weekend (on the treadmill, no less) that knocked my socks off.

A couple weeks ago, TAL did a show entitled “The giant pool of money.” It was in collaboration with NPR news, and it explains the mortgage crisis by talking to the actual people who got everyone into this mess. Or, as they put it, “the human beings who accidentally created the international financial crisis.” You can listen to a promo here.

Now, most – if not all – of the readers of this blog probably understand what a NINA loan or a mortgage-backed security is better than I do, but there’s more to be reaped from the 60-minute episode than a global understanding of how the foreclosure crisis came about.

The show asserts that the subprime crisis has connected the people facing foreclosure and the higher-up finance guys. Along the chain there were bankers, brokers and homeowners, all of whom deluded themselves. During the program, the NPR producers ask (and answer) “How did it even work?” and “What were they thinking?”

This is how you would find out what it felt like to be Mike Gardner, a former bartender-turned-mortgage broker, during the so-called “Valentine’s Day massacre” at Silver State Mortgage, when the Nevada employer defaulted on its loans and, without warning, laid everyone off.

Give it a listen and tell me what you think.

JACKIE SAUTER, Web Editor

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Where I grew up in Ellicott City, the Homeowners Association was King. Most decisions about changes to our neighborhood had to be cleared by the all-powerful HOA.

But their power might be draining (if we equate power with money, anyway).

Many HOAs’ access to cash just isn’t what it used to be. Forget pool upkeep or road repaving projects – some HOAs are scraping to meet the essential services such as trash removal. They’ve fallen victim, like so many others, to the foreclosure crisis. Homeowners are paying dues late or not at all.

The WSJ explains:

A growing number of homeowner and condominium associations across the country are raising their fees or putting the brakes on clubhouse improvements, new landscaping and other shared neighborhood amenities. The kitty is so low for some that essential services, such as building maintenance, electricity, trash removal and repairs have been cut.

As community residents lose their homes to foreclosure and new home building has slowed considerably, many of the roughly 300,000 neighborhood associations in the U.S. are grappling with shrunken budgets.

And, as one sage commenter at Poynter.org points out, some condo associations are dealing with an abundance of empty units – which means there are fewer homeowners to share the costs of vital projects.

JACKIE SAUTER, Web Editor

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Nationally, home values are still eroding and foreclosure filings are doubling, but thankfully, here in Maryland, we have a new ad campaign to save the day.

“Mortgage Late? Don’t Wait!”

Almost 700,000 postcards have been mailed to at-risk areas in the state with that message.

It’ll also appear on buses and rail cars in Baltimore and PG County. And that’s not all – a multimedia component will include radio and print advertising.

Because all people need is a little prompting, right?

JACKIE SAUTER, Web Editor

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Just when you thought having a five-fold increase in the number of foreclosures in Baltimore was a bad thing, America’s most well-known person-brand sees the silver lining.

Tapping into the investment opportunities available in light of people losing their homes, Donald Trump is prepared to show savvy investors how to take advantage of the situation.

Through his Trump University online courses, the Donald himself (through a team of instructors) is prepared to share his knowledge of finding “big money” in a series of introductory classes called the “Fast Track to Foreclosure Investing.”

Touting real estate as the new “it” investment — okay? — Trump University is offering free classes showing how to find foreclosed homes, track the cycle and secure funding.

And, it’s not like you’d be taking advantage of other peoples’ financial woes. Instead, you will “learn how to be a hero to homeowners who can’t afford their adjustable rate mortgage payment.”

According to a full page ad in Tuesday’s Baltimore Examiner, you even get a free “digital” copy of Trump’s “Catch The Wave: How Timing Can Make You a Fortune in Real Estate Today.”

Don’t worry though, for those skeptical that paying for full page ads and giving away digital copies doesn’t make financial sense, fine print at the bottom of the ad reminds people “products will be available for sale.”

BEN MOOK, Assistant Business Editor

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