Maryland Business

Just read an article in the most recent Business Week edition about home loans backed by the US Dept. of Agriculture (USDA Home Loans: Subprime Redux?). Gist of the article is that the loan program offers $0 down and 100% financing, conditions awfully similar to those subprime loans that have wreaked so much havoc.

A quick look at eligible areas for the program on the USDA website shows that there are some prime areas in the state. Links to search for eligible areas are on the left side.

Obviously, most of the urban areas in Baltimore City, Baltimore County, Howard County and others are ineligible but there are pockets that might work.

Is this a viable tool to get people in homes? Or, will it be another program that will cause headaches down the road?

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The Federal Deposit Insurance Corp. on Wednesday released an online toolkit aimed at arming borrowers, banks and others with information to prevent unnecessary foreclosures as well as foreclosure rescue scams.

The kit includes:

• Is Foreclosure Knocking at Your Door? brochure (available online and in print), which encourages consumers facing financing difficulties to contact their servicer, apply for a loan modification, and talk to a counselor.

• Beware of Foreclosure Rescue Scams brochure (available online and in print), which provides information on common scams, tips for detecting fraudulent deals, and resources for reporting criminal activity.

• Spring 2009 edition of FDIC Consumer News, which features advice for consumers on avoiding foreclosure rescue and loan modification schemes.

The tool kit and other helpful resources are available on the FDIC’s foreclosure prevention Web page at www.fdic.gov/foreclosureprevention.

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Stifel Nicolaus is downgrading the value of LendingTree, the online service that puts people in touch with a network of lenders, because of potential competition from Google. Within the next few weeks, Google plans to launch a service that will compete directly with Tree.com’s LendingTree Exchange business.

The competition could seriously impact LendingTree’s earnings, Stifel said.

“We project that the Exchanges segment of LendingTree will represent about one-third of Tree.com’s total revenue in 2009 and a higher percentage of gross profit,” the report by analyst George I. Askew’s team said. “If Google launches a competing product, we believe LendingTree may face a decline in consumer loan requests, fewer lenders in its Exchange, higher marketing costs and lower lead pricing.”

LendingTree has also filed a law suit this week against Mortech Inc., claiming the mortgage technology provider violated its contract with LendingTree by partnering with Google in the endeavor.

Shares of Tree.com fell more than 8 percent by mid-morning.

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The federal government has decided to rescue Freddie Mac and Fannie Mae to help get the mortgage giants — and the U.S. economy — out of a pickle.

While that might have been good news to Wall Street and stock markets around the world, local investment manager Legg Mason Inc. took yet another hit in an already difficult year.

In particular, Bill Miller, the famed fund manager behind Legg Mason Capital Management, will suffer from this move. Miller has been adding steadily to his stockpile of shares in Freddie Mac this year, at various price points (about 35 million shares when the price was in the teens this spring, and another 30 million this summer when the price was under $10). He had amassed 80 million shares as of July 31, or 12.4 percent of shares, making LMCM the largest shareholder of Freddie stock.

Analysts think Freddie’s stock will soon be worth pennies – the share price was 90 cents at 1 p.m., down $4.20 or 82 percent today. So what should Miller do with those 80 million shares of Freddie stock? Sit around and hope for a miracle or try to find someone who’s daring enough to spend $80 million on the hopes of a turnaround?

What would you do in his shoes?

DANIELLE ULMAN, Business Writer

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