Activists and unions urged a Baltimore City Council committee to consider actions against lenders they argue hurt the city by purchasing distressed mortgages, evicting homeowners and leaving properties vacant.
The Housing and Urban Affairs Committee held a hearing on Thursday at City Hall examining the impact of a federal Housing and Urban Development program allowing the sale to investors of nonperforming mortgages backed by the Federal Housing Administration.
Groups such as Unite Here, United Workers and the Baltimore Housing Roundtable contend investors are buying the mortgages but not making attempts to assist owners stay in those properties, in many cases leaving the homes vacant hurting communities.
The organizations singled out one such investor, hedge fund Oaktree Capital Management, as particularly hurting Baltimore neighborhoods, especially predominantly black communities in the city.
“This meeting here is about Oaktree,” said Thomas Scott, a union leader with Unite Here.
As of June, 40 percent of the loans purchased by Oaktree are in foreclosure and 20 percent were in pre-foreclosure, according to a report from Unite Here.
The group also said volunteers knocked on the doors of 510 homes purchased by Oaktree in the Baltimore area and found that 42 percent of the houses were vacant.
The report also found that of the loans Oaktree purchased from HUD’s Neighborhood Stabilization Program, roughly 14 percent were modified. Of the mortgages that were modified, more than half of those, according to Unite Here, involved a $10,000 increase on the principal, while 14 percent of the time the principal increased by $50,000.
Sarah Edelman, director of housing policy at the think tank Center for American Progress, told the committee that lenders have until December 2018 to prove that 50 percent of the loans purchased from HUD must be stabilized.
Oaktree did not send a representative to the committee hearing Thursday despite a request by chairman Councilman John Bullock. John Christiansen, a spokesman for California-based Oaktree, said Thursday in an interview that the company is in compliance with Neighborhood Stabilization Program regulations.
There’s little action that can be taken by the Baltimore City Council to address the issue. According to activists, it can regulate firms charged with maintaining the properties and try to crack down on lenders who keep the properties in the previous owners name to collect the Homestead Tax Credit.
Another suggested method by activists to pressure Oaktree is for the council passing a resolution urging employee pension funds divest in Oaktree-related entities until it met a list of demands from the Baltimore Housing Roundtable. Those demands include a $1 million donation to the city’s fledgling affordable housing trust fund, a donation of 25 houses to a city land trust and halting evictions and foreclosures.