Wednesday, July 18, 2007
State renews push against shady lenders
Residents detail how they lost their homes; Montgomery has seen more than 700 foreclosures in the past three months
by Janel Davis | Staff Writer
Naomi Brookner⁄The Gazette ‘‘I sold them my house with the intentions to rebuy it after a year of renting from them,” YaVonne English said, recounting how investors bought the Silver Spring house her mother willed to her.
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Each time YaVonne English recounted how she lost her house in Silver Spring, she was on the verge of tears. Three years ago, she said, a series of financial setbacks led her to seek help from unscrupulous lenders.
A broker referred her to an investor whose wife was a real estate agent.
‘‘I sold them my house with the intentions to rebuy it after a year of renting from them,” she told reporters at a news conference Monday in Rockville.
English owed $150,000 on her home. The husband-wife team bought the house for $300,000. A year later, the investors’ new asking price: $500,000.
English lost the house that her parents bought in 1970 — and that her dying mother willed to her.
‘‘Maybe it would be better, but I haven’t seen the investor nor his wife punished,” an anguished English said after the news conference. ‘‘I know God does the punishing, but it would satisfy me if at least she couldn’t sell real estate anymore or something.”
English’s story holds a mirror to the two-pronged problem occurring across the state: rising numbers of homebuyers losing their homes, and the need for tougher laws to thwart the practices of dishonest lenders.
Realty Trac, which tracks residential and commercial sales, reported Maryland’s foreclosure rate rose 24 percent from May to June, with 2,192 foreclosures recorded in June. The rate is a 370 percent increase from the same time last year.
During the second quarter of 2007, Montgomery County’s 717 foreclosures ranked eighth highest in the state for the number of households in foreclosure, compared to its 49 foreclosures during the second quarter of last year.
Monday’s news conference follows a $325 million settlement with Ameriquest Mortgage for its dishonest lending practices and a lawsuit filed by the national NAACP last week against 14 mortgage companies for predatory lending practices.
English and other county residents detailed their stories at Monday’s news conference. County Executive Isiah Leggett (D) joined state Labor, Licensing and Regulation Secretary Thomas E. Perez, detailing the state’s plan to keep Marylanders from losing their homes.
Last month, Gov. Martin O’Malley (D) established a Homeownership Preservation Task Force, hired four new compliance examiners and launched the Homeowners Preserving Equity. Part of the initiative includes a $100 million program to help about 500 households refinance their mortgages.
‘‘I heard someone refer recently to the ‘mortgage foreclosure tsunami’ ... a tsunami is an act of God. Foreclosures are not,” said Perez, a former Montgomery county councilman. ‘‘We know how we can fix this problem ... this is a preventable situation.”
Key to fixing the problems is ridding the county and state of predatory lenders, Leggett said.
‘‘An informed consumer is a better-protected consumer, so we want to ensure that our new homebuyers, and those homeowners who may be refinancing, are protected to the greatest extent possible,” he said.
While on the County Council, Perez (D) sponsored a fair housing law in 2005. The law was overturned last year by a judge after a lawsuit filed by mortgage lenders successfully argued that the council had exceeded its authority. At that time, Perez’s council colleagues said they would revise the law.
‘‘There have been some conversations,” said council Vice President Michael J. Knapp (D-Dist. 2) of Germantown. ‘‘We still need to figure out what the problem is and what the predatory or fair housing piece of that is. The foreclosure data [discussed at the Monday’s news conference] isn’t really a shock considering the high cost of housing in the region.”
It is that high cost that has prevented English from buying another home, and has forced Parvez Bakshi and his wife, Mary Rogers, to continue renting.
Bakshi lost his Gaithersburg house after his sister and the mortgage broker she worked for sold the couple on a bad refinancing deal. When the couple hit hard times, Bakshi, who is legally blind, took a second job to try to catch up on the $125,000 mortgage. Two months behind in payments, he sought out the broker for help.
Bakshi said the couple lost their home because the broker did not fully explain the terms of the refinancing to them.
‘‘Here we are, years later, back renting,” he said Monday. ‘‘Our house was our American Dream. Our dream still remains, but at our ages, we may not achieve it.”
By his estimates, Bakshi lost about $225,000 in equity. And the relationship with his sister: ‘‘We don’t talk.”
The problem with combating dishonest lending practices is that the state efforts are years too late, said Jorge Ribas, president of the Mid-Atlantic Hispanic Chamber of Commerce.
‘‘We warned them about this three years ago. There are lots of people who are already losing their homes,” he said. ‘‘The [lending industry] seems to be unregulated, and there is not enough done against the brokers.”
Most of the licensing and enforcement of the lending industry is done at the state level, leaving counties with little recourse to handle the problems locally. Perez said his office is evaluating existing state laws to determine whether they should be strengthened.
For more information
Public forum: At 7 p.m. today, a ‘‘Your Home-Your Money” housing forum about new homes and condo contracts, subprime mortgages and refinancing, foreclosures, settlement charges and property tax disclosures. Rockville Library, 21 Maryland Ave., Rockville. Call 240-777-3636.
Questions? If you think you have been a victim of unscrupulous mortgage lending practices, call the Montgomery County Office of Consumer Protection at 240-777-3636 or the Maryland Department of Labor, Licensing and Regulation at 888-784-0136.
