Marc Witman and Mary Antoun are giddy about the mountain they have conquered. They are inhaling the rarefied air of success.
For Witman, president of the Greater Baltimore Board of Realtors, it was a crusade.
For Antoun, executive vice president of the Maryland Association of Realtors, it was the end of 15 years of frustration.
For Maryland homeowners with escrow accounts, it means they'll share in a one-time refund totaling nearly half a billion dollars. Yes, that's half a billion. And if they act quickly, they can get the money sooner than later.
And for those buying homes, it means a significant lowering of closing costs, which have been deplored as the second-highest in the nation.
The hype and discourse found in this year's General Assembly session may have been about cigarette taxes, electric utilities deregulation, gay rights or racetrack subsidies, but the sleeper bill may have been the one that directed the switching of property tax payments from an annual to semiannual basis.
The concept had been kicking around Annapolis for years, only to be killed each session, but it finally passed through the House of Delegates and Senate. The bill is awaiting the signature of Gov. Parris N. Glendening, who supported it.
"I would say to the dollar benefit to the buyer, this is the most significant piece of closing-cost reduction legislation that has ever been passed," said Witman, an associate broker with Long & Foster Real Estate Inc. in Pikesville.
According to Witman, in Baltimore County it will reduce the cash necessary for closing by 15 percent, and in Baltimore by 22 percent.
"At the minimum, this will cut a couple of hundred dollars off of the amount of money that buy- ers will have to bring to the settlement table," said Ronald W. Wineholt, director of the Maryland Department of Assessments and Taxation. "But I would say the Maryland Association of Realtors were the real driving force on this legislation."
When a buyer purchases a home, the lender usually requires 12 months' worth -- plus a two-month buffer -- of property taxes to be placed into an escrow account at settlement.
Maryland homeowners already had the option to pay property taxes on a semiannual basis, but few elected to change. But with the new law, semiannual becomes mandatory and an annual payment becomes optional.
For example, Witman said, a buyer paying taxes on a 12-month basis would have to pay $6,270 in closing costs on a $150,000 home in Baltimore County. But under a semiannual schedule, the closing costs would drop to $5,350, a savings of $920.
In Baltimore, the closing costs would drop from $8,382 to $6,573.
"I think everybody is a winner with this legislation and it just took us a while," Antoun said.
"This year we were able to sit down and demonstrate [the benefits] a little more clearly than we had before. And everybody, quite frankly, likes the idea of giving people some of their money back."
The legislation, which is limited to owner-occupied properties, has two effective dates. The first is July 1, when new housing contracts of sale are to be figured using semiannual payments as the norm.
The second is July 1, 2000, when semiannual payments for all homeowners become effective. However, homeowners will still be able to pay annually if they choose.
"As hard as it is to effect change, and as resistant as people are to any change, when we sat down with representatives of government who had concerns about it and really explained the mechanics and the benefit of it, who it was good for, the unanimous vote [in the Senate committee] shows you just how obvious this thing is for Maryland and homeownership in Maryland," Witman said.
The legislation also empowers local jurisdictions to collect a fee for anticipated lost interest income and administrative charges that cannot exceed 1.6 percent of a homeowner's second installment of property taxes. Wineholt said that fee would average about $12 a year for a homeowner.
According to Antoun, it is estimated that for every $1,000 in reduced closing costs, another 3,000 homebuyers can qualify for loans.
"If we get just another 2,000 home sales just because of this legislation, it's going to put about $6 million in the coffers in the counties," Antoun said, referring to transfer taxes and other fees generated by home buying and selling.
Although the primary purpose of the legislation was to lower closing costs, a side benefit is that thousands of homeowners with escrow accounts can expect to get anywhere from four to six months of property taxes refunded when their accounts are re-analyzed by their mortgage service provider.
Federal law requires lenders to analyze escrow accounts once a year -- usually in the fourth quarter -- and refund any excess funds.