Tax, interest issues can victimize holders of `special...


November 30, 1999

Tax, interest issues can victimize holders of `special mortgages'

John O'Donnell and The Sun deserve high praise for their wonderful exposes on fraudulent house sales ("A cruel lesson in home buying," Nov. 7). The city is now talking about the "flipping" scams and the problems the new homeowners face.

I would like to outline three additional problems with these special mortgages.

First, unlike normal mortgage loans, where one-twelfth of the property tax bill is collected each month, few if any of these mortgages have provisions for an escrow account. This means that owners will have to pay the full tax amount in one lump sum, which is extremely difficult for those without savings.

In an unscientific examination of 25 randomly selected examples of such properties, only seven tax bills were up to date. The remaining 18 could well face a tax sale in May.

Second, these mortgages do not have fixed interest rates. They are adjustable rate mortgages starting, for the most part, at 10 percent, with provisions for rising 5 or 6 percent.

If the rates rise, owners could see, for example, payments on a $40,000 loan rise from $350 to more than $500.

These loans also have payment provisions that can make it very difficult to reduce the principal balance. On traditional mortgages, each payment reduces both interest and principal. But these contracts often contain the sentence: "The mortgage payments will be applied to interest before principal."

This is like buying on your Visa card and it can mean trouble to the low-income buyer. If hardship strikes someone with a scam loan, and a payment is 60 days late, the entire payment will be applied to accrued interest.

Theoretically, if one owes two back payments and makes only the regular payment each month for, say, two years -- or even 10 years -- the principal balance is never reduced. Unfortunately this is happening frequently.

Vincent P. Quayle


The writer is executive director of St. Ambrose Housing Aid Center.

Hold harbor developers to firmer standards

Kudos to Joe Mathews and Mike James for their expose on Neil Fisher. While I have often criticized The Sun for what I have believed to be one-sided reporting, this article at least stirs debate over how public officials are performing their duties ("Fisher record raises doubt," Nov. 23).

What strikes me now is the governor's apparently strident position about the $27 million or so in state aid for the improvement of the piers and bulkheads along HarborView's property.

When HarborView received its original tax breaks, the public was told the owner would be providing such improvements in the future.

As much as the Ritz-Carlton project would be a good thing for the Inner Harbor, the governor ought not be so willing to spend public money to aid a developer who has not lived up to his past promises.

HarborView Owner Richard Swirnow's poor record ought not to be overshadowed by Mr. Fisher's even more glaring deficiencies.

Gerard P. Martin


I read James Keat's column on waterfront development with interest ("Questioning roll of government on waterfront," Opinion Commentary, Nov. 25). It was a good summary of the roles of public and private figures in the development along Key Highway.

Particularly interesting was the report of city Public Works Director George G. Balog's opinion that the law is merely "conceptual" and can be ignored by those in power.

Apparently, some public figures need to be reeducated that the law is the will of the people -- and a "zero tolerance" policy needs to be enforced in the council chambers and boardrooms.

Mark J.Hannon


Hotel developers defraud officials and communities

After reading the articles "A checkered past, few questions asked" (Nov. 21-22) by Joe Mathews and Michael James, I have a tremendous admiration for these reporters' skill and tenacity.

The con-artistry, deception and fraud woven into the hotel construction industry by these money manipulators are a disgrace to our country.

The really sad part is the deception practiced on well-meaning public officials and dedicated community activists who have the city's interests at heart.

Walter E. Boyd


Jesse Jackson: a busybody who deserves no recognition

The item in The Sun's National Digest "Decatur schools ask court to keep Jackson, allies away" (Nov. 18) turned my stomach. Why give this grandstander one line of recognition?

Jesse Jackson should leave these local problems to those in authority at the site of the problem.

To attempt to make a national issue of some unruly kids is what keeps this country off balance, and prevents progress on the problem of racism.

John F. Thomas


Owners need incentives to maintain historic homes I've been reading with interest The Sun's articles pertaining to historic homes in Baltimore County. My wife and I own the "Hiss House," which is the ancestral home of Alger Hiss and one of the original Methodist meeting houses in Maryland.

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