Flipping the script

March 27, 2006

We told the flippers, `You can run but you can't hide,'" U.S. Sen. Barbara A. Mikulski recently boasted. In the six years since she helped establish the Baltimore City Flipping and Predatory Lending Task Force, more than 100 dishonest real-estate dealmakers - appraisers, attorneys, settlement officers and phony homebuyers - have been convicted for taking part in predatory lending schemes that preyed on vulnerable city residents.

These results are worth bragging about. Real-estate speculators once ran roughshod over fragile city neighborhoods: buying houses on the cheap, making minor repairs and getting them illegally appraised at inflated rates, then quickly reselling them to unsuspecting homebuyers for overpriced amounts. This practice of "flipping" left buyers of modest means stuck with houses worth a fraction of what they paid for them. Many could not pay their mortgages and lost their homes. Some 3,000 houses were flipped between 1996 and 2000, and foreclosures shot up to 6,000 a year. Neighborhoods were left with empty, boarded-up houses.

Flipping cases have dropped by 77 percent since 1999, thanks in good measure to a concerted effort to blunt the practice. The task force and the U.S. attorney's office deserve credit for educating homebuyers and prosecuting dishonest sellers. Federal investigations and regulatory reforms sought by Senator Mikulski also played an important role, as did grassroots housing advocacy groups who got members of Congress involved.

Baltimore's healthy housing market is still ripe for speculators, but real estate is changing hands here a lot more cleanly these days - and that's good for current and future homeowners.

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