Federal Housing Administration

An article in the Jan. 12 Real Estate section incorrectly stated benefits to buyers of homes in the Department of Housing and Urban Development inventory.Through the end of February, buyers who plan to live in homes insured by the Federal Housing Administration pay just a $500 down payment. Owner-occupants or investors can get a $300 bonus if the sale goes to settlement within 30 days of HUD's accepting a contract.The Sun regrets the error.Pub Date: 1/19/97

The Obama administration has announced a major new effort to stem the foreclosure crisis by focusing on two groups: the unemployed and the rapidly growing share of homeowners who owe more on their mortgages than their houses are worth. Getting banks to temporarily reduce payments for the unemployed fits in with many previous efforts to help those who find they are unable, because of the economic downturn, to meet their mortgage obligations. But the second part of the plan, helping those with so-called "underwater" mortgages reduce the amount of principal they owe, may be more difficult for many Americans to swallow.

The federal effort to eliminate troubling lenders from the Federal Housing Administration mortgage program got an important boost this week from the 4th U.S. Circuit Court of Appeals in Richmond, Va. The court upheld the move last year by the U.S. Department of Housing and Urban Development to bar a Maryland business from making FHA-backed loans in the Baltimore-Washington area because of a high default rate on those mortgages. Capitol Mortgage Bankers Inc. of Millersville was one of 27 lenders to be barred in the first round of a new attempt by HUD to reduce the rising foreclosure rate on mortgages insured by the Federal Housing Administration.

A small paid notice in Wednesday's Sun announced the death of Anne Irene Ruth Salzman at Charlestown Retirement Community. She was 97 and "was preceded in death by her husband of fifty years, Sidney Salzman," the notice said. Missing was the rest of the story - how the Salzmans in 1941 fought the Federal Housing Administration for the right to live in a neighborhood of their own choosing. Much has changed since then, but studies suggest that each year millions of Americans still face similar discrimination - not by the government, perhaps, but by the real estate marketplace.

The Obama administration has announced a major new effort to stem the foreclosure crisis by focusing on two groups: the unemployed and the rapidly growing share of homeowners who owe more on their mortgages than their houses are worth. Getting banks to temporarily reduce payments for the unemployed fits in with many previous efforts to help those who find they are unable, because of the economic downturn, to meet their mortgage obligations. But the second part of the plan, helping those with so-called "underwater" mortgages reduce the amount of principal they owe, may be more difficult for many Americans to swallow.

Susan Gaffney, the chief investigator at the U.S. Department of Housing and Urban Development, whose plans for a fraud probe in Baltimore sparked charges of racism from former Mayor Kurt L. Schmoke three years ago, announced her retirement yesterday. Gaffney, 57, said she plans to retire "in about a month" after 22 years in the federal government. In 1993, former President Bill Clinton named her HUD inspector general, an independent post that supervises a nationwide staff of auditors and criminal investigators.

Every American family should be able to afford a decent home in a suitable environment.That's the national goal, as expressed in a major new housing legislative bill -- the National Affordable Housing Act. It's the first really significant housing legislation in 10 years and opens the door to new and experimental affordable housing programs.The legislation makes it possible for mortgage lenders, government units and non-profit organizations to join in establishing local affordable housing programs.

A small paid notice in Wednesday's Sun announced the death of Anne Irene Ruth Salzman at Charlestown Retirement Community. She was 97 and "was preceded in death by her husband of fifty years, Sidney Salzman," the notice said. Missing was the rest of the story -- how the Salzmans in 1941 fought the Federal Housing Administration for the right to live in a neighborhood of their own choosing. Much has changed since then, but studies suggest that each year millions of Americans still face similar discrimination -- not by the government, perhaps, but by the real estate marketplace.

Dear Mr. Azrael: I bought a house last October using an FHA 203(k) loan. The items that were on the 203(k) list were done. My problem is that I am finding repairs that were not disclosed to me that are major and need to be done immediately. I cannot find anyone that will help me find the right person responsible for the mess in this house. I have recently found out that the FHA 203(k) loans are all in Philadelphia and now you cannot get through. I want to know: What does it mean when I am told that Maryland has a disclaimer and/or disclosure law?

Federal housing officials on Tuesday served subpoenas on 15 mortgage companies, including one in Maryland, saying the firms appeared to have high default rates for loans backed by the Federal Housing Administration. Dell Franklin Financial, a small Columbia firm with about 20 employees, is among those being investigated, but President Richard Reese said it has done nothing wrong and that a federal audit performed late last year found the bank to be in good standing. The firm originates about 800 loans every year on homes around the country, working with clients by telephone and from its headquarters.

Federal housing officials on Tuesday served subpoenas on 15 mortgage companies, including one in Maryland, saying the firms appeared to have high default rates for loans backed by the Federal Housing Administration. Dell Franklin Financial, a small Columbia firm with about 20 employees, is among those being investigated, but President Richard Reese said it has done nothing wrong and that a federal audit performed late last year found the bank to be in good standing. The firm originates about 800 loans every year on homes around the country, working with clients by telephone and from its headquarters.

WASHINGTON -- The House passed yesterday the most sweeping government plan yet to shore up the troubled housing market and help people struggling to pay their mortgages, adopting legislation that would underwrite $300 billion in new loans and keep an estimated 500,000 homeowners out of foreclosure. Backers contend that the bill - or something close to it - has a good chance to become law even though Senate Republicans have criticized it and the president has threatened a veto. "We're not stopping trying to compromise," said Rep. Barney Frank, a Massachusetts Democrat who is chairman of the House Financial Services Committee and chief author of the package.

William Otto Schmidbauer, one of the prominent figures in an epidemic of Baltimore property flipping that has cost lenders and the government tens of millions of dollars, scarred neighborhoods and financially ruined hundreds of victimized buyers, pleaded guilty yesterday in federal court to conspiracy. Schmidbauer became the 51st defendant to be convicted in U.S. District Court in Baltimore in a multicase investigation that began five years ago. Another 16 people have been convicted in federal court in Greenbelt.

WITH ROUGHLY 140 foreclosure petitions filed each week, Baltimore is headed for a bumper year in real estate repossessions. That's bad news all around: Buyers lose investments, the federal government must redeem bad mortgages it has guaranteed, and fragile city neighborhoods are confronted with further instability. This flurry of foreclosures comes in the wake of the so-called property flipping (the quick purchase and resale of houses at inflated value) and predatory lending fraud that racked Baltimore from 1996 to 2000.

Despite federal prosecution of more than three dozen defendants and investigations of dozens of other people, property flipping is still a serious problem in Baltimore, a congressional subcommittee was told yesterday. "Flipping continues with several thousand such deals every year," Mayor Martin O'Malley told a Senate Appropriations subcommittee hearing called by Sen. Barbara A. Mikulski, a Maryland Democrat. "We are not winning the war," said Ken Strong, director of research and policy at the Community Law Center and consultant to the city Housing Department.

WITH ROUGHLY 140 foreclosure petitions filed each week, Baltimore is headed for a bumper year in real estate repossessions. That's bad news all around: Buyers lose investments, the federal government must redeem bad mortgages it has guaranteed, and fragile city neighborhoods are confronted with further instability. This flurry of foreclosures comes in the wake of the so-called property flipping (the quick purchase and resale of houses at inflated value) and predatory lending fraud that racked Baltimore from 1996 to 2000.