A package of legislation aimed at curbing property flipping in Baltimore and elsewhere drew wide but not unanimous support from witnesses at a lengthy House of Delegates committee hearing yesterday in Annapolis.
"These bills would at least go a long way toward preventing flipping," state Attorney General J. Joseph Curran Jr. told two committees. He urged legislators to take steps to prevent future deals while his office investigates past transactions.
More than 2,000 Baltimore houses have been bought and quickly resold in the last four years at price increases of at least 100 percent.
In most cases, virtually no repairs were made to the dilapidated houses, and inflated appraisals and falsified documents were used to obtain mortgages that often exceeded the value of the properties, defrauding lenders and buyers.
The House Economic Matters and Commerce and Government Matters committees heard more than four hours of testimony, including the stories of more than a half-dozen Baltimoreans who said they had been defrauded by lenders and sellers.
They were part of a delegation bused from Baltimore to the hearing by the Association of Communities Organizing for Reform Now (ACORN).
ACORN crafted -- and is pushing -- a bill introduced by Del. Salima S. Marriott, a Baltimore Democrat, that would limit fees and points that mortgage brokers and lenders could charge and place restrictions on lenders who provide high-interest mortgages.
"We come here now to demand your protection against the greed of predatory lenders," said Glenn Scott, a Southwest Baltimore resident.
The Marriott measure ran into opposition from the Maryland Association of Mortgage Brokers, the Greater Baltimore Board of Realtors and the Maryland Association of Realtors.
The bill, said Ira Cooke, a lobbyist for the mortgage brokers, "will dry up the available mortgage money in high-risk areas" and "dry up quality mortgage loans in Maryland."
Before the hearing, ACORN members -- including one dressed as a shark -- tried to hold a rally and press conference on a sidewalk next to a House office building, but police told them they had to move because they did not have a permit. They crossed the street to a mall between state buildings and held a brief rally.
The Marriott bill was not part of the package of three anti-flipping bills introduced by two other Baltimore Democrats, Dels. Carolyn J. Krysiak and Samuel I. Rosenberg.
Those measures would require the licensing of all real estate appraisers; give the state's commissioner of financial regulation broader authority to regulate mortgage brokers and lenders and require closer policing of the mortgage industry; and provide that home sales in Baltimore appear more quickly on the Web site of the State Department of Assessments and Taxation.
"This package of legislation appears to be addressing what we know about the process of flipping," said Mark Feinroth, an assistant secretary of the Department of Labor, Licensing and Regulation, which regulates appraisers, lenders and mortgage brokers.
Feinroth warned that the agency could seek further legislation in the future as it learns more about the practice.
The only significant opposition came from the Maryland Bankers Association, which mounted a case against the measure to require licensing of all appraisers -- a bill supported by regulators and the Maryland Appraisers Coalition.
The bill "will do absolutely nothing to stop the problem of flipping," said Robert Enten, lobbyist for the bankers association, but "will drive up closing costs all over the state of Maryland."
Appraisers are not required to get licenses to work in Maryland, although about 2,300 are licensed by the state. In many instances, federal agencies involved in real estate transactions -- for example, by insuring a mortgage -- and purchasers of mortgage loans require the use of a licensed appraiser. Regulators estimate that about 500 unlicensed appraisers are operating in the state.
Supporters argued that licensing of all appraisers would give the state more leverage over the industry, pointing out that an appraiser who loses his license can continue to practice.
Del. Michael E. Busch, an Anne Arundel County Democrat who heads the Economic Matters Committee, seemed incredulous that regulators had not yet penalized any appraisers involved in flipping.
"You haven't taken any regulatory action?" Busch asked. "You haven't suspended their license? You haven't revoked their license?"
"Not finally, no," Feinroth answered.