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'Courtroom' video is lesson on avoiding foreclosure

The Baltimore Sun

The first to enter the courtroom was a gray-haired widow who was obviously distraught, and with good reason: To pay for a new furnace, she was hoodwinked into taking out a new mortgage with a sky-high interest rate that has put her paid-off house in jeopardy.

Next came the mortgage broker, the very picture of smugness, also with good reason: His actions were unfair but not illegal.

Finally, the judge entered, sympathetic but realistic, scornful of the broker but unable to punish him.

The above scene is from a new, 21-minute video from the Baltimore Homeownership Preservation Coalition, a public-private partnership formed two years ago to address the high number of home foreclosures in the city.

Titled Judge Smartt and modeled after the ubiquitous television courtroom shows, the video has a simple but timely message: Both homeowners and homebuyers should seek impartial advice on any transaction involving the purchase or refinancing of a house.

The video -- which will have its public premiere at a $10-a-head event at 6 p.m. Tuesday at the Creative Alliance at the Patterson in Highlandtown -- is a logical complement to the coalition's first effort last fall to set up a hot line and expand services for borrowers facing foreclosure.

"A strategy for reducing the number of foreclosures has to include prevention on the front end -- trying to educate more homeowners and homebuyers," said Barbara Aylesworth, executive director of Belair-Edison Neighborhoods Inc. and executive producer and co-writer of Judge Smartt.

The video comes amid a growing problem with defaults on subprime mortgages -- loans at high interest rates given to borrowers with poor credit or modest, unstable incomes. Congress and financial regulators have begun looking at such practices as offering low "teaser" rates that quickly balloon upward, and some advocates have begun arguing that subprime lenders should be held accountable for the suitability as well as legality of the loans they give out.

But for now, says Aylesworth, "The onus is really on the homeowners and homebuyers."

Hence the video, which Aylesworth hopes will be shown to existing and potential owners by nonprofit groups such as hers that do housing counseling, and perhaps screened in such venues as the jury waiting room and high school classes.

The video is produced by the nonprofit Megaphone Project and includes as actors some well-known names in housing and local lending. In the opening segment, for example, Ruth Louie, president and CEO of Baltimore Community Lending, is Judge Delores Smartt; Anne Blumenberg, a lawyer with the St. Ambrose Housing Aid Center, plays the distraught widow; and Bill Henry, an executive with the Patterson Park Community Development Corp. and a candidate for City Council, is the unscrupulous mortgage broker.

The video was funded by the Annie E. Casey Foundation and the Greater Baltimore Board of Realtors.

Asked why his organization supported the project, Joseph T. "Jody" Landers III, executive director of the Realtors group, had a ready answer.

"Because we think it's important that people be made aware and buyers be educated to some of the pitfalls of dealing with disreputable actors out there in the marketplace," Landers said. "The first course of protection is for buyers to become more knowledgeable."

Besides the first segment, the video includes two other scenarios that housing advocates contend are all too common. One involves a couple who got a mortgage with a high rate over the Internet and had to make a pre-payment penalty to get out of the loan. The other is about a woman with poor credit who unwittingly overpaid for a house that needed substantial repairs, financing it through two loans with high fees and interest rates.

"It was very easy to write the script," Aylesworth said. "All the stories were based on actual [counseling] cases we had. We didn't pull them out of thin air."

Aside from emphasizing the need for independent advice, one of the most salient points of the video was that instead of rushing into high-cost loans, borrowers with poor credit would be better off in the long run taking time to repair their credit and qualifying for less expensive mortgages.

"Low-income people can get good loans even if they've had credit problems," Aylesworth said. "They can learn how to clean up their credit, learn how to budget, get attractive loans and be stable homeowners."

Another is the apparent limitations of legal recourse, notwithstanding the protestations of the borrowers that they didn't fully realize what they were getting into. At one point in the video, Judge Smartt lectures a speculator/broker with an open-necked shirt, gold chain and tinted glasses: "You and your kind are a scourge on this city. But you're smart. You didn't break the law."

Indeed, at the end of the video, after finding against the homeowner for the third time, she says: "This has been a really bad day for the good guys. Once again, I have to rule in favor of a defendant who doesn't necessarily deserve justice."

With a little more education and caution on the part of homebuyers and owners, those days might turn out to be fewer and further apart.

For information on the video and the premiere, call Belair-Edison Neighborhoods Inc. at 410-485-8422.

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