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	Photo by Bill Green Mike Hager, an investment buyer, talks to a fellow investor as foreclosure auctions are held in front of the Frederick County Courthouse. Conducting the auction are Jim Loftus, auctioneer, left and Jamey Levinson.
	SUBPRIME LENDING & FORECLOSURES Homeowners around the nation are struggling to make mortgage payments, and Frederick County is no exception. The map below show the area with the lowest and highest concentration of subprime mortgage loans. Click the map for a larger image. SEARCHABLE DATABASE Search the list of foreclosures filed in Frederick County Circuit Court from Jan. 1 to March 18, 2008. BIZ BLOG Business editor Cliff Cumber blogs about the project. Click here to check out his blog. THE ECONOMY & ME This new online-only section houses all sorts of stories that come our way on the economy, as well as tips consumers can use to stretch their dollar a little bit further. Click the graphic to go to the section. RELATED STORIES Foreclosure: A far-reaching problem Published on May 04, 2008 Ellen Scrivens reminisces about the house that she lost due to foreclosure last August that is located off Burning Bush Drive.more » Getting hit from all sides Published on May 04, 2008 In 2006, 455 foreclosures were filed in Frederick County Circuit Court. In 2007, that number more than doubled to 1,025. more » Officials seek to help foreclosure victims Published on May 04, 2008 People facing foreclosure, or who know someone who is, will have the opportunity Monday night to hear from someone who can help. more » Comptroller: state efforts to stem Published on May 04, 2008 The effect of the foreclosure crisis will hit hardest at local budgets, according to the state's chief tax official. more » Borrowers' euphoria clouded subprime risks Published on May 04, 2008 People were so happy to be in a home that the risks of the subprime loans they signed up for went right over their heads. more » Budgeting measures may protect county from foreclosure trouble Published on May 04, 2008 With conservative budgeting, Frederick County is prepared financially for effect from the local economy caused by the foreclosure crisis. more » Signs of trouble Auctioneers saw dangers of subprime loans coming Published on May 04, 2008 Auctioneers saw it coming. They knew the subprime loan frenzy would cause many homeowners to mortgage their futures. more »

"In 2005, we found that some homebuyers were not well informed, yet they had no trouble getting no-documentation loans," said Paul Cooper, vice president at Alex Cooper Auctioneers, based in Towson.

"You scratched your head," he said. "It didn't make sense. When the trouble came, it wasn't a real shock."

David Prinsky, an attorney for the Washington-based law firm, Chasen & Chasen, said that in early 2006 he figured trouble was on its way.

"Everybody knew that the anniversary dates for graduated interest rate loans would come due in 2008, and that a lot of people would be caught in that," he said.

Prinsky was referring to 2/28 subprime loans, with deals of two years at a fixed interest rate and 28 years at a higher variable rate.

Once the variable rates hit, many borrowers can't afford their mortgage payments.

"Bank of America saw it three years ago when it announced that it was no longer offering creative financing," Prinsky said.

Boosting the auction business

The resulting loan defaults and foreclosures have boosted Cooper's and Prinsky's business.

Prinsky is an attorney for creditors' rights, he said, and his clients are mostly institutional lenders, such as banks. The lenders buy mortgage loans.

Chasen & Chasen hires Alex Cooper and another Towson firm to conduct foreclosure auctions all over Maryland, including Frederick .

"Maryland is so compact that it's pretty easy for one auction firm located in the Baltimore or Washington area to cover the entire state," Prinsky said.

Only in Baltimore, by city ordinance, is an auctioneer required at a foreclosure auction. In Maryland's counties, the use of an auctioneer is optional.

That leaves Prinsky free to conduct his own auctions in Frederick . Prinsky said that he has mastered the rapid auctioneer delivery.

Most of the properties at auction are bought by the lenders because they don't get the price they want, Cooper said.

Then, the lenders hire a real estate agent to sell the property so they can recover the debt.

"Every sale has a story behind it, and the attorneys know better than I do. I'm just hired to place the ad announcing the sale in the paper and to conduct the sale," Cooper said.

One of Prinsky's areas of responsibilities is real property foreclosures, and he lectures on the subject.

Auctioning property

If a foreclosure auction takes place on the courthouse steps, the property will be sold, Prinsky said.

At each auction, the lender will enter the initial bid, he said. A third of the time, the homeowner meets obligations either by paying the money in default or by paying off the loan. Another third results in bankruptcy proceedings, and another third in the properties being sold.

Of the properties sold, 95 percent are sold back to the lender, Prinsky said. But buying foreclosed homes at auction can be a risky way to make quick cash.

The value of properties will probably increase in the long run, but properties are very expensive to maintain, Prinsky said.

"For investors to buy distressed properties as a profession, yes, they can make a lot of money. But one or two bad decisions can cost them," Prinsky said.

"For that reason, these investors tend to be very conservative, and property values are now headed in one direction -- and it's not up."

Property values are likely to drop for another year, Prinsky said.

Tom Bikle, who is an auctioneer for James G. Cochran & Associates in Boonsboro, said that when banks own a property they become landlords.

Bank managers have to pay taxes and get someone to mow the grass.

"Banks aren't in the real estate business. They can only take a certain loss on the property," Bikle said.