Real Estate Information

Foreclosures in Maryland rose in February, pushing its rate of default ahead of the national level.

Nationally, there were 308,524 foreclosures in February, equaling one in every 418 households. Nationwide foreclosures fell 2 percent from January but were 6 percent higher from one year ago.

Across the country 6 states accounted for 60 percent of the national total: California, Florida, Michigan, Illinois, Arizona, and Texas. Nevada had the worst rate of default in February with one of every 102 households in foreclosure.

Maryland foreclosures rose to 5,732 in February, an increase of 9 percent from January 2010 and an 80 percent increase from February 2009. In February 2010, one of every 407 households in Maryland was in foreclosure, the tenth worst rate of default in the country, according to the latest survey by Irvine, Calif.-based RealtyTrac, a foreclosure research company.

Nick Gioia | www.ngrealtygroup.com

At last count, an estimated 10.7 million residential mortgages — almost a quarter of all home loans in the U.S. — were underwater, meaning that the property was worth less than the amount outstanding on the mortgage. This is a legacy of the housing and credit bubbles: with every underwater mortgage, a potential default and foreclosure.

As the number of such mortgages has grown, more and more borrowers have simply decided to walk away. That seemingly reckless move is now not only tolerated but encouraged — even among those who can afford to make the payments. I’ve recently read articles in the mainstream media suggesting borrowers will come out ahead if they stop making payments on underwater loans. But does this make sense from a purely economic point of view?

Let’s dismiss for the moment any legal or moral reasons to keep making payments on a house whose value has fallen. I admit that I was raised to believe that willingly defaulting on a mortgage woul be unthinkable. Of course, much the same could be said of divorce. Both are now commonplace. But there are some practical consequences to default, including a damaged credit rating and inability to get another mortgage for several years.

From a short-term perspective, the case for default seems obvious. Why keep making payments on an asset that is worth less than the debt it carries? One of the peculiarities of our mortgage finance system, when you stop and think about it, is how much leverage is built into the market for housing. People who wouldn’t dream of borrowing money to buy stocks on margin, considering it too risky, have no trouble piling on leverage when it comes to their home, borrowing 90 percent or even 100 percent of the purchase price. Of course, real estate is expensive — few purchasers have that much cash — and housing prices are less volatile than stocks. Still, real estate is an asset like any other. Values go down as well as up. And leverage always magnifies losses as well as gains.

Let’s consider a hypothetical house that sold for $500,000 at the top of the market in 2006, purchased with a 10 percent down payment and a $450,000 mortgage. Assuming a 25 percent drop in value since then, the house is now worth $375,000. If the owner stops making payments and abandons it, he loses the down payment of $50,000 plus all subsequent payments of interest and principal. That’s a total loss.

Bad as that outcome appears to be, the alternative seems to be to throw good money after bad. Default at least caps the loss at the down payment plus payments already made. If this was a typical 30-year mortgage, 26 years of payments of interest and principal would remain on an asset now worth just 83 percent of the original mortgage. And assuming the borrower has the resources to pay off the mortgage in full and then sell, he would lose $125,000 on the investment, plus interest he’s paid — more than double the cost of simply defaulting and walking away. Moreover, he can probably rent something as nice or better for less than the equivalent monthly payment and live happily ever after. This, in a simplified nutshell, is the case for default.

But I’m not convinced the case is nearly so simple. The analyses I’ve seen in support of walking away assume a static housing market, in which home values are fixed at their current low prices. But historically, housing prices have consistently risen over time, and it’s quite possible that real estate prices hit their ultimate lows around August of last year.

To walk away from an underwater mortgage now is the equivalent of selling at what may turn out to be the bottom, or close to the bottom. Just as with stocks, the Common Sense strategy is to buy lower and sell higher, and even if this doesn’t turn out to be the bottom of the real estate market, we know for a certainty that it’s not the top.

Let’s assume that housing prices continue to recover and revert to a modest average rate of appreciation — say, 5 percent a year. At that rate, our hypothetical home will be worth $1.3 million in 26 years, when the mortgage is paid off. That’s nearly three times the purchase price. Of course, this homeowner might not want to wait that long. Still, at 10 years, the value would be $610,835, which represents a decent gain. After six years, he’d be back at break-even. To me, that doesn’t seem all that long to wait as an alternative to realizing a loss of over $50,000 by abandoning the house now. And remember, I’m using conservative numbers: The National Association of Realtors says the historical annual gain is 6 percent.

There’s also the opportunity cost of defaulting when real estate prices are low and likely to increase. By the time defaulting borrowers restore their credit ratings to the point where they’d be eligible for another mortgage, they will have missed years of housing-price appreciation. And the attractive rents currently available as an alternative to mortgage payments are unlikely to last once markets recover and landlords can raise them.

To be sure, everyone’s circumstances are different, and all housing markets are local. But after the recent plunge in prices, a reversion to historic norms strikes me as a reasonable possibility. Having lived in the same house since I purchased it 10 years ago and putting 20% down, I’ve never experienced an underwater mortgage. But I had friends who bought a home in Baltimore County in 1990, just in time to see its value drop by about a third during the recession of 1991-92.

They lamented this turn of events, saying they felt trapped in a home they couldn’t sell for the amount of their mortgage. But they stayed, made their payments, and nearly 20 years later, their home is worth far more than they bought it for. And with their credit rating intact, they were subsequently able to get a mortgage on a house in the country. The years they were underwater now seem inconsequential.

At the very least, the case for staying with a mortgage seems to me far more compelling than might first be apparent. And fulfilling an obligation also strikes me as the right thing to do. Surely that, too, still has some value.

Nick Gioia | www.ngrealtygroup.com

To buy or sell homes in Howard County, MD, contact Nick Gioia with RE/MAX Sails at 410-765-5422.

IF PUBLIC SCHOOLS ARE IMPORTANT TO YOUR DECISION ABOUT WHERE TO BUY REAL ESTATE IN HOWARD COUNTY, CONTACT US TO HELP YOU FIND YOUR HOME.

Our agents will provide you with detailed public school information to help you make your home buying choices. Of course, the public school rankings are not the only factor families use to determine their Howard County home location. Price, transportation alternatives are surely important. However, the first question we are asked about homes and locations in Howard County real estate will be the public schools.

When you work with an NG Realty Group Buyer's Agent, we will provide you with boundary maps and school accountability information.

Unlike some areas of the country, Maryland school students attend the schools in the county in which they live. The attempt to adhere to the neighborhood school goal means that your children will most likely attend the school in the community in which you buy real estate. So, our buyers are, not surprisingly, interested in the individual schools of the area. Howard County and, indeed, all of Maryland follows a "cluster system". Children attend the neighborhood elementary school which feeds into a particular middle school (along with other elementary schools), which, in turn, feeds into a high school (along with other middle schools). These are known as "school clusters".

The above ranking is based on tests taken during the 2007 - 2008 academic year including:

Grade 12 Geometry
Grade 12 Biology
Grade 12 Government
Grade 12 Algebra

TOP RANKED HIGH SCHOOLS IN MARYLAND for the most requested counties.

Walt Whitman - Montgomery County
River Hill - Howard County
Winston Churchill - Montgomery County
Centennial - Howard County
Wootton - Montgomery County
Severna Park - Anne Arundel County
Atholton - Howard County
Glenelg - Howard County

SAT Scores for Howard County MD during the 2007 - 2008 academic year.

To learn more about buying or selling homes in Howard County Maryland please visit our Howard County neighborhood Page.

Nick Gioia | www.NGRealtyGroup.com

Contracts for pending sales of previously owned homes unexpectedly fell in January, a survey showed, brought down in part by harsh weather in the U.S. Northeast.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, fell 7.6 percent to 90.4 from an upwardly revised 97.8 in December.

Analysts polled by Reuters had forecast pending home sales, which lead existing home sales by one to two months, would rise 1 percent in January.

Compared to January 2009, the index was up 12.3 percent.

Nick Gioia | www.ngrealtygroup.com

Jamie Smith-Hopkins of the Real Estate Wonk wrote a very interesting story about the pros and cons of Zillow's Home Value Estimation Software that I thought was worth sharing.

You've probably checked out Zillow.com's "Zestimates" at some point -- those free estimates of a home's value -- so you might have given some thought to how accurate they are. That's the subject of much debate, actually.

The latest volley comes from professors Daniel R. Hollas, Ronald C. Rutherford and Thomas A. Thomson, arguing in The Appraisal Journal that they're really Overzestimates:

The results indicate that Zillow overestimates value for approximately 80% of the houses in the sample by at least 1%. ... The average overestimation is 11.66% or $13,576, with a median of $9,717 or 7.92%. Zillow’s magnitude of overestimation is marginally higher than the value overestimation by recent home buyers reported in the literature.

 
The authors -- from the University of Texas at San Antonio -- pitted Zestimates vs. 2006 sale prices of about 2,000 houses in Arlington, Texas. "Zillow indicates that this market is one where its data has its highest accuracy rating," they wrote, adding later: "The likelihood is that in [a] more ... volatile market with a lower accuracy rating Zillow would misprice at a higher rate and larger amount."

Zillow roared back with a response:

"In addition to being limited to only one city in the U.S., the study does not compare sales and Zestimate values during the same time period; it looks at sales in 2006 compared to Zestimate values in January and February 2007 – apples and oranges as it’s two separate periods of time," Zillow spokeswoman Jill Simmons wrote in an email to me. "It’s unfortunate that this study has been structured in such a misleading, and limited fashion."

Here's how the authors describe their methodology:

The sale price data, housing characteristics, and location data are obtained from the MLS for the city of Arlington, Texas (Tarrant County), for sales during the last six months of 2006. The sale price data was acquired in January 2007. Next, data from Zillow.com was obtained for each of the MLS sales to acquire Zestimates during the last week of January 2007 and the first two weeks of February 2007.

And here's how Zillow describes (for a non-mathematician audience) how it arrives at its figures:

When our statisticians developed the model to determine home values, they explored how homes in certain areas were similar (i.e., number of bedrooms and baths, and a myriad of other details) and then looked at the relationships between actual sale prices and those home details. These relationships form a pattern, and they used that pattern to develop a model to estimate a market value for a home.

How does the Zestimate of your home -- or homes near you -- match up with your sense of value?

We are of the opinoin that real estate is local and the best way to accurately value homes in the Baltimore Metropolitan Region is to use a free local house value service like www.BaltimoreHouseValues.com

Nick Gioia | www.NGRealtyGroup.com

Starting January 1st, 2010, all real estate transactions will be settled using a new HUD-1. The HUD-1 is a standardized form which allows real estate buyers and sellers to clearly understand the costs of their transaction.

The original HUD-1 was developed as a by-product of the Real Estate Settlement and Procedures Act of 1974 — or, as it’s usually called, RESPA. Prior to 1974 settlement forms could be different, meaning that it was very difficult to compare costs or to know what was deductible for tax purposes in the year of the transaction.

So what do we get after 36 years? The new HUD-1 is a vast improvement over the old model. It’s three letter-sized pages long rather than two legal pages, but there’s much more information in the new HUD-1. Buried in the form is an accounting of costs costs and perhaps even some write-offs. Buyers will find the full and complete cost of buying real estate while sellers will see how much cash (if any) they’re getting from the transaction.

Page One

The first page of the form is a summary of the transaction. In effect, it translates the sales contract between buyers and sellers into hard numbers.

At the top of the form we first have administrative data such as:

• The type of loan (conventional, VA, FHA, etc.).
• The place and date of settlement (the date can be very important for tax purposes).
• The mortgage insurance case number (important if you’re ever facing foreclosure).
• The street address of the property. This is a concern because for great clarity  and assurance the form would be better if it also included the legal address of the property.
• The name of the settlement (or closing) agent. The party that conducts the settlement is typically regarded as an agent of the settlement process. In other words, they do not represent you.

Page One, Buyer’s Side

The HUD-1 shows transaction costs for both buyers and sellers — you get to see what the other person’s information. More important you get to see your own.

On the right side of the first page we have buyer costs grouped by sections.

Section 100 — This is where buyers see the cost of the property and the cost of settlement (the figure found on line 1400). Combine the two and you get the gross amount — but not the final amount — due from the purchaser.

Notice that there can be some adjustments in this section. For instance, it may be that the seller has paid local property taxes in advance — those payments would be a credit to the seller and a cost at closing to the buyer.

Section 200 — As a buyer you may have certain credits to offset your gross costs. Credits include such things as your deposit, your new loan (for closing purposes the mortgage is a credit to the borrower because it represents money brought into closing) and any additional financing.

In the 200 section you can also see adjustments which are a credit to the buyer. For instance, maybe the seller still owes some property taxes.

Section 300 — This is a re-cap of all costs and credits. If you take the gross amount due from borrower (line 120) and subtract the buyer’s credits and cash you then get the total cash due to — or from — the borrower.

Most buyers, of course, will need to bring “cash” to settlement. By “cash” what most settlement agents really want is a certified check or a cashier’s check. Also, it may be possible to wire funds to the closing agent. Always ask the settlement provider well in advance of closing how payment can be made.

Gifts: To assure lenders that you are not somehow getting a secret loan from someone, it’s best to have closing funds in your name and on deposit for at least 90 days. If you are getting a gift to close, ask your lender how the gift is to be documented and precisely follow the lender’s instructions.

Page One, Seller’s Side

Settlement is a moment of truth for owners, the time when you find out exactly how much or how little you’re getting from your sale.

Section 400 — The sale price of the house, plus the cash paid for any personal items, are shown here as credits to the owner.

Also in this section are adjustments — credits for property taxes and other costs paid in advance.

Section 500 — If any mortgage debt remains unpaid it shows up here as a cost to the seller. Also, the costs of closing (line 1400) are here as a deduction as well as any adjustments for such costs as unpaid property taxes.

Section 600 — If we take the gross amount due to seller (line 420) and subtract the seller’s closing costs (line 520) we can then see how much cash the owner will get from closing (or, how much cash is needed to close if the seller is upside-down).

Practices around the country regarding cash to owners at closing vary. In some areas there are “wet” settlements where the owner gets a check at closing, in other areas there are “dry” closings where it takes a few days to get a check because it takes time for the lender to fund the transaction and paperwork to be recorded. In some jurisdictions there are rules requiring the disbursement of cash with a few days. For specifics, speak with your settlement agent.

Page Two

On the second page of the new HUD-1 we have a series of sections which show costs that may be paid by either buyers or sellers — or split between them. In other words, these are costs which can be negotiated when a sale offer is made. For instance, in a slow market a seller might agree to pay all transfer taxes. In a hot market, the buyer might pay.

Section 700 — If one or more real estate brokers are involved in the transaction, this section will show the compensation to each broker and the cost, if any, to buyers and sellers.

Section 800 — Getting a mortgage is hardly free. When the buyer applied for financing the lender provided a Good Faith Estimate of Closing Costs (GFE) on the new form developed by HUD. This section shows such costs as points, origination charges, appraisal fee, credit report and tax service. Borrowers should check the numbers at closing with the estimates provided in the GFE. The costs shown on lines 801 (origination charge), 802 (points), and 803 (adjusted origination fee) must be the same as the GFE.

Please see our guide to the new Good Faith Estimate form to see how it’s coordinated with the equally-new HUD-1.

Section 900 — Closing is scheduled at a time which is mutually-agreeable to the buyer and seller. That time, however, will mean that for such items as interest, mortgage insurance premiums and homeowner’s insurance there will likely be a need to make some payments for daily costs in advance until the next billing period.

Section 1000 — If you purchase a home with less that 20 percent down the lender will likely require that you pay additional amounts each month for property taxes and insurance. This money is held in an escrow or trust account and then paid out as the bills come due.

If you will have an escrow account then the lender will typically collect money in advance from borrowers to assure that the escrow account is properly funded.

Section 1100 — As part of the buying process, sellers typically promise to deliver good, marketable and insurable title — and buyers should want nothing less. This section shows the costs for title insurance — both lender’s and owner’s coverage.

Lender’s cover — which is required by lenders if you finance the purchase — protects you up to the remaining loan balance in the event of a title claim. In other words, it protects the lender.

Owner’s coverage protects you if there is a title claim up to the purchase price of the property — in other words the loan amount plus your equity. Be aware that some title insurance policies have an inflation rider so that the value of the coverage can actually increase over time. For specifics, speak with your title agent.

Also, take a look at line 1107. This shows the commission paid to the settlement agent for providing title insurance.

Section 1200 — This is where you can see how much state and local governments are getting from the transaction. Governments are elated when homes are sold because such transactions are a major source of revenue. Government taxes can includes such things as deeds, releases, transfer taxes, state taxes, stamps, etc. Call it what you will, a tax is a tax.

Section 1300 — This is where you can find additional settlement costs.

Section 1400 — The total costs to close — this number also appears on lines 103 and 502 on the first page.

Page Three

The third page of the new HUD-1 is partially a confirmation that the costs outlined in the Good Faith Estimate are what you’re actually paying — or pretty close.

Some quoted costs on the GFE cannot be changed, some can be changed as much as 10 percent and some can simply change with the winds.

Also shown on page three is a recap of your loan including the mortgage amount, interest rate, loan term, ARM-related terms (if any), prepayment penalties (if any), balloon payments built into the loan (if any) and related matters.

IMPORTANT: Always keep your closing papers in a safe place for tax reasons and to assure that your loan terms are actually the same as disclosed on the HUD-1. For questions regarding closing issues, speak with your real estate broker, mortgage lender and closing agent. Be aware that some costs found on a HUD-1 may be tax deductible — for specifics speak with a tax professional.

Nick Gioia | www.ngrealtygroup.com

Home prices unexpectedly slipped in December but the annual rate of decline slowed, reinforcing the housing market's rocky road to recovery, Standard & Poor's/Case-Shiller indexes showed on Tuesday.

The S&P composite index of home prices in 20 metropolitan areas declined 0.2 percent in December, matching the dip in November, for a 3.1 percent annual drop.

A Reuters survey had forecast that prices would be unchanged for the month and down 3.2 percent annually.

The S&P/Case-Shiller U.S. national home price index, which covers all nine census divisions, fell 2.5 percent in the fourth quarter from the same time a year earlier. This measure, like the 20-city and 10-city indexes, have seen smaller annual declines all through 2009.

On a seasonally adjusted basis the 20-city index, which includes Baltimore City, rose 0.3 percent in December, S&P said, matching the November increase.

Nick Gioia | www.ngrealtygroup.com 

In many respects, Maryland is weathering the recession better than most other states, but not when it comes to foreclosures. The number of foreclosure events — either final dispositions of foreclosures or court filings — increased in the final three months of 2009 to nearly 17,000. That’s 13.4 percent higher than the previous quarter and nearly 70 percent higher than the previous year. Hardest hit by far is Howard County, followed by Baltimore City. The foreclosures have crippled the state’s housing market and driven down real estate values, compounding economic woes that could last for years.

During his term, Gov. Martin O’Malley has made foreclosure prevention one of the key focuses of his administration, pushing through legislation that lengthened what was previously one of the quickest foreclosure processes in the nation and creating resources to help troubled homeowners find assistance. Now he’s back with legislation to require mediation between lenders or mortgage servicers and borrowers.

It has the general support of both consumer advocates and the state’s banking industry, and it deserves to be enacted by the General Assembly. In many cases, it would do a lot of good. But lawmakers and homeowners should understand that it will not solve the foreclosure crisis and that given the way things have deteriorated, it’s possible that nothing the government can do will solve it completely.

Although Governor O’Malley’s legislation is being called a mandatory mediation bill, mediation is not the most important element of it. The key is that it will force lenders or loan servicers to make an affidavit before they file for foreclosure indicating that they have tried all other options first. Various federal and state programs can help homeowners to modify their loans, and other outcomes besides foreclosure can help bring both sides to a softer landing. But many homeowners don’t know about them, and lenders or mortgage servicers don’t necessarily offer the information. Mediation would come into play if the two sides dispute the conclusion about whether the homeowner is eligible for any of the assistance programs, but as it is, too many troubled borrowers don’t even get to that point.

In the romanticized notion of mortgages, such rules wouldn’t be necessary. The story we often hear is that foreclosures are no better for the lender than they are for the borrower and that both sides have an incentive to work things out through loan modifications, extensions or other means. It conjures the "It’s a Wonderful Life" idea of a homeowner heading down to the building and loan to talk over his problems with kindly George Bailey, who is just as invested in the community as he is. That’s still true for some borrowers, but the profusion of mortgage-backed securities and other Wall Street innovations that packaged and bundled loans and sold them to investors means that the borrower in many cases has no real relationship with the company that services his loan, and that company, in turn, has no more than a contractual relationship with the entity that actually owns the debt. Talking to the miserly Mr. Potter would be better than many homeowners can manage these days; at least he had a financial stake in the situation and the power to negotiate.

The representatives of the banking industry who participated in the task force that helped design this legislation have expressed concerns about some details, primarily about the timing of the process. They argue that they should be able to file for foreclosure in court before seeking alternatives with the borrower. In some cases, they say, borrowers don’t take foreclosure notices seriously until they get notice of a court filing, and just because a lender files court papers doesn’t mean the foreclosure actually has to be completed.

They do have reason to worry about lengthy delays in the process; as long as a loan is delinquent, they are forced to hold larger reserves and thus have less money to loan in the community. And the longer a homeowner is delinquent in his or her loan, the more difficult it is to catch back up.

But the legislation does allow lenders to certify that a borrower has not responded to efforts to determine eligibility for assistance. That should be sufficient protection for lenders, so long as a reasonable timetable is built into the process. Borrowers are at enough of a disadvantage that they deserve to be granted a pause to seek alternatives.

The experience of Nevada, where a similar law has been in effect since last summer, shows the promise and limitations of such an effort. According to the Legal Aid Bureau of Southern Nevada, which works with troubled borrowers, about a third of homeowners in foreclosure have requested mediation since the program began last summer. Of those who have completed the process, about a third avoided foreclosure, and about 25 percent weren’t eligible for any of the assistance programs and lost their homes. In the remaining cases, mediators found problems with the way the foreclosure was handled, and the homeowners "won" the mediation. That means they’ve stayed in their homes but are in a state of limbo. The banks may decide to try to refinance, or they may foreclose again. The program is too young to know how many people will be able to stay in their homes in the end.

Part of the limitation of foreclosure-prevention programs like the one in Nevada is that the reasons for the crisis have shifted. The first wave of foreclosures was largely the result of buyers being given exotic mortgages — interest-only loans, loans given out without verification of income or assets, loans in which interest rates ballooned after an initial period. As a result of efforts by the federal and state governments (not to mention a sustained period of low-interest rates), many of the people with those mortgages who qualified to refinance have already done so. Many others have already defaulted on their loans.

What’s happening now is a second wave of foreclosures among people who have lost their jobs or seen their incomes drop, a problem compounded by falling home values. People in the real estate industry are worried that people with "underwater" mortgages — homeowners who owe more than their houses are worth — will start walking away from their homes in large numbers, further deepening the cycle of falling property values and foreclosures. That hasn’t happened much in Maryland yet, but according to First American CoreLogic, a firm that tracks real estate statistics, as many as a fifth of mortgages in the state are now underwater.

The Obama administration has created the Home Assistance Refinance Program, or HARP, to help with those issues. Unlike other programs, people with mortgages up to 125 percent of their home’s values can qualify to refinance, provided it is possible through measures like reduced interest rates and lengthened loan terms to bring monthly payments below a certain threshold relative to the borrower’s income. It only helps borrowers who aren’t more than 30 days behind in their loans, though, so if it is to prevent foreclosures, time is of the essence.

For that reason, the governor’s legislation, which requires lenders to provide information about foreclosure prevention programs to borrowers as soon as they fall behind on payments, coupled with his previous efforts to encourage homeowners to call for help at the first sign of trouble, can make a difference. And the experience in Nevada suggests that simply forcing lenders and borrowers to sit down together, while not a panacea, can help many. Governor O’Malley’s legislation won’t stop the foreclosure crisis in Maryland, but it can help thousands of people stay in their homes.

Nick Gioia | www.NGRealtyGroup.com

RXR Realty said Wednesday it has refinanced $176 million in debt it borrowed to build the Ritz-Carlton Residences on Key Highway in Baltimore City.

New York-based RXR plans to use the funds to finish construction on the Inner Harbor waterfront condominiums and continue marketing the project to prospective buyers.

So far, just 23 of the project’s 190 condos have been sold, including three combined units to popular spy novelist Tom Clancy for $12.6 million.

“We have responded to the reality of the marketplace and successfully recapitalized the project, showing our confidence in its future along with our partners, investors, and the Baltimore City,” RXR CEO Scott Rechler said in a statement.

The developers celebrated the project’s grand opening in May 2008, but sales for the high-end units, with an original asking price in excess of $1 million, were dampened by a downturn in the residential condo market. In Harbor East, another team of developers suspended construction in January 2009 on the residential part of their Four Seasons Hotel and Residences project in Harbor East.

RXR has been struggling to refinance its debt for months, and a lack of capital has prompted a wave of lawsuits by contractors on the multi-million-dollar project. Among them was a suit brought by general contractor Bovis Lend Lease, which sued RXR in November 2009 seeking nearly $11 million in fees for its work on the Ritz.

“Bovis Lend Lease and RXR have experienced a close working relationship on this project from the beginning,” Bovis Chief Commercial Officer Mark Melson said in a statement. “Through it all, we never lost sight of our goal to create the most outstanding residential community in the city.”

The contractor’s suit, in the Circuit Court for Baltimore City, is pending the outcome of arbitration, according to court records.

RXR agreed to put more of its own money into the project as part of the refinancing deal, but the developer did not disclose details of the package.

Nick Gioia | www.NGRealtyGroup.com