Baltimore lawmakers, homeowners sound warning on equity firm

Baltimore city lawmakers gathered Wednesday with local homeowners and community leaders to demand that an equity firm that purchased hundreds of residential mortgages through a federal program be held accountable for its destabilizing impact.

Oaktree Capital Management has purchased more than 5,000 loans through the Department of Housing and Urban Development‘s Distressed Asset Sale Program; 612 of those loans are in Baltimore city and Baltimore County, according to figures compiled by Unite Here, a union representing Baltimore hospitality workers.

Since the purchase, 40 percent of the loans have gone through foreclosure and 45 percent of homes appear to be vacant, according to the report. Of the loans Oaktree modified, more than half incurred an increase of more than $10,000 on the principal.

Oaktree has until 2018 — five years after purchasing the mortgages — to comply with HUD requirements to stimulate neighborhood stabilization. But Unite Here claims “it is not clear the company is on a track to success.”

The purpose of the Distressed Asset Sale Program was to mitigate losses by the Federal Housing Administration as homeowners defaulted following the financial crisis. The Neighborhood Stabilization Outcome program targets communities like Baltimore which were hit hardest by the foreclosure crisis and requires Oaktree to meet certain benchmarks in Baltimore for at least half of the loans purchased.

In a prepared statement, incoming Baltimore City Councilman Kristerfer Burnett said he is concerned Oaktree’s actions may be displacing people in his district and contributing to the large numbers of foreclosed homes and vacancies.

“I am prepared to work together with Oaktree to find solutions that will the benefit all of Baltimore,” Burnett said.