Even as the recovering housing market nationally appears to be brightening, foreclosure filings in Maryland are once again increasing, according to the Baltimore Neighborhood Indicators Alliance (BINA).
After a period of high foreclosure rates in 2009, the number of property foreclosures in Maryland decreased significantly from 42,446 in 2010 to 14,321 in 2011. According to the Fiscal and Policy Note for Maryland 2014 legislative session HB 1021, “the dramatic decrease in 2011 was due, in part, to two factors:
(1) Maryland’s legislative response to the foreclosure crisis, which provided additional protections to homeowners at risk of losing their homes; and (2) the delay by mortgage servicers to begin foreclosure procedures until the results of a foreclosure settlement between five of the largest lenders and the U.S. government were known.”
The results of the National Mortgage Settlement were announced in February 2012. The uncertainty surrounding the settlement and Maryland’s new increased consumer protections created a backlog of foreclosures that lenders began to address.
Property foreclosures rose in 2012, totaling 17,126, up 18.8 percent from 2011 levels. Foreclosure activity began a more rapid increase in the fourth quarter of 2012, with the number of foreclosure events totaling 6,381 with roughly half of these properties owner-occupied and the other half being investor properties.
This rapid increase in foreclosure activity continued in 2013 with foreclosure activity reaching the highest level in three years during the fourth quarter.
In the fourth quarter of 2013, Maryland had the second highest foreclosure rate in the nation.
The Department of Housing and Community Development attributes the surge in foreclosure activity that began in 2012 to a “rebound in the housing market which encouraged lenders to return inventory of seriously delinquent loans to the market at an increasing pace,” allowing servicers to clear the backlog.
“The foreclosure filing indicator is definitely an early warning indicator of distress,” said Seema Iyer of BINA. Homeowner distress is highest in Baltimore, in once stable neighborhoods such as Washington Village, Belair-Edison, Ashburton-Dolfield and Poppleton. The distress correlates with affordability issues, in situations where people are spending more than a third of their gross income on mortgage and rent.
Although the filings do not always lead to the loss of a property, it is a factor, along with crime, vacant housing, and unemployment, indicating neighborhood destabilization.
“I’ve seen families living in cars. I’ve talked to families who are sleeping on their relatives’ couches. I think Maryland needs to do something that is bold and daring to keep people in their homes and stabilize their lives, said Sen. Verna Jones Rodwell, who has worked to pass favorable foreclosure legislation to protect Baltimore’s homeowners during the past 15 years, but who will retire when her term ends in January 2015.