More pay on time for homes

Delinquent payments on mortgages fell in Md., nation in fourth quarter

U.S. foreclosures up, however

Low borrowing costs, strong economy credited

March 14, 2004|By Daniel Taylor | Daniel Taylor,SUN STAFF

Fewer homeowners in Maryland and the nation fell behind on their mortgage payments during the last three months of last year, marking the best showing in almost four years, resulting from a slowly improving economy, according to a new survey by the Mortgage Bankers Association.

Nationally, the seasonally adjusted percentage of mortgage payments that were 30 days or more past due fell to 4.49 percent in the fourth quarter, down from 4.65 percent during the previous three months. It was the lowest rate since the second quarter of 2000. The rate stood at 5.03 percent during the fourth quarter of 2002.

In Maryland, the number of people 30 or more days past due on their mortgage payments fell to 5.2 percent during the fourth quarter from 5.23 percent during the previous three months.

Doug Duncan, a senior vice president and chief economist for the Mortgage Bankers Association, credited the improvement to a more robust economy and interest rates that remained at less than 6 percent for much of last year.

Duncan added that although the job market is not sizzling, employment nationwide increased for the first time in 10 quarters at the end of last year.

But the recent economic doldrums continue to affect some households: The proportion of homes in foreclosures increased nationally to 1.29 percent during the October-December period from 1.24 percent the previous three months. The figure was 1.51 percent a year ago.

In Maryland, foreclosures fell to 1.17 percent during the fourth quarter from 1.22 percent in the previous three months.

Brian Sacks, a branch manager at Integrity Home Funding in Baltimore, is surprised that more people aren't falling behind on their monthly mortgage payments.

"I can't really explain [the decline]," Sacks said. "I would think delinquencies would be higher given unemployment and the state of the economy."

Some Baltimore housing experts credit the declines in foreclosures and late payments to better efforts to combat predatory lending.

Such lending often targets low-income buyers, who end up paying higher mortgage rates and fees.

"I think we're back to the old way of doing things," said Frank Fisher, a housing counselor at St. Ambrose Housing Aid Center. "We had the predatory lending thing for a couple years, and the petitions to foreclose doubled over two or three years."

Fisher said he has noticed a return to the usual reasons of foreclosures: loss of a job, marital problems and illnesses. He said banks have done a better job of tightening controls on whom they lend to in hopes of avoiding foreclosures.

Foreclosures in Baltimore rose during a flipping scandal in the 1990s. Real estate speculators bought homes at depressed prices, made minor repairs and resold them at inflated prices. Many of the mortgages for those homes were worth more than the houses, leading to foreclosures.

Andre Weitzman, a Baltimore lawyer who has been involved in several court cases over flipping, said that situation has improved slightly but that predatory lending has not stopped.

"It's not the tidal wave it was a couple years ago," Weitzman said. "But now I'm seeing a lot of the aftermath of flipping and predatory lending."

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