Foreclosures soar

Md. homes facing auction triple from year ago

October 12, 2007|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

The number of Maryland properties about to be put on the foreclosure auction block more than tripled last month from a year earlier, as homeowners struggle with the one-two punch of mortgages they can't afford and homes they can't quickly sell.

About 1,730 notices of impending auction were issued last month, up from about 550 in September 2006, Irvine, Calif.-based RealtyTrac Inc. said yesterday.

The number of properties taken back by lenders last month after no one bought them at auction increased 10-fold from September 2006, to about 220. Though some might be commercial properties, the great majority are homes, the company said.

Foreclosures are also rising nationwide, but not as rapidly as in Maryland, the RealtyTrac numbers suggest. Impending-auction notices jumped 70 percent across the country last month, while lenders took back twice as many properties as they had a year earlier.

"The picture in Maryland is a troubling picture, and we cannot deny that. In virtually every corner of the state, foreclosure events have increased dramatically," said Thomas E. Perez, the state secretary of labor, licensing and regulation. "Given that there are so many adjustable-rate mortgage loans that are going to adjust upward in the near future, I'm very fearful that it will be some time before the problem truly abates."

Adjustable-rate and other so-called exotic mortgages, which added fuel to the housing boom, are contributing to the rise in foreclosures.

There's a vicious cycle at work: As lenders react to foreclosures by tightening credit availability, homeowners are less able to refinance out of trouble. And the slumping housing market means they can't count on selling fast to avoid foreclosure.

Housing counselors say some borrowers got loans they couldn't afford from the start, let alone the higher payments that result when adjustable rates go up.

The problem appears to be most severe in states with once-hot housing markets that are keenly feeling the slump, such as Nevada and Florida, and in those in economic distress, such as Michigan and Ohio. But communities across the country are looking for solutions to stave off a crisis.

More calls for help

Maryland has programs designed to help homeowners in trouble and a task force pondering legislative action. And the Bush administration announced this week a new coalition of lending industry companies to help with foreclosures.

Meanwhile, problems grow. At St. Ambrose Housing Aid Center in Baltimore, which is getting three times as many calls for help as it did a year ago, counselors are frustrated by how little can be done, said Lisa R. Evans, deputy director.

These are not the defaults of the past, when people just needed to get through a bad patch, she said. On top of that, mortgage-servicing companies are so overwhelmed that it is difficult for St. Ambrose counselors to reach anyone who could change the loan terms, she said.

`So critical'

"It's so critical that we start figuring this out," Evans said. "A lot of it falls to the industry."

There were fewer foreclosures in Maryland in September than in the month before, but RealtyTrac noted that August was particularly bad nationwide. U.S. foreclosure filings of all sorts - notices of defaults as well as impending sales and new bank repossessions - were at their highest point in August since the company began tracking foreclosures in January 2005.

"August was an extraordinarily high month for foreclosure activity, so some falloff was almost predictable," said Rick Sharga, RealtyTrac's vice president for marketing.

The company counted nearly 224,000 foreclosure filings nationwide last month, down 8 percent from August but nearly double a year earlier. Some properties might have received more than one notice if the owners have multiple mortgages.

RealtyTrac ranks Maryland 15th worst based on the number of total foreclosure filings per household, one out of every 806. But the rate is likely higher; the company says it does not have information on default notices for many counties in the state, the first stage in the process.

Typically, borrowers must be 60 to 90 days past due on their mortgage payments before their lender will consider them in default. If a homeowner can't find a way to get current on payments, the home is then often put up for auction, and if it doesn't sell, it goes back to the bank.

The Associated Press contributed to this article.

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