The number of Maryland homeowners behind on their mortgage payments jumped a record 70 percent in the past year as a protracted housing slump and months of sharply tightened credit continue to take their toll.
Delinquencies have not hit all-time highs in the state - the share of loans with late payments was larger at the end of the 1990s and in the early part of this decade, because of fraudulent property-flipping schemes in Baltimore.
But housing counselors and Maryland leaders are alarmed by how quickly the mortgage situation has been worsening statewide, despite a low unemployment rate and high household income.
More than 70,000 loans were at least 30 days past-due in the first three months of the year, including those in imminent danger of foreclosure, the Mortgage Bankers Association estimated yesterday. That's an increase of 70 percent from the first quarter of last year, the largest jump since figures were first kept in 1979.
The numbers come from a survey that covered about eight out of 10 U.S. first-lien loans, the trade group said.
Anne Balcer Norton, director of foreclosure prevention at St. Ambrose Housing Aid Center in Baltimore, said the nonprofit group is getting upward of 90 calls some weeks from homeowners in trouble across the state. It was getting 40 calls or so a week at the beginning of 2007.
Overwhelmed mortgage servicers can't handle the volume, and some believe homeowners are scheming to get help that they don't really need, she said, disputing that viewpoint.
"We're not seeing homeowners that are trying to profit or benefit from this," Norton said. "We're seeing people truly in distress."
The state's HOPE hot line - 877-462-7555 - has received more than 6,000 calls for assistance since being launched a year ago, many of them recently, state housing officials said.
Nationwide, the delinquency rate and the rate of loans entering the foreclosure process both set records in the first three months of the year, according to seasonally adjusted figures from the mortgage bankers. Many of the loans going sour are in California and Florida, big states that have been pummeled by the housing slump.
Maryland ranked 24th nationwide, tied with Delaware for the share of mortgages that were delinquent but not yet in the foreclosure process.
Hoping to stem the rising tide, state legislators passed a law in the session earlier this year requiring lenders to give borrowers more notice of impending foreclosure.
As of April 4, companies must serve homeowners with an "intent to foreclose" notification 45 days before filing with the courts - rather than after filing, when auction looms. That was one of a string of local foreclosure prevention efforts.
"Reforms that the state of Maryland passed in response to the foreclosure crisis have been called some of the most sweeping in the country," said Shaun Adamec, a spokesman for Gov. Martin O'Malley.
The notification change will probably drive down foreclosures in the second quarter - because it created a "de facto moratorium" of 45 days - and send them artificially higher in the third quarter, said Vicki Schultz, senior adviser for consumer protection at the Maryland Department of Labor, Licensing and Regulation. In the long term, she thinks, it will make a real difference. The notice must include information about the amount owed and whom to contact to negotiate alternatives.
But that goes only so far. Complaints have streamed in to the state from borrowers and housing counselors about lack of response.
Norton said St. Ambrose tried for 2 1/2 months to get one mortgage servicer to confirm that it had received the information it needed to start the foreclosure-prevention process for a Baltimore County homeowner. St. Ambrose kept resending the information, to no avail, she said. This week - a day and some hours before the auction was set - the company finally responded because two state agencies intervened, she said.
"It took all of that to reach a resolution," said Norton. "There is complete miscommunication and disarray."
Jay Brinkmann, vice president for research and economics at the Mortgage Bankers Association, said many mortgage holders are working on foreclosure prevention through the HOPE NOW Alliance. He thinks that is having a positive effect on foreclosure numbers in many parts of the country.
In Maryland, officials are meeting with large servicers to get agreements about how quickly they'll handle requests for help from homeowners, known as "loss mitigation" because foreclosure is costly to lenders. Schultz said servicers seem to be on board with the state's proposal that they acknowledge receipt of borrower information within five business days and share their decision about loss-mitigation options within 60 days.
The state is asking that no further penalty fees be added during that period.
"We may not be able to help everybody," Schultz said, "but for those that we can help, we don't want process to stand in the way."