In a sign that Maryland could be making strides toward helping struggling homeowners keep their houses, foreclosures fell almost 16 percent in the three-month period that ended in September, compared with the second quarter, according to statistics released yesterday.
But state officials warned that the drop is likely temporary, with the foreclosure crisis expected to intensify as a weak economy continues to hamper the job and housing markets. And despite this summer's improvement, foreclosure figures are still up almost 14 percent compared with a year earlier.
"There are so many issues out there in the national economy that will impact us," said Maryland Housing Secretary Raymond A. Skinner after releasing the figures. "While we have made progress, there is still a lot of work to do."
State officials attributed the quarterly drop - 7,974 foreclosures in July through September, from 9,453 in the second quarter - to more state-sponsored programs for financially strapped homeowners. A state law that took effect in April also requires a longer wait before people who fall behind on mortgage payments can have their homes taken in foreclosure.
Officials said a quarter-to-quarter comparison showing the decline more accurately reflects the state's foreclosure trend instead of a year-to-year assessment, before the law was enacted.
But state housing leaders acknowledge that the foreclosure problem remains a troubling issue since more homeowners are likely to lose their jobs in this weak economy. The state's 5 percent unemployment rate reached a 12-year high in October, and many economists expect it to increase more next year.
Homeowners also will likely have trouble making monthly payments as mortgage rates begin to reset during the next couple of years on alt-A loans - the riskier-than-prime loans that required little or no documentation of employment or income. The rates on more than 64 percent of alt-A loans in Maryland are due to reset starting in August, state officials said.
In what state officials said indicates that more foreclosures are on the horizon, lenders have filed 40,000 notices of intent to foreclose since April, said Mark Kaufman, deputy commissioner of financial regulation for the Department of Labor, Licensing and Regulation. Emergency legislation took effect that month requiring lenders to notify borrowers 45 days before filing for foreclosure with the courts, instead of notifying them shortly before an auction.
