More than a year after Maryland officials set out to quell the foreclosure crisis with some of the most aggressive prevention programs in the nation, the number of homeowners on the brink is again on the rise.
"We're not doing a heck of a lot better now than we were before," Gov. Martin O'Malley said in a recent interview. "So we've got to try to do something different to try to get the numbers moving in a better direction."
The O'Malley administration is working on a new tactic: using mediators to ensure lenders are making a good-faith effort to renegotiate more affordable loan terms, and to ensure homeowners understand those terms. The governor, a Democrat, plans to introduce legislation requiring mediation in foreclosure cases when the General Assembly convenes in January.
A number of states, including Nevada and Connecticut, and cities such as Philadelphia have implemented mandatory mediation programs.
O'Malley launched an all-out campaign against foreclosures last year. He pushed a reform package though the legislature and implemented state-backed loan programs. A public-service campaign urged troubled homeowners to call nonprofit housing counselors.
But those efforts had mixed results.
Foreclosure starts in Maryland slowed after new state laws and programs were implemented, and then resumed climbing, nearly doubling in the past year to 13,955 in the second quarter that ended in June, according to the Mortgage Bankers Association.
The O'Malley administration, using figures from data provider RealtyTrac, points to other troublesome trends, including a sharp uptick in foreclosure sale notices issued in the third quarter that ended in September, and the doubling of the number, to 2,210, of foreclosed properties purchased by lenders in that quarter compared with the first quarter.
The Center for American Progress, a liberal Washington think tank, has called for the federal government to increase funding and take steps to encourage mediation programs on the state and local level. The group, in a recent report, found that many at-risk homeowners had not talked with their lenders or servicers.
State housing officials say the recent uptick in foreclosures reflects persistent joblessness. While the initial crisis was related to subprime loans or adjustable mortgages resetting to unaffordable rates, many of the latest defaults are related to rising unemployment and the loss of household income.
