The mortgage crisis has worsened to the point that about one in every 10 prime borrowers in Maryland and nationwide - homeowners judged to be good credit risks - were behind on payments in September.
The Mortgage Bankers Association, releasing those numbers Thursday, blamed unemployment, which is at a 26-year high in Maryland and the United States. Falling home prices are another factor, because owners who owe more than their properties are worth cannot easily sell them.
High-interest "subprime" loans, on the other hand, are no longer the big problem. That is sobering news, because lenders and housing counselors can do more for an employed person who has fallen behind on a subprime mortgage than for a prime borrower who is out of work and cannot afford anything.
"Bad loans are easier to address than bad income situations," said Mark A. Kaufman, the state's deputy commissioner of financial regulation.
All told, the Mortgage Bankers Association counts nearly 150,000 Maryland homeowners who were at least one month behind on payments at the end of September. The trade group estimates that its survey covers about 80 percent of the market, so the total is probably higher.
About 77,000 of the homeowners - just more than half of those counted by the trade group - were prime borrowers. About 48,000 were subprime borrowers. The rest had other loans, such as those insured by the Federal Housing Administration.
Requests for help are increasing fast at Home Partnership Inc., a nonprofit housing counseling agency in Harford County. The group was working with 67 borrowers during the summer, more than double the number it saw the summer before. And last month alone, it had 117. Job losses are a key reason.
"About a third to a half of the mortgages we're seeing are subprime," said Kim Cowie, the agency's housing counselor. "The rest are prime, and they tend to be fixed rate."
Statewide, the number of prime borrowers behind on their mortgages was 70 percent higher in September than a year earlier, the mortgage bankers said. Subprime delinquencies increased by 19 percent.
Lenders also started foreclosure proceedings against more Maryland borrowers - prime or not - than a year earlier. The one ray of light: They started fewer foreclosure cases during the summer than the spring.
But the Mortgage Bankers Association did not consider that a sign of turnaround. The number of loans that are past due by 90 days or more but have not yet entered the foreclosure process continued to grow.
"There's sort of an ever-enlarging pool of seriously delinquent loans," said Michael Fratantoni, vice president of single-family research for the trade group.
Gov. Martin O'Malley, a Democrat, has said he intends to introduce legislation when the General Assembly reconvenes in January that would require mediation in foreclosure cases. A spokesman for O'Malley said Thursday that the governor is not happy about the level of effort some large mortgage servicers are making to avert foreclosures. But what mandatory mediation might look like is still being hammered out, and there is no guarantee it could help address the thorny problem of how to help the unemployed.
The result would not necessarily mean renegotiating or changing terms of a mortgage, said Shaun Adamec, O'Malley's press secretary. "In some cases, we've found it may not even be possible. But we need to get all sides to the table to find out. It's such a critical first step."
The mortgage bankers' trade group said lenders are making "every effort" to reach out to borrowers already and argued that a mandatory mediation law might only delay foreclosures.
"Efforts to improve communication are all to the good, but ... if it's just one more step in a checklist, that's probably not going to be beneficial," Fratantoni said.
Alexander M. Sanchez, Maryland's secretary of labor, licensing and regulation, said the state has been meeting with experts and industry representatives to see how mediation efforts have worked elsewhere. He called it a collaboration.
"There's nothing good about an abandoned property," he said. "Everyone who has come to the table to try to figure out what a potential solution might be recognizes that."
Marcia Griffin, president and founder of HomeFree-USA, a Hyattsville housing-counselor agency with a nationwide reach, said lenders seem to be more open to working with borrowers than they were last year. Many are participating in the federal Home Affordable Modification Program, which offers incentives for modifying mortgages. But the modifications are largely temporary so far, she said, and homeowners need permanent solutions.
The federal program doesn't offer much hope for homeowners who are out of work, she said. In Maryland, 215,000 adults are looking for work, 50 percent more than last year.
"There are no programs today that are really effective for homeowners who have lost their jobs," Griffin said. "There are families who may lose their homes, and ... we have to think about options for them."