In the latest sign the mortgage crisis is easing in Maryland, the number of homeowners facing foreclosure or falling behind on their home loans hit the lowest level since mid-2009, statistics released Thursday show.
The number of Marylanders behind on payments in the final three months of last year, including those in foreclosure proceedings, fell 10 percent from the year-earlier period to 140,000, according to the Mortgage Bankers Association. That number accounted for 13.5 percent of the more than 1 million loans in the state, the data showed.
In Maryland and elsewhere in the nation, the foreclosure crisis has moderated but is far from over. Jay Brinkmann, chief economist for the bankers association, said that "while delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner."
Brinkmann noted that the national delinquency rate for loans up to 30 days past due fell to pre-recession levels and predicted that "steady increases in employment will lead to drops in the delinquency rates." About 13.5 percent of the nation's 43 million loans were either past due at least 30 days or in foreclosure, the trade group reported.
In Maryland, the number of people who are past due on their loans and facing foreclosure has been inching downward since the first quarter of last year. The Mortgage Bankers Association says nearly 90 percent of lenders participate in its survey.
Nearly 43 percent of Maryland borrowers with subprime loans were at least one payment behind in the fourth quarter, also an improvement over the same period a year ago. Subprime delinquencies peaked at 46 percent at the end of 2009.
While most states saw a decline in the number of loans entering the foreclosure process, the number grew in Maryland in the fourth quarter, to about 9,300 from roughly 7,800 in the third quarter, the survey showed. The increase came after a significant decline in foreclosures in the third quarter, when a new law allowing Maryland homeowners to request foreclosure mediation took effect — and temporarily put the brakes on new foreclosure cases.
"Typically, what we see in the following quarter is a bit of a rebound, and we think that's what we're seeing here," said Mike Fratantoni, MBA's vice president for single-family research.
Homeowners who have lost jobs or had their wages trimmed during the recession and slow recovery have been especially susceptible to mortgage troubles, said Mary Warlow, director of programs and development for Belair-Edison Neighborhoods Inc., a Baltimore nonprofit that offers housing counseling.
"We're no less busy" than at the height of the recession, said Warlow, whose organization helps homeowners work out loan modification agreements with lenders and avoid foreclosure. "Part of the problem is it takes so long to get a resolution for people."
Robert L. Bush, a Gwynn Oak homeowner who has lived in his house for more than 30 years, said he was laid off from several jobs and became unable to make his monthly mortgage payment. He became frustrated by the paperwork required for a loan modification and ended up turning to an Arizona-based law firm that promised to work with his lender, Central Mortgage Co.
After paying the firm $2,700, Bush said, he was unable to reach the company and was later told by his lender that no progress had been made on a loan modification. A phone listing for the law group was out of service Thursday.
"People out here are struggling and losing their homes, and then you've got these predators preying on people and taking what little money they do have," Bush said.
Bush, a former heating and air conditioning business owner who now works as an instructor in the field, said he has been informed by his lender that he's in foreclosure and must come up with $22,000 to keep his home.
"They might as well have told me I owe $22 billion," Bush said. "I guess they're going to have to take the house. I want to get this resolved, but right now I'm in limbo."
Jason Kincy, a spokesman for Central Mortgage Co., said the lender does not comment on individual customer situations.
Consumer complaints have increased in Maryland against loan modification consulting firms, many of which charge consumers illegal upfront fees, said Mark Kaufman, commissioner of financial regulation at the state Department of Labor, Licensing and Regulation. He said the department has imposed fines, ordered refunds and referred cases for criminal prosecution.
"The most important advice is not to pay these upfront fees at all — don't pay, walk away," Kaufman said. "While we may recover money, and we've recovered roughly $200,000 for consumers, we will never recover the time which is lost in avoiding the underlying foreclosure."
Baltimore Sun reporter Jamie Smith Hopkins contributed to this article.