In the first three months of the year, there were 9,339 foreclosure filings in Maryland, more than twice the total of a year earlier but still far below the peak of 16,788 during the last three months of 2009, state data shows. That year, there were about 50,000 foreclosure filings.
Foreclosure hot spots, once concentrated in Prince George’s County and Baltimore, are suddenly appearing across the state, in communities from Baltimore County to the Eastern Shore, especially in areas that have yet to recover from the recession and where unemployment rates remain high. For many Marylanders battling to keep their homes, it might as well still be 2008.
Housing experts had been bracing for a second wave of foreclosures since 2010, when lenders were forced to halt all foreclosures while they addressed massive documentation problems. Many kept the brakes on until last year, when they reached a nationwide settlement with state attorneys general over their practices.
All the while, the backlog of troubled loans grew, mainly in states such as Maryland, where courts approve foreclosures and the process takes much longer. Lawmakers in Annapolis also passed a series of reforms to help homeowners try to save their homes, which made the foreclosure timeline even longer. Once among the shortest in the nation, Maryland’s is now among the longest: an average of 575 days as of June, according to foreclosure-tracking firm RealtyTrac. In Virginia, where court approval for foreclosures is not required, it takes 184 days, the shortest of any state.
The speed can be brutal for homeowners, consumer advocates said, leaving them few chances to challenge lenders. But the shorter timeline, economists said, also allows Virginia and other nonjudicial states to move foreclosures off the market more quickly.
(Courts do not approve foreclosures in the District, but the city’s foreclosure process has largely stalled since the D.C. Council made changes in 2010.)
For the past year, the growing “shadow inventory” of homes in or on the edge of foreclosure has loomed over Maryland’s housing market. Homeowners and policymakers, especially in hard-hit areas such as Prince George’s, feared that once it was unleashed, it would depress home prices and prolong a housing slump.
But the second wave of foreclosures is unlikely to be as devastating as the first one, experts said, because it coincides with a housing recovery that is making it easier for banks to offload distressed homes.
“People realize the market has pretty much bottomed out in terms of home prices,” said Daren Blomquist, a RealtyTrac vice president. “People are jumping in. These foreclosure properties will be snatched up quickly.”