Foreclosure Events Decline in State

But Officials Warn That Number Should Rise as Moratorium Ends

The number of foreclosure events in Maryland has fallen more than 20 percent since the state enacted legislation to address the housing crisis, state officials told members of the Board of Public Works yesterday.

But Thomas E. Perez, secretary of the Department of Labor, Licensing and Regulation, warned that foreclosures are expected to rise in the near future as a "de facto temporary moratorium" that extended the foreclosure period from 15 to 150 days ends for many homeowners.

"We bought time for people," Perez said during an interview after the meeting. "That's a good thing, but as the year goes on, the numbers will increase dramatically." During the second quarter of 2008 in Maryland, there were 8,929 foreclosure events in which homeowners received notices threatening foreclosure, went through auction proceedings or had a home repossessed. That number was down more than 20 percent from the first quarter. Prince George's and Montgomery counties had the highest percentage of foreclosure events, according to data released by the housing department yesterday.

The new legislation required that homeowners be notified of an intent to foreclose and that the process take 150 days. The extension of the foreclosure timetable was hailed by housing advocates because it would provide immediate assistance to homeowners.

Another key element of the legislation was tougher punishment for those involved in mortgage schemes, such as tricking homeowners into signing over their houses to a third party. The legislation also prohibited prepayment penalties.

In February, Gov. Martin O'Malley (D) announced emergency regulations requiring loan service companies to tell the state when residents are in danger of losing their homes so that the government can offer preemptive help. Maryland became the second state, after California, to enact such regulations.

Perez said the commissioner of financial regulation has received 24,000 notices of intent to foreclose and has sent letters to the homeowners about services available to them.

In yesterday's update, Perez also said the state is continuing to work with loan service companies to make certain they are providing homeowners with adjustable rate mortgages with loan modifications that are workable.

Raymond A. Skinner, secretary of the Department of Housing and Community Development, said counselors report that homeowners are experiencing better results with loan modifications than in the past.

"I think [loan service providers] have no other choice to some degree," Skinner said.

Skinner said the state, at the behest of Chief Judge Robert M. Bell of the Court of Appeals, has enlisted 700 lawyers who will work pro bono to help homeowners facing foreclosure.

He said the lawyers have been trained and are being paired with housing counselors to provide "appropriate legal advice that is free and objective."

Perez said the state has also created mechanisms to reach out to homeowners telling them to beware of scam artists.

"None of the things were grand-slam home runs, but we have interventions that are designed to help people stay in their homes," Perez said.