About 133,000 of the state's nearly 1.1 million residential loans, or 12.6 percent, were either in the foreclosure process or at least 30 days late at the end of March, a 9 percent drop from last year's first quarter, the Mortgage Bankers Association said.
The survey, which the group says covers most but not all residential mortgages, showed continuing improvement in the market for Maryland borrowers. The number of delinquent or foreclosed-upon loans in the state has been declining for the past three quarters, with decreases of 10 percent in the fourth quarter and 3 percent in the third quarter last year, when compared year over year.
"We have had some jobs created, and we've had declines in first-time claims for unemployment insurance," Jay Brinkmann, chief economist for the bankers association, said in a conference call. "The real estate market is dependent almost entirely on how many paychecks are created, and those numbers are positive."
In another bright spot for Maryland, the number of new foreclosure cases started in the first quarter dropped sharply from a year earlier — down 27 percent, to about 9,500 loans. That could reflect the lingering effect of the robo-signing scandal, which prompted the launch of nationwide investigations last fall and emergency court rules in Maryland that may have slowed servicers in seeking foreclosure. But new cases were up modestly compared with last year's fourth quarter.
An easing of the foreclosure crisis in the state is likely also a result of increased efforts by lenders to work out loan modifications and payment plans on troubled loans, said Clarence J. Snuggs, deputy secretary of the state's Department of Housing and Community Development.
The housing department continues to assist borrowers in distress, he said, connecting homeowners with housing counselors and offering help such as the new Emergency Mortgage Assistance Program. Unveiled last month, the program provides two-year loans to supplement mortgage payments in cases where borrowers have been laid off or face high medical costs.
Though the mortgage delinquency situation is improving in Maryland, the recovery from a deep recession has been spotty nationwide, Brinkmann said, adding that the real estate market is entering a recovery period.
But some argue that conditions in the market remain bleak. While fewer loans may be troubled, the bankers association numbers also show that 4.8 million borrowers nationwide — or 1 in 9 — were at risk of losing their homes to foreclosure, according to an analysis by the Center for Responsible Lending.
In the first quarter of 2003, before the housing bubble, the figure was 1 million borrowers, or one in 32, who were at risk, or 60 or more days late or in foreclosure, according to the Washington-based nonprofit research and policy group.
The trend is echoed in Maryland, where 100,000 borrowers, or nearly 1 in 10, were 60 days or more past due on loans or in foreclosure in the first quarter. By comparison, 1 in 30 Maryland borrowers, or about 30,000, were at risk in the first quarter of 2003.
While the bankers association says the foreclosure crisis is abating, "we're saying the patient is so critically ill" that the first-quarter figures are hardly an improvement, said Kathleen Day, a spokeswoman for the Center for Responsible Lending. "The problem is the mortgage servicing industry is such a mess. It really doesn't feel like things are getting better."
Day was referring to revelations last year that mortgage services and law firms were processing foreclosures based on insufficient or fraudulent paperwork.
But Brinkmann said some of the first-quarter figures point to a recovery that is likely to continue. For one thing, short-term delinquencies have returned to prerecession levels; for another, the share of loans that are 90 days past due has been declining for five straight quarters.
He added that the percentage of foreclosures initiated by lenders fell to the lowest level since the end of 2008. Also, the bankers association reported that the share of loans in foreclosure nationally has dropped from the previous quarter.
"This is a clear sign of a mortgage market that is on the mend," Brinkmann said. "It is not better yet, and we have not gotten back to a normal market, but we are moving there."
Baltimore Sun reporter Jamie Smith Hopkins contributed to this article.