Protestors try to stop a foreclosure eviction in Baltimore

Protestors try to stop a foreclosure eviction in Baltimore (Barbara Haddock Taylor / Baltimore Sun / May 16, 2012)

Good news, bad news: New mortgage-delinquency problems are back to normal levels in Maryland, but the older cases -- borrowers seriously behind on their loans -- aren't receding.

Worse news: The state has the nation's 15th highest share of borrowers in the foreclosure process, awaiting auction, and second-highest percentage of borrowers not yet in foreclosure but at least 90 days behind on payments.

That's as of March, the newest figures from the Mortgage Bankers Association.

There's an argument brewing over why Maryland has a big backlog of pre-foreclosure and foreclosure cases -- the so-called "shadow inventory" that, odds are, will eventually become short sales or hit the market as bank-owned deals. The mortgage bankers count 91,000 of these homes in Maryland, which doesn't catch everything because the trade group's survey covers roughly 88 percent of first-lien loans.

So why the backlog?

The Mortgage Bankers Association blames state rules. Maryland hasn't made foreclosure a full court proceeding like, say, a criminal trial, where the defendant is entitled to go before a judge. But mortgage servicers must file with the court to get permission to foreclose, must participate in mediation before auction if the borrower requests it and must get auction sales ratified.

Before 2008, a servicer could have foreclosed in Maryland just 15 days after the first late payment -- one of the fastest processes in the country, and without requiring proof of notification. (A Columbia man who wasn't behind on his mortgage lost his home in 2005 and was never able to get it back, though he did eventually get a settlement.)

Now servicers must wait 90 days to start a foreclosure case, and the earliest point an auction could take place is 135 days after default (four-and-a-half months) -- 185 days if the borrower asked for mediation.

But Maryland regulators say servicers have been delaying the start of foreclosure far beyond what's required. Companies hit the brakes here and elsewhere after the robo-signing scandal erupted in late 2010.

In March, mortgage servicers gave the owners of 32,600 Maryland homes a warning that foreclosure proceedings could begin in a month and a half. On average, those borrowers were behind on their mortgages by more than a year -- even though Maryland law specifies that the warnings can be sent as soon as borrowers are 45 days behind.

The number of March warnings was more than double the number of a year earlier. Whether the national mortgage settlement being announced the month before had anything to do with that, the state can't say. (I called two big mortgage servicers, and neither could give me an answer Wednesday.)

Marceline White, executive director of the Maryland Consumer Rights Coalition, is concerned that Maryland foreclosure-warning notices are being mailed so much later than they could be. The farther behind a borrower gets, the less likely that any option but foreclosure is possible.

Such delays prompted a state law that will go into effect Oct. 1, giving borrowers and servicers the option — if both agree — to have a mediation session before the foreclosure case is started rather than after. State officials hope that will lead to more auction-block alternatives.

The new law is also intended to speed up foreclosure for homes certified as empty by the local government.

"Properties that are vacant should just flow through the process," said Anne Balcer Norton, Maryland's deputy commissioner of financial regulation.

Got a housing tip to share? (Or just want to tell me something?) Email me at jhopkins@baltsun.com.