Md. mortgage distress appeared to ease slightly in 2011

The number of Maryland homeowners behind on their mortgage payments but not yet in foreclosure inched downward in 2011, numbers released Thursday showed.

It was the second consecutive year of improvement, but it wasn't enough to bring the state back to the levels seen before the foreclosure crisis began in 2007 — or even close to those levels. More than 100,000 homeowners without pending foreclosure cases were at least one month behind on payments at the end of last year, compared with an average of 50,000 at year-end in the first half of the last decade.

The Mortgage Bankers Association statistics are drawn from a survey of banks and thrifts. The numbers account for most of the mortgage market — and thus most of the mortgage delinquencies — but not all.

National measures are also looking better, with the delinquency rate back to levels from three years ago, the trade group said.

"The improvements that we've seen are clearly tied to the improvements in the economy," said Jay Brinkmann, the trade group's chief economist.

While the number of Maryland homeowners past due on payments but not yet in foreclosure dropped, falling about 3 percent compared with the end of 2010, the ranks of borrowers facing the auction block rose. Mortgage servicers had active foreclosure cases against 42,000 Maryland homeowners at the end of last year, up 19 percent from a year earlier, according to the trade group's survey.

That's not unexpected. Foreclosures slowed dramatically in the wake of revelations in the fall of 2010 that mortgage servicers had been "robo-signing" important foreclosure documents in assembly-line fashion, with employees taking no time to verify the information before signing, faking other employees' signatures and falsely notarizing it all as above-board.

Maryland joined in last week on the national, $25 billion attorney general settlement with large servicers over such practices.

The Mortgage Bankers Association said Thursday that it expected foreclosure processing in the country would eventually speed up as a result of the settlement, but it added that such processing could initially slow things further as servicers put new rules into effect.

Maryland's share of the settlement money from Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial — the former GMAC — is expected to be $960 million.

Homeowners and former homeowners who hope the settlement might help them have flooded the Maryland attorney general's office with calls. Staffers there are urging borrowers to contact a nonprofit housing counseling agency.

"We've taken over 1,500 phone calls here so far," said David Paulson, a spokesman for the attorney general. "Many of them have already spoken to a housing counselor and it didn't help them, or they've been through a process. What we're telling them is the rules have changed, and what you may be [eligible] for has changed under this settlement. It's time to go back to that housing counselor again to find out what might be available for you."

As many as half the callers seeking foreclosure help from St. Ambrose Housing Aid Center in Baltimore are immediately asking questions about the settlement. But details about what it will take to qualify for benefits such as refinancing, principal reductions and other loan help are still scarce. The Maryland attorney general's office said officials would be working to identify eligible borrowers over the next six to nine months.

"We don't know who's going to qualify yet," said Reece Dameron, a St. Ambrose attorney who works on foreclosure prevention. "We're waiting to hear more. … Unfortunately, we just don't know very much now."

About $25 million of the state's settlement is expected to go to homeowners foreclosed on between 2008 and 2011 who were victimized by "unfair servicing practices," the attorney general's office says. It said the checks would be between $1,800 and $2,000. Most of the rest of the settlement is earmarked for reducing mortgage principal and for other foreclosure-avoidance techniques, including short sales.

One fact Dameron said St. Ambrose does know for certain is that borrowers with loans insured by the Federal Housing Administration aren't eligible for the settlement's refinancing program, aimed at those who owe more than their homes are worth. Many of the nonprofit's clients have FHA mortgages.

Calls to St. Ambrose for help have been on the rise this year after slumping in 2011, when servicers were delaying action on delinquent loans. About 3,400 foreclosures were completed in Maryland last year, down nearly 80 percent from the year before, according to real estate data firm CoreLogic. The Baltimore region saw the same sharp drop.

All told, mortgage holders have foreclosed on about 50,000 homes statewide since 2006, CoreLogic said. That's the equivalent of every home and apartment in Annapolis nearly three times over.

Maryland has been hit hard by mortgage woes — in Prince George's County and Baltimore especially, but no community has proved immune. The state had the nation's eighth-highest share of homeowners behind on payments at the end of last year, according to the Mortgage Bankers Association. Nearly one in 10 Maryland borrowers was delinquent — which doesn't include the thousands in foreclosure.

The mortgage bankers' group estimated that the country as a whole was about halfway through the foreclosure mess, based on how far below the peak — and above normal — delinquencies now stand.

Much depends on the economy. About 200,000 Marylanders were trying to find work but had not succeeded at the end of last year.

"It's going to keep going until people get jobs again," Dameron said of the foreclosure crisis. "That's the main issue in Baltimore."