Improvement in mortgage delinquencies in Maryland slows

The number of Maryland homeowners who are behind on their mortgages still is falling, but the pace of that decline has slowed as rising unemployment puts more pressure on borrowers, numbers released Monday show.

The number of borrowers who were at least one month behind on their mortgages between April and June fell 4 percent compared with a year earlier, according to the report from the Mortgage Bankers Association. During the previous two quarters, the rate of improvement was around 10 percent.

The number of seriously delinquent borrowers — those who were 90 days or more behind on their mortgages, including those in foreclosure proceedings — continued to decline. But the group of newly delinquent borrowers one month behind grew slightly over the year, the first time that measure worsened since the summer of 2009.

That's similar to the trend nationwide. The Mortgage Bankers Association said rising unemployment during the spring explains why the country's 30-day delinquency figures are no longer trending downward.

"The change in the short-term delinquencies are very much tied to what took place in the employment market," said Jay Brinkmann, the trade group's chief economist.

Maryland had the nation's second-highest percentage of seriously delinquent mortgages that weren't yet in the foreclosure process during the spring, the Mortgage Bankers Association said. The state's rate of newly started foreclosure cases, meanwhile, ranked a much lower 23rd.

The trade group attributed the big overhang of pre-foreclosure delinquencies to Maryland's new mediation law, which since last summer has allowed homeowners to request a meeting with representatives of their lender before an auction can occur.

"When you put a roadblock in front of the foreclosure process, you would expect the 90-day-plus [category] is going to back up, and that's what we think is happening here," said Michael Fratantoni, a vice president of research at the bankers group.

Clarence J. Snuggs, deputy secretary of the Maryland Department of Housing and Community Development, said the state hopes lenders use the time to find a modification plan or other alternative that would render foreclosure unnecessary.

The Mortgage Bankers Association's survey shows that about 140,000 Marylanders were behind on their mortgages during the spring. The number included cases in which mortgage servicers were trying to foreclose, but hadn't yet repossessed. About 146,000 homeowners were behind during the spring of last year.

That's most but not all of the state's delinquencies, because the survey accounts for just under 90 percent of first-lien mortgages nationwide.

Brinkmann said the key to stemming the foreclosure crisis — and getting the housing market humming again — is more job growth. Unemployment is 9.1 percent nationwide.

Maryland's jobless rate isn't as bad. But after climbing to 7.2 percent in July, the rate is still far above the state's historical norm.

"It's taking people longer to find jobs," Snuggs said. "Folks are running through their unemployment benefits … and they're struggling to make a partial payment or any kind of payment on a mortgage because of an inability to find comparable employment."

Unemployed and underemployed homeowners have less than a month left to apply for Emergency Mortgage Assistance, which offers no-interest, forgivable loans that help borrowers pay off past-due amounts and cover a portion of the monthly payment for up to two years.

The state-run program is funded with federal dollars that must be committed by Sept. 30, and officials with the housing agency say the very latest a homeowner could apply is Sept. 15 — assuming the money isn't already handed out by that point.

The state has approved just over 680 loans, about $23 million of the $40 million it has for the program. Details about how to apply are on the state's website,

Patricia Hull, a homeownership adviser at Neighborhood Housing Services of Baltimore, said the nonprofit is hearing from many borrowers hoping to get that help. Unlike the often-frustrating loan modification process, she said, it's pretty clear upfront to homeowners whether they'll qualify for the Emergency Mortgage Assistance program.

It's often the only mortgage help they will be offered if they're unemployed, Hull added.

"If you lost your job, you were pretty much out in the cold," she said. "The EMA program really speaks to that population."