Alarmed by signs that Maryland's burgeoning foreclosure problem will worsen before it gets better, 200 housing counselors, lenders and other officials packed a forum yesterday to talk about solutions - from short-term help to regulatory reform.
The event, held in Annapolis, comes two days before the General Assembly convenes for its annual session. Foreclosure issues are expected to loom large, not only because they affect an increasing number of people but also because they have a ripple impact on neighborhood housing values and tax revenue.
Thomas E. Perez, Maryland's secretary of labor, licensing and regulation, told the crowd yesterday that the O'Malley administration "will have a robust legislative agenda to ensure homeownership preservation," including "meaningful oversight" for mortgage brokers. Mortgage underwriting, he said, was "unbelievably shoddy" both during the run-up in home prices and sales that ended in late 2005 and, more recently, as sales slumped and lenders rushed to get new business.
"So many people were set up for failure," Perez said.
The Baltimore Homeownership Preservation Coalition, one of three organizers of the Foreclosure Solutions Forum, used the event to announce an ad campaign encouraging struggling borrowers to call 888-995-HOPE, a national number staffed by housing counselors.
Commercials began airing on Baltimore-area radio stations yesterday. Ten billboard ads are going up this week, and poster ads are already inside 165 buses with this message: "Mortgage late? Don't wait."
"We're only seeing the tip of the iceberg," warned Cora Ganzglass, chairwoman of the Coalition for Homeownership Preservation in Prince George's County, another forum organizer.
Prince George's and Baltimore are seeing some of the biggest foreclosure numbers, but homeowners are falling behind on their payments across the state. In large parts of Maryland in September, more than 20 percent of all subprime loans were either delinquent, facing imminent foreclosure or in limbo as the borrowers filed for bankruptcy, according to data presented by The Reinvestment Fund yesterday.
That's a troubling trend because subprime loans - higher-cost mortgages meant for people with imperfect credit - have ballooned in number. In 2004, about one in seven loans to homebuyers in Maryland were high-cost. In 2006, the first full year of the housing slump, it was one in three.
Nonprofit housing counseling agencies can help borrowers negotiate with their lenders, whether to modify loan terms or get time to complete a sale. But there aren't enough local counselors to go around, said Ruth L. Griffin, executive director of the Maryland Housing Counselors Network, another forum organizer.
"There's a lot of talk about education, but how are we going to do that?" she asked.
Perez acknowledged that the $1 million the state announced last year for increases in foreclosure-prevention activities such as housing counseling is merely "a down payment."
He said the state also must help people facing foreclosure by lengthening the window between the start of foreclosure proceedings and when the house can be auctioned - now 15 days. Lenders say it's often longer than that in practice, but housing counselors say they're having a hard time negotiating with overwhelmed loan servicers before it's too late.
Bill Ariano with the Maryland Department of Housing and Community Development told the crowd that the state will be announcing new funding programs in the next few months to help homeowners refinance out of loans they can't afford. It is also planning to help homeowners catch up on their mortgage payments with no-interest loans, which would be paid off when the home is sold or refinanced.
The nonprofit Neighborhood Housing Services of Baltimore Inc. is trying a similar no-interest loan program - $5,000 apiece. It has $180,000 in funding for its trial run.
"What we're trying to do is to give folks breathing room," Felix Torres, executive director of the group, said in an interview.