We are continuing our discussion from our last post. According to RealtyTrac Inc.’s May foreclosure data, Maryland is failing where most other states are succeeding. The number of homes in some stage of foreclosure increased from April to May and greatly increased — 229 percent — from May 2012. The big question is, of course, what the heck is going on here?
Real estate professionals have their theories, but one in particular is worth digging into. A few years ago, as the foreclosure crisis began to take hold everywhere, Maryland lawmakers changed the process. The objective of all the law changes was to keep borrowers in their homes. Now, the theory goes, those borrowers just can’t hold on any longer. The law changes only delayed the inevitable.
Under the old laws, foreclosures could take, from start to finish, 15 days. The minimum is now set at 135 days. (The average, however, is 575.) Those days were added so that homeowners could pursue other paths, like loan modifications or refinancing. Homeowners could also avail themselves of the state’s medication program.
Mediation is supposed to give homeowners a little more control, and perhaps more dignity, over the foreclosure process. In many cases, the process has worked. One real estate agent says he personally has seen borrowers’ credit histories saved.
In other cases, however, attempts at modification and mediation sessions have just prolonged the process. There are still plenty of homeowners out there who are in trouble, the experts say, homeowners who cannot be helped by any of these programs. Some of them have been out of their homes for months, if not years, but the foreclosure is still hanging over their heads.
Delays cannot solely be laid at the feet of Maryland’s laws, though. The banks and mortgage servicers slowed their own foreclosure processes while they sorted out settlements and went through loan reviews.
So the bad numbers are up, and the good numbers aren’t up but aren’t really down, either. The hope is that this surge in foreclosures is temporary and will work itself out over the next year or two. And then, a few years down the road, the state can evaluate the full impact of the law changes.
Just in time for the next housing bubble to burst.
Source: The Baltimore Sun, “Md. foreclosure activity high despite recovering market,” Steve Kilar, June 22, 2013