WASHINGTON — The housing market is slowly getting back to normal and the number of foreclosures continues to fall. But that’s not true in Maryland.
Maryland has the third-highest foreclosure rate in the country, up 93 percent from a year ago, according to a new study by RealtyTrac.
Foreclosures nationwide were down 9 percent in November compared to October, and down 1 percent from a year ago.
RealtyTrac Vice President Daren Blomquist says Maryland’s foreclosure rate is climbing because, after the housing crisis, the state passed a law that tried to help homeowners avoid foreclosure through mediation.
“The problem is, not everybody qualified. At the end of the day, the mediation delayed a lot of inevitable foreclosures and kicked the can down the road.”
The program did help some homeowners by providing more aggressive foreclosure- prevention options, but those who could not save their homes are now facing foreclosures much later than residents in other states.
Most of these foreclosures, Blomquist says, originated from bad loans during the housing bubble between 2004 and 2008.
“The good news is that there’s not a new wave of loans that are going bad recently. But the bad news is, those foreclosures are still going to have a negative impact on the market. As they are foreclosed, that represents someone losing their property. It represents a home often being sold at a discount, which drags down home values in the neighborhood.”
Virginia, on the other hand, did not intervene. The number of foreclosures has continued to decline and is down 15 percent this year compared to 2013.
“Home prices have bounced back more quickly,” Blomquist says.” It’s moved on and is not weighted down by those distressed properties.”
Blomquist estimates that within a few months, nationwide foreclosure levels will be back in the pre-housing bubble range.
“Lenders did learn their lesson. The industry did learn its lesson and it’s now much harder to qualify for a loan. That’s a good thing for foreclosure rates — although some people would argue it’s become too tight and it’s so hard to get a home loan now. But what it has done is caused foreclosure rates to plummet.”