Maryland's efforts to help cash-strapped homeowners avoid foreclosure are prolonging the housing crisis, according to housing experts.

Foreclosure filings in the state jumped 21 percent in the first quarter from the previous three months, while they dropped 4 percent in Virginia -- which let the crisis run its course -- and 7 percent nationwide, according to the foreclosure-tracking firm RealtyTrac.

Foreclosures around Washington
Fairfax County3433382592331,173
Loudoun County164155123121563
Montgomery County148168101156573
Prince George's County3523594933661,570
Prince William County2993271972031,026
Source: RealtyTrac

"The foreclosure machinery in Maryland is ramping back up again," said Daren Blomquist, vice president of RealtyTrac.

Not only are foreclosures still high, they are keeping home sales prices down.

In Prince George's County -- ground zero in Maryland's foreclosure crisis -- home values have plunged 52 percent since their peak in 2006, according to Metropolitan Regional Information Systems Inc. As a result, most homeowners in the nation's wealthiest majority-minority county say they owe more on their house than it's actually worth.

The county had three times as many foreclosures as neighboring Montgomery County during the first three months of the year. In April, Prince George's foreclosure activity improved 25 percent, but it still topped all other local counties, with 366 foreclosures.

In the state as a whole, the average sales price fell more than 4 percent to $267,983 in the first quarter compared with the previous quarter. The state's foreclosure activity increased 21 percent during the period.

By comparison, the Old Dominion's home prices ticked up less than 1 percent to $325,909 in the first quarter of 2012 as foreclosure activity fell nearly 4 percent.

Blomquist said Maryland's surge in foreclosures appears to be the result of a state law, implemented in July 2010, that aimed to help people facing foreclosure refinance their mortgages and stay in their homes.

The law requires lenders to file documentation proving they tried to modify a loan before forcing residents out of their homes, and to pay a $300 fee for every foreclosure notice issued. If homeowners request mediation, judges will review the paperwork and decide whether to bring the sides together to rework a loan agreement.

The number of Maryland homeowners seeking mediation doubled to 1,043 in the first four months of 2012 compared with the previous four-month period, according to data from the Maryland Department of Housing and Community Development.

Gov. Martin O'Malley touted the law as a life preserver for cash-strapped families who were bilked by predatory lenders.

Opponents say it only delayed the inevitable by creating a backlog of impending foreclosure cases that would resurface eventually.

And states like Virginia that let the crisis ride itself out -- even those that froze foreclosures during the nationwide robo-signing investigation -- are seeing far fewer foreclosure filings, Blomquist said.

"In nine and a half out of 10 cases, modifications don't work and the homes are eventually foreclosed on," said Vince Caropreso, a Maryland real estate agent and certified distressed property expert. "Some consumers just use it as a way to stay a little bit longer [in their homes]."

The state's foreclosure filings dipped for several months following the law's implementation, but now the foreclosures that were avoided a year ago are unloading into the housing market.

"We are definitely seeing a lagging foreclosure wave coming through that was delayed a year ago and is now hitting Maryland," Blomquist said, adding that he has seen similar patterns in other states with loan modification programs.

"From what I have seen, nobody really wants to fix the problem" in Maryland, said Continental Properties real estate agent Fernando Garcia. "They basically just set it aside and wait for somebody else to pick it up. It's not solving anything."