Md. foreclosures soar as Virginia stabilizes

In the latest battle between Virginia and Maryland, the southern state appears to be gaining.

Virginia’s foreclosure crisis — which was at fever pitch just a few years ago — is easing, while Maryland’s foreclosure filings are skyrocketing.

The neighboring states have taken vastly different tacks on how they have dealt with the popped housing bubble, with some analystssuggesting that some of Maryland’s laws are merely delaying the pain.

Maryland’s foreclosure filings jumped 60 percent in the first three months of the year from a year ago, while Virginia’s stayed flat.

Maryland saw about 9,200 foreclosure filings in the first quarter of 2009, and ranked 16th in the country in the number of filings per houses, while Virginia was 13th with 14,725, according to the online foreclosure-tracking Web site RealtyTrac.

In a year’s time, Maryland has overtaken Virginia, with nearly 15,000 filings, while the commonwealth’s numbers have declined to 14,534. Maryland is now 14th, and Virginia ranks 22nd.

Maryland has taken aggressive measures to combat its housing crisis. In 2008, the state lengthened the foreclosure process from 15 to 150 days, made mortgage fraud a crime, and banned other predatory practices.

“I think that Maryland has definitely been very progressive about trying to address the [foreclosure] problem,” said Daren Blomquist, a spokesman for RealtyTrac.

“Unfortunately, nothing has really seemed to stick,” he said. “It feels to me that the problems have dragged on [in Maryland] a little bit longer” than in Virginia.

Maryland is following a pattern seen elsewhere in the country. When laws are passed that delay the foreclosure process, states see a dip in foreclosures, followed by a spike — basically amounting to a “processing delay,” Blomquist said.

Conversely, Virginia’s foreclosure laws differ from those in Maryland, said Andy Bauer, a regional economist with the Baltimore branch of the Richmond Federal Reserve.

“A lot of the efforts in Maryland involved giving borrowers more time,” he said. “Increasing the timeline could have pushed back the foreclosure filings.”

The Maryland legislature just passed a bill that charges lenders $300 to start foreclosure proceedings and requires them to consider modifying loans. The law, which takes effect July 1, also gives homeowners the option to enter foreclosure-mediation proceedings.

Critics of the new law say that it’s only delaying the problem. Del. Luiz Simmons, D-Rockville, says such moratoriums are “admirable efforts,” but don’t get to the heart of the problem.

“I don’t see the mediation as doing much as prolonging the inevitable,” he said. [It’s] useful, but it’s certainly not going to stanch the tide.”

But Rick Nelson, director of Montgomery County’s Department of Housing and Community Affairs, didn’t think that was the case.

But Rick Nelson, director of Montgomery County’s Department of Housing and Community Affairs, didn’t think that was the case.

“I think there are some positive outcomes we can expect as a result of mediation,” he said. “I am one who is a strong proponent of the banks sitting down with the borrower and [trying] to work something out.”

Across the Potomac River, Virginia’s efforts to control the crisis was more muted.

Former Gov. Tim Kainecreated the Foreclosure Prevention Task Force in 2007 to provide outreach and foreclosure-prevention programs to troubled homeowners. Lawmakers also passed a law during last year’s General Assembly session to crack down on abusive mortgage broker practices.

Parts of Loudoun County have been peppered with foreclosures over the past few years, but County Administrator Tim Hemstreet — who started at his post in December — said the market appears to be stabilizing.

[email protected]