It could be much worse. That is the line Gov. Martin O’Malley uses all the time to describe the swell job he’s doing leading the state.
He’s right. Things are OK, thanks to taxpayers around the nation. They bankroll the highest median household income in the country through high-paying federal jobs, federal contracts and research grants flowing to the state.
But things can’t get much worse in terms of the state’s foreclosure problem. Maryland ranks in the top 10 nationwide for the rate of filings, putting it in the company of Nevada and Michigan. And state efforts to slow them have not worked.
There were 2,089 foreclosures filed in Prince George’s County last month, up almost 70 percent from November 2008. And filings more than doubled in November from a year earlier to 952 in Montgomery County, one of the richest counties in the nation.
These numbers are happening despite an all out assault by Gov. O’Malley to reduce them. Last year he pushed a package of reforms through the legislature that included slowing down the foreclosure process. He also started loan programs to aid struggling homeowners through the Department of Housing and Community Development.
Those who counsel people going through the foreclosure process say that the new laws codified a timeline that was already industry practice. And some said that lenders often take more time because they are backlogged.
Statistics on the state’s loan programs show many are handouts, not loans, for the few benefiting from them. Nine of 22 loans are in default for the Homesaver Refinance Mortgage Loan Program, and 10 of 52 are in default for the state’s Lifeline program, according to Jacqueline Lampell of the Department of Housing and Community Development. She said there are no delinquencies for the 53 Bridge to HOPE loans.
Many people are not eligible for loans because their mortgages are more than the value of their home. These statistics beg the question of how more state intervention will stem the foreclosure tide and whether doing so will actually save the state money.
O’Malley has proposed forcing mediation between borrowers and lenders, but with a $2 billion budget deficit, paying for it will require cutting other programs.
The bigger issue is that most problems are out of state hands, even if they are having dire consequences on local tax revenue. The governor can not prevent people from losing their jobs. And not even the federal government can force lenders to modify loans on its time frame.
Statistics released earlier this month showed that only 31,382 loans of more than 700,000 under a federal program have been permanently modified to a lower payment.
Banks blame homeowners for not sending in paperwork fast enough to make modifications possible. But foreclosure counselors, including Tom Simonton at Consumer Credit Counseling Services in Rockville, say it’s the banks who lose information, sometimes eight or 10 times.
“I can only imagine the room where the faxes go to,” he said. He’s tried certified mail, Fed Exing and UPSing documents and lenders still claim to not have received documents, he said.
While the answer likely lies someplace in the middle, one can only wonder if the banks aren’t stalling in hopes of another government bailout. It would help consumers, right? Wasn’t that the logic last time around?
Examiner Columnist Marta Mossburg is a senior fellow with the Maryland Public Policy Institute and lives in Baltimore.
