Just when the local housing market is looking stronger, red flags are emerging in Maryland, with foreclosure activity up triple-digits last month.
Some families, like the Hoovers, are finding it tough to get by. Randy Hoover has worked for 35 years and he and wife Ann have enjoyed owning their home in Frederick since 2001. They received their first foreclosure notification in January. As Ann's unemployment benefits ran out, the family faced unexpected medical bills and with the last of four children in college, there just wasn't enough left over to make December or January's payments. "When I came to the realization I may not be able to make the mortgage payment, it's very scary and terrifying," says Randy.
The Hoovers are far from alone. Just as local houses are starting to sell again, some at record prices, Maryland foreclosure activity surged 154 percent last month compared to this time last year. Scheduled auctions were up 199 percent. Where the Hoovers live in Frederick County, foreclosures surged almost 100 percent. One of the worst increases in the state came in Cecil County, with foreclosures up 6,800 percent.
The state's foreclosure process is slower than other parts of the country. Banks are now working through a backlog of auctions and foreclosure activity is expected to stay elevated through the rest of the year. RealtyTrak's Daren Blomquist tells WUSA*9 "the other shoe is dropping in Maryland when it comes to foreclosure activity as foreclosures slowed down by the state's foreclosure mediation law and faulty foreclosure paperwork are finally working their way through the foreclosure pipeline."
But Blomquist says that the increase in activity shouldn't be seen as a harbinger for the future in Maryland. "This was expected given the dramatic drop-off in foreclosure activity following the implementation of the foreclosure mediation law in August 2010. The good news is that these foreclosures are not a sign the housing market is cratering again but a sign that the market is finally working through much of the distress created by the real estate slump of the last few years." Besides making times tougher for residents at risk of losing their homes, "the additional influx of foreclosures may slow home price appreciation in Maryland in the short term, we don't expect it to cause a double-dip in home prices," says Blomquist.
Randy and Ann have equity in the home but they haven't been able to pursade their lender to lower their 7.5 percent mortgage rate. "Every time I call the mortgage company they say they can't work with me," says Randy, adding "I'm not asking for them to forgive my principal balance. I just want a cheaper rate so I can have a cheaper balance to keep my home." The Hoovers were able to get current on the mortgage by taking money out of Randy's 401k. Come August, that money will run out.