Foreclosures skyrocket; state officials take action

Since January, Maryland rate has tripled from 2006

The rise in foreclosures has been partly blamed for a drain on the national economy and Wall Street by some experts. In Maryland, the state’s foreclosure situation ‘‘has been steadily moving in the wrong direction,” said Thomas E. Perez, secretary of Maryland’s Department of Labor, Licensing and Regulation, this week.

One factor behind Maryland’s skyrocketing rate has been ‘‘exotic mortgages coming home to roost,” Perez said. Rescue swindles in which con artists cheat people desperate about losing their homes to foreclosure have also risen significantly in the state, he said.

As part of state efforts to handle the rise in foreclosures, Perez’s agency has started investigations into 95 mortgage cases this year, and is in the process of hiring four more investigators to step up efforts to combat mortgage fraud, he said.

In July 2006, Maryland ranked 41st in the nation in foreclosure filings per capita with one for every 6,532 households, or 328, according to Irvine, Calif., data company RealtyTrac. Last month, the state moved up to 16th place with 2,214 filings, or one per 1,027 households.

Over the first seven months of the year, foreclosures in Maryland jumped to more than 9,000, compared with about 2,500 during the same period in 2006. Meanwhile, foreclosures across the nation grew from almost 700,000 to 1.1 million during the same period. Foreclosures increased much more slowly from 2005 to 2006.

‘‘It’s very, very troubling,” Perez said. ‘‘Foreclosures not only have a significant impact on individuals, but on neighborhoods and communities.”

And they can also affect the economy. In Maryland, many lenders and brokers have been laid off, Perez said. One major impact was the bankruptcy of American Home Mortgage Investment Corp. in early August.

The Governor’s Homeownership Preservation Task Force, which Perez co-chairs with Department of Housing and Community Development Secretary Raymond Skinner, plans to make recommendations related to the foreclosure increase to the governor in October.

Prince George’stops in foreclosures

Prince George’s County saw more foreclosures than any Maryland county in the first seven months this year, with some 2,800, more than triple the number from the same period in 2006. Montgomery County was next with almost 1,300, compared with only some 150 the previous year.

Baltimore City, which dominated foreclosure activity in Maryland in 2005, is fourth so far this year, also behind Baltimore County.

In some Maryland counties, including Prince George’s, Frederick and Anne Arundel, the rise in foreclosures, accompanied by a drop in home sales, has resulted in home prices falling. But that has not been a trend in Montgomery and some other counties, resulting in the average home sales price in Maryland climbing higher.

That average price reached $380,161 in July, up 2.6 percent from a year ago, according to Metropolitan Regional Information Systems. That was actually slightly bigger than the 2.3 percent rise seen from July 2005 to July 2006.

Housing salesat auctions rise

Some investors see an opportunity in buying foreclosed homes, fixing them up and selling them. Residential real estate was the fastest growing sector of the U.S. auction industry from 2003 to 2006, with an increase of 39 percent to $16 billion, according to the National Auctioneers Association.

By comparison, revenue at art auctions rose by 16 percent, while sales at auto auctions increased by 10.5 percent during those years.

Peter Conti, an Annapolis investor and co-author of a book on investing in foreclosures published in 2003, recently predicted that investing in homes would be ‘‘tough until mid-2009.”

‘‘I’m still buying houses, but now I’m focused on land development,” Conti said in a statement.

Many banks and other lenders have become more cautious in this environment, said David W. Wilhelm, a senior residential loan officer for EagleBank in Bethesda who has also worked for mortgage companies.

‘‘People still can get loans if they have good credit,” he said.

Getting help

Counseling is an effective way to avoid foreclosure, according to the National Foundation for Credit Counseling in Silver Spring. Last fiscal year, 93 percent of the nonprofit’s housing clients avoided foreclosure. About half of individuals facing foreclosure don’t speak to their lenders prior to foreclosing.

Consumers who seek counseling on home foreclosures may call the National Foundation for Credit Counseling at 866-557-2227.

Consumers with complaints about mortgage loans may call the Maryland Division of Financial Regulation at 410-230-6097 or 888-784-0136.

Prince George’s topsstate in foreclosures

Prince George’s County saw more home loan foreclosures in the first seven months of this year than any other Maryland county, although foreclosures increased faster in some other counties.Somerset and Garrett counties had the fewest foreclosures in the state.