Foreclosures drop in Maryland, Anne Arundel

State efforts to help residents keep their homes have led to a recent decline in the number of foreclosures across Maryland and in Anne Arundel County, officials announced yesterday.

But despite a drop from the second quarter to the third quarter, the number of foreclosures still is significantly higher than this time last year. And state officials said they expect those number to jump even higher as more Marylanders lose their jobs and home loans reset to higher rates next year.

"It's a short-term drop," said Mark Kaufman, deputy commissioner of financial regulation for the state Department of Labor Licensing and Regulation, at a news conference in Baltimore yesterday. "It's, to some extent, temporary."

According to a report from the state Department of Housing and Community Development, home foreclosures dropped 16 percent to 7,974 in the third quarter compared with the second quarter when there were 9,453.

However, state foreclosures jumped 13 percent from this time last year. There were 7,001 in the third quarter of 2007.

Already, the state commissioner of financial regulation has received nearly 40,000 notices of intent to foreclose since April, when a new law was put into place to elongate the foreclosure process, he said.

"Most of those people will not end up in foreclosure, but it gives you a sense of the scale of the problem," Mr. Kaufman said.

In Anne Arundel, the number of foreclosure filings fell to 186 in November, a 22 percent drop from 240 in October, said Clerk of the Circuit Court Robert Duckworth.

He said he originally thought the county would see more than 2,000 foreclosure filings by the end of the year. He said he now expects less than that. Also, Mr. Duckworth said he is optimistic the state legislation and other efforts will prevent foreclosures next year.

"I think they will help families stay in their homes," he said.

Rates on "Alt-A" loans, which require little or no documentation - will begin resetting to higher rates in August, leading to more foreclosure. Thirty percent of the rates on those loans have already reset.

About 10 percent of the rates on the loans will reset between August 2009 and July 2010. About 54 percent of the rates on Maryland Alt-A loans will spike after August 2010, he said.

Although officials said they expect the foreclosure problem to continue, state legislation that gives people more time to keep their homes has had an immediate impact in Anne Arundel County, Mr. Duckworth said.

"It's kind of stretched it out," he said.

The state has rolled out a number of initiatives to help homeowners who were seduced into exotic loans.

In April, Gov. Martin O'Malley signed into law a series of housing reforms, including one that extends the amount of time before a foreclosure can become final from 15 days to 150 days.

Last month, the state finalized an agreement with six mortgage service companies to help struggling Marylanders keep their homes. The governor has also created the Bridge to HOPE loan program, providing loans at zero interest to homeowners.

"We in Maryland have taken a comprehensive approach to dealing with the foreclosure crisis," said Department of Housing and Community Development Secretary Raymond Skinner. "We really feel that we have services in place that can help people in getting out of this situation."

Mr. Skinner also said in a meeting yesterday that the help of Maryland housing counseling agencies has been critical. Over the past year, counselors have assisted more than 11,000 consumers who have been in "various stages of foreclosure or are about to go into foreclosure," he said.

As a result, counselors have achieved more than 4,000 "positive outcomes," including restructuring of loans, payment plans, and short sales that have helped consumers avoid foreclosure, he said.

While progress has been made, Mr. Skinner warned that "we cannot refinance ourselves out of this situation."

"What we have to do is look at other ways to get more scalable or massive modification to mortgages," he said.