Foreclosure News Dampens Hopes For Local Recovery

In this case, trailing the pack would be nice.

Instead, with more than one in every 300 housing units receiving at least one foreclosure filing, Charles County had the state’s second-highest foreclosure rate in April, according to statistics compiled by RealtyTrak, a real estate analysis firm. The number includes homeowners in any stage of the process, from receiving a notice of default to having the bank seize the home. With one in 297 houses in the process, the rate is almost one and a half times the state average, which in turn is higher than the national rate of one in 387.

Not far behind at No. 4 is Calvert County, where one of every 311 homes is in foreclosure, according to RealtyTrak.

Suffering under the highest foreclosure rate in the state is Prince George’s County, where one in every 234 homes is threatened or was seized by a bank. Our northern neighbor also leads the state in total foreclosures, while no Southern Maryland county made the top five.

Maryland as a whole saw a 3 percent increase in rates over March — and a whopping 51 percent increase over April 2009, the report said. The increase bucks the national trend, where the rate dropped 9 percent in the month and 2 percent in the year.

Charles County Commissioner Reuben B. Collins II (D) said subprime mortgages marketed to new residents are partly responsible for the high foreclosure rate.

“We saw record growth and the impact was on many first-time homebuyers [who] are moving into a new community. The subprime market, I can’t tell you whether that was the primary source of lending that many of the residents that saw foreclosure activity saw, but I can tell you a good portion of those were subprime loans [that] were obviously most affected by the downturn in the economy,” Collins said.

He went on to praise state initiatives that he said slowed down foreclosures, including a requirement that bank representatives meet with a property owner before foreclosing.

Anirban Basu, chairman and CEO of Baltimore-based Sage Policy Group, an economic consulting firm, partially agreed with Collins.

A number of factors, principally real estate speculation gone awry and na�ve first-time buyers, could be contributing to the foreclosure rate spike that “is a bit of a mystery to me,” Basu said, because of Maryland’s relatively low unemployment rate.

In Calvert County, the foreclosure rate could be driven by investors buying waterfront property earlier in the decade. Intending to flip the homes, they then were left holding the bag when housing prices collapsed, he speculated, a practice he also saw in St. Mary’s and southern Prince George’s counties, he said.

After the housing crash such investors would find financing scarce, forcing them into foreclosure.

In Charles County, a population boom of young workers buying “more houses than they could handle” is probably to blame, he continued.

“Believe it or not, many people were buying homes in various parts of state, not to live in them but merely to flip them. This is probably somewhat less true in Charles County. In Charles County, probably, the story is many first-time homebuyers bought in the boom and first-time homebuyers have been particularly susceptible to foreclosure,” he said.

Calvert County Director of Economic Development Linda Vassallo echoed Basu’s verdict when she wrote in an e-mail that “foreclosures aren’t broken down by principal residence so some foreclosures could be on second homes, rental properties or vacant land, which would make it seem that a county is much worse off than it really is.”

On the impact of foreclosures on the local economy, Vassallo wrote, “Since we are not one of the leading jurisdictions for residential foreclosures, and we remain constant on economic growth and increases in the commercial assessable tax base, I would say that this has minimal impact.”

Not all mortgage lenders were affected equally by the foreclosures. Community Bank of Tri-County has only one house for sale as a foreclosure, the same number as last year, out of a portfolio worth about $120 million, bank officers said. President Mike Middleton and Chief Credit Officer Jim Burke said their delinquency rate actually has improved since April 2009.

They credit their low foreclosure rate to their determination to help struggling homeowners stay in their houses until the economy recovers and they can make mortgage payments again. The bank also aggressively vetted home loans to pick out the best applicants, they said.

“From our perspective these are people we see in Safeway, see in the grocery store and all around the community. The tack we have taken, to the extent we can, we sit down with the borrower to work something out,” Burke said.

Copyright ©, 2010 Southern Maryland Newspapers

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