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Lenders step up foreclosure intent filings

Maryland housing officials say lenders have filed an average of 15,000 intent notices per month against homeowners since January, indicating a new wave of foreclosures may soon hit the state.

The disclosure came Thursday after a national report from RealtyTrac that said banks and lenders may soon restart issuing large volumes of foreclosure notices following delays because of a robo-signing scandal.

The 91,840 new notices of intent to foreclose that have been filed in Maryland since the beginning of the year means thousands of new legal actions are being prepared, said Massoud Ahmadi, an economist and director of the Office of Policy, Planning and Research at the Maryland Department of Housing and Community Development.

“A good portion of them will end up in the foreclosure process,” Ahmadi said.

The state figures also reflect a national trend. RealtyTrac figures showed that notices of default increased by 32.5 percent nationally in August over July’s figures.

In Maryland, there were 958 new foreclosures filed last month — the lowest since March 2007, Ahmadi said. The August figure was also 22 percent lower than July’s foreclosure filings — and 80 percent below August 2010.

Overall, Maryland’s foreclosure rate in August was one in every 2,444 households, state figures show. That placed the state 43rd in the U.S.

RealtyTrac, a national foreclosure data agency, released a report this week using data from August that showed a 33 percent increase over July figures in foreclosure notices issued by banks throughout the country against homeowners who have fallen behind on mortgage payments.

The jump is the largest in four years and the highest in nine months after banks slowed foreclosure filings in response to charges of faulty and fraudulent record keeping, RealtyTrac experts said.

“The big increase in new foreclosure actions may be a signal that lenders are starting to push through some of the foreclosures delayed by robo-signing and other documentation problems,” said James Saccacio, chief executive officer of RealtyTrac, in a statement.

“It also foreshadows more bank repossessions in the coming months as these new foreclosures make their way through the process.”

RealtyTrac issued a report in July that showed foreclosures in Maryland fell during the first six months of 2011 by more than 68 percent over 2010 figures. A portion of that slowdown was related to legislation passed by state lawmakers in 2010 requiring mandatory mediation between residential lenders and borrowers if a foreclosure is imminent.

Nationally, the RealtyTrac report said foreclosures dropped 29 percent over 2010 figures from Jan. 1 to June 30.

Ahmadi cautioned against reading too much into the national report because the figures are based on only one month of data. But he did say Maryland’s increased numbers in foreclosure activity pointed to a spike in activity.

“One month doesn’t really give us a trend,” he said. “With the increase in notices (of intent to foreclose), that is a proxy of future activity and so that basically tells us a story that the lenders have started looking at this piling up of delinquent loans and started taking action.”

Deborah A. Ford, who heads the real estate department at the University of Baltimore’s Merrick School of Business, said Thursday that the ongoing foreclosure crisis continues to have a negative impact on the local housing market.

“It’s going to drag the market down,” Ford said. “It will continue to drag the market down — for how long? I don’t have a crystal ball but (analysts say) for about two to three years. I suspect until mid-2013.”

A local Realtor said he has yet to see such activity at the sales level, but that the activity has prompted a roller coaster-like effect on the local market.

“The banks are being very cautious in moving forward,” said David McIlvaine, a Realtor with Keller Williams Realty and a past president of the Greater Baltimore Board of Realtors.

“They are auditing themselves and looking at foreclosures to make sure every ‘I’ is dotted and every ‘T’ is crossed. They are doing that because it’s the right thing to do,” he added.

McIlvaine said the glut of foreclosed homes has forced residential values down and impacted the sales inventory.

In Baltimore County, for example, he said there were 4,211 active listings in August — below the county’s five-year average in listings of 4,427. New listings last month in the county dropped 18 percent over the new listings posted in August 2010, he added.

Nevertheless, he said prices of residential homes for sale in Baltimore County are beginning to rise.

“We are seeing some appreciations,” McIlvaine said. “The median price in the county increased 10.5 percent from July this year, but it decreased 3.2 percent from August 2010. We are seeing a bottoming — it’s starting to come back up. The demand is there and the active listing is up, not spectacular, but up nonetheless.”