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Gov. Larry Hogan’s order amends his April directive suspending all foreclosure actions due to the outbreak of the COVID-19 virus. (File photo)

Data: Foreclosure mediation not big drag on market

Some real estate professionals are blaming a law aimed at preventing foreclosures for slowing down the recovery of the housing market in the Baltimore metro area, but figures from the state regarding participation in the foreclosure mediation process raise doubts about the law’s impact on housing prices.

The argument goes that a moratorium enacted on foreclosures, and a law requiring mediation before a lender can foreclose on a home, have in part resulted in a glut of distressed sales that are holding down housing prices in the area.

According to real estate data provider RealtyTrac, Maryland had the third-highest foreclosure rate in the nation last month — one in every 611 housing units had a foreclosure filing — and home repossessions were up 100 percent in the state in January.

Meanwhile, listing prices in the Baltimore metro market fell by 8.1 percent, but non-distressed home sale prices were only down by 1.8 percent, according to figures from the Greater Baltimore Board of Realtors.

“Because we are a judicial state and because [former Gov. Martin J.] O’Malley was intent on letting people stay in houses without paying we now go back and forth between No. 1 and No. 2 in the country in foreclosure filings,” T. Ross Mackesey, president of the Greater Baltimore Board of Realtors, told reporters on Wednesday. “So when you read the national releases about the boomerang buyer, and all of that that is going to drive the market this year, we’re two years behind that.”

But supporters of the law requiring mediation argue it’s working as intended and isn’t a major drag on the housing market. Figures from the state give some credence to supporters’ assertion that the law isn’t the main culprit for a depressed housing market.

According to records from the Department of Housing and Community Development, only 23 percent of eligible households participated in Maryland’s mortgage mediation program between July 2010 and December 2014. Of the 14,423 mediation requests made during that time only 20 percent have resulted in some resolution, ranging from a loan modification to a hold on foreclosure proceedings.

“In the initial year of implementation, an alarmingly high 40 percent of cases resulted in some form of resolution. The fact that that number has declined to approx. 20 percent is a sign of success — consumers are now being much better vetted for possible loss mitigation resolution, prior to mediation and prior to being foreclosed upon,” Wiley Hall, a spokesman for the Department of Housing and Community Development, wrote in an email.

Regardless of the cost for the slow pace of sales in recent years, area real estate veterans are predicting a strong spring this year.

During a meeting with reporters on Monday, the Baltimore Realtors group said earlier this week that indicators such as the 18.4 percent increase in closed sales last month compared to January 2014 and the increase in the median sale prices of single-family detached homes and condos are reasons to be optimistic heading into the spring selling season.

About Adam Bednar

Adam Bednar covers real estate and development for The Daily Record.