Maryland, Baltimore see increase in foreclosure rate

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Foreclosure rates increased both in Maryland and across the country during May as homeowners grapple with the lingering effects of the end of foreclosure moratoriums and high interest rates.

A May 2023 data report from ATTOM, a property data group, reported a 7% increase in foreclosure filings nationwide in the past month, and a 14% increase from the previous year. The data also showed a 4% monthly increase in Maryland, and a 40% increase in the number of foreclosure filings since May 2022 in the state.

ATTOM’s report, utilizing data from over 3,000 counties nationwide, found that Maryland had the second-highest foreclosure rate in May 2023, trailing Illinois. In May, one in every 2,203 housing units in Maryland had a foreclosure filing.

The report also found that Baltimore had the third-highest foreclosure rate in May 2023 for metropolitan areas with a population greater than 1 million, ranking behind Cleveland, Ohio, and Jacksonville, Florida. One in every 1,908 housing units had a foreclosure filing in Baltimore in May, according to ATTOM.

ATTOM CEO Rob Barber said in a news release that the increase in foreclosures across the country during May represents an expected upward trajectory, and suggests the continuation of heightened foreclosure activity in the near future.

The May 2023 report continues a pattern of rising foreclosure activity since a sharp decrease in 2020 due to the COVID-19 pandemic and subsequent foreclosure moratoriums. In Maryland, the state government imposed a moratorium on new residential foreclosures from April 2020 to June 2021.

Since the end of the moratorium, foreclosure filings in Maryland have increased, not yet reaching pre-pandemic levels, but the steady rise suggests the rate will do so in the future.

Jonathan Herbst, a real estate lawyer in Maryland, said that he has seen an increase in clients facing foreclosure, and that the rise in filings correlates with the lingering impact of the foreclosure moratorium during the COVID-19 pandemic.

Despite the moratorium preventing foreclosures for a 15-month period, the foreclosures have restarted and homeowners are seeing the result of the postponement of foreclosure filings, Herbst said.

The Maryland Department of Housing and Community Development enacted the Maryland Homeowner Assistance Fund in March 2021 as a part of the American Rescue Plan Act. The fund was designed to offer financial assistance to homeowners struggling with mortgage payments or housing costs due to the COVID-19 pandemic, and it was aimed at supplementing loss mitigation tools offered by mortgage servicers.

Through the Maryland Homeowner Assistance Fund, $166.7 million have been paid to 7,229 eligible applicants through loans and grants, offering an average of $17.6 thousand in assistance, according to the fund’s website; $127.2 million of the money granted has gone towards mortgage and housing assistance.

However, as the foreclosure rate continues to climb in Maryland, applications to the Homeowner Assistance Fund have decreased. Applications peaked in Q2 and Q3 with over 3,000 new applications in 2022; the Homeowner Assistance Fund received just over 2,300 applications in Q1 2023.

In addition to pandemic-related factors, recent hikes in interest rates have also contributed to the increased number of foreclosures. The average 30-year-mortgage rate is 7.06% as of Friday, according to Bankrate.

In addition to continued increases in residential foreclosures, Herbst also said he anticipates a potential increase in commercial foreclosures as employers embrace work-from-home and hybrid employee scheduling.

Data from Trepp, a data and analytics company that focuses on the commercial real estate market, found that both Washington, D.C., and Baltimore rank within the top five metropolitan areas for banks’ internal risk for office loans, as well as “criticized” office loans, those that show preliminary signs of higher risk.