Regional Spotlight: Maryland Homeowners Can Take Action to Avoid Foreclosure

RISMEDIA, May 24, 2007-(MCT)-The number of foreclosures in Frederick County, Maryland-801 during a 12-month period ending in March-increased by 26 in April. The national foreclosure rate hit a two-year high in March, said James Saccacio, CEO of RealtyTrac, a California based research firm.

“Foreclosure rates usually subside in the spring and summer, but I expect the rate to stay above last year’s level,” Saccacio said.

The main culprits for the foreclosure rate are risky loans and slowly appreciating home values, he said.

Terry Fox, president of the Frederick County Association of Realtors, has seen the slight increase.

“It’s due to the unique loan products that caught a lot of consumers unaware,” she said. “We do handle foreclosures and have a few right now.” She advised people facing a foreclosure to talk to the lender, which may be able to work out a short sale, where the foreclosure would cease for 60 to 90 days to allow the lender and consumer to work out a sale. That could save the consumer’s credit record. Stephen Mackintosh, of Mackintosh Inc. Realtors, agreed.

“Work it out with the lender, an (real estate) agent or an attorney. If you have enough equity you can get the home sold.” Mackintosh said many of the foreclosures are caused by the homeowner’s loss of a job.

On a positive note however, Mackintosh referred to statistics from the Mortgage Bankers Association that, at 68.9%, homeownership remains at near record levels. The association said 35% of homeowners own outright, and 49% have fixed-rate loans. Only 5% of homeowners are in non-prime adjustable rate loans.

The bankers’ group said about 1% of all loans are in the foreclosure process. Three out of four homes that enter foreclosure are able to work out some alternative with the lender, such as refinancing or a voluntary sale of the home.

Historically, the bankers’ group said, delinquency rates peak in the first three to five years. Non-prime borrowers always had a higher delinquency and foreclosure rates.

Lenders, the association said, are not looking forward to foreclosures, as it costs them 30 to 50% of the loan balance. “A lot of buyers, because of the negative news in the media, have jumped back on the fence,” Mackintosh said.

Both Mackintosh and Fox said they are seeing home sales pick up, however.

“Anything under $500,000 and townhouses are getting a lot of attention,” Mackintosh said. Fox said it is typical for home sales to rise in the spring, picking up in March in the $275,000 to $325,000 range, and generally for houses under $400,000.

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