Flood of Foreclosures Sweeps Through Several States
Maryland's foreclosure starts in July increased 275 percent from last year, according to RealtyTrac's July 2013 U.S. Foreclosure Market Report. Overall Maryland foreclosure activity -- including default notices, scheduled auctions and bank repossessions -- saw a 148 percent increase since July 2012 with one in every 598 housing units in foreclosure. That puts the state at No. 2 in the country, the highest it has ever ranked, behind Florida's 1 in 328 rate.
Nationally, foreclosure filings are down 32 percent from July 2012, with 130,888 American properties posting filings during the month. It's a 2 percent increase from June's 78-month low of 127,790 houses with filings. In the past 12 months, Maryland posted its highest foreclosure rate in May 2013, ranking fourth nationally with one in every 587 units in foreclosure. The state's overall foreclosure activity has seen annual increases in each of the past 13 months. (RealtyTrac started its foreclosure market report in 2005.)
What's Behind the Foreclosure Flood?: Maryland isn't alone. Fifteen states saw annual increases in July foreclosure starts, with Oregon, New Jersey, Rhode Island and Arkansas joining Maryland in the top five of that statistic. The states with the top-six rates use judicial foreclosure, meaning the foreclosures are processed by the courts.
Going through foreclosure is a huge knock on a consumer's credit. In 2010, a foreclosure-prevention law added mediation to the state's foreclosure process, allowing borrowers to confront their lenders. Fern Dannis, director of housing programs for the Maryland Association of Realtors, said this sometimes causes lenders to delay foreclosure filings and slows things down. It results in a shadow inventory -- known delinquencies that have yet to start the foreclosure process create a backlog until lenders release those properties.
It seems now is the time to foreclose on and sell those houses. "Maryland was slower than some of the other states to get back its momentum," Dannis said, mentioning that things got busy in March. Properties started selling in one or two days, hence the surge in foreclosures. "Lenders don't want to release units for foreclosure unless they know they can move through."
The slew of new homes working their way through the foreclosure process could be great for potential homebuyers looking for deals while interest rates remain low.
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