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Delayed foreclosures: drawing out the agony?

Nancy Marshall-Genzer Apr 7, 2014

Delayed foreclosures: drawing out the agony?

Nancy Marshall-Genzer Apr 7, 2014

The townhouse where Robert Witherspoon and his eight-year-old son live is in a quiet cul-de-sac in Prince George’s County, Maryland. Witherspoon greets me as I drive up, telling me he’s lived here for 10 years. 

The brick townhouse is solidly built, like Witherspoon, a 52-year-old Navy veteran who now manages a small IT company and works from home.

This house is lived in, but it was sold in a foreclosure auction last September. Witherspoon says his bank bought the house, and that he hasn’t paid his mortgage in a couple of years. 

Witherspoon first fell behind on his mortgage payments when he was laid off in 2009. Now, he’s squatting – not so unusual in Maryland, which has the second-highest foreclosure rate in the country, the forefront of a second wave of foreclosures across the U.S.

Approximately one out of every 540 homes is in foreclosure in Maryland, says Marceline White, the executive director of the Maryland Consumer Rights Coalition. 

She says it’s not that unusual for people to keep living in foreclosed homes, since the foreclosure process takes so long. On a recent afternoon in Prince George’s County, she pointed to one example.

“It’s clearly occupied,” she said, pointing out a jet ski. “There are cars in the driveway.“

At one point, while banks were negotiating a national settlement, they stopped foreclosing in some states. And still, the average foreclosure in Maryland takes almost two years. That’s because Maryland requires foreclosures to be approved by a judge. And new laws slowed things down even more by allowing things like mediation.

Opinions vary on whether that’s helpful for homeowners.

“The longer process has definitely helped,” says Lisa Butler-McDougal, executive director of Sowing Empowerment and Economic Development, a group that helps homeowners avoid foreclosure.

Butler-McDougal says foreclosures in Maryland used to be rushed.

“Some people’s homes were being foreclosed in 15 days, 30 days,” she says. “Where before they could even understand the notice of intent to foreclose, they were receiving notice of a sheriff’s sale.”

But there’s a flip side.

“There’s so many people that come in here that have medical issues as a result of the stress of trying to hold onto a house, that isn’t worth it,” says Manny Montero, an attorney who represents homeowners in foreclosures.

Montero says many homeowners don’t realize that living rent-free in a foreclosed house could eventually cost them, because it makes it much tougher for them to file for bankruptcy and wipe out their debts. 

The pace of foreclosure proceedings in Maryland appears to be picking up, says Daren Blomquist, vice president at RealtyTrac. 

“I would guess sometime this year Maryland would turn the corner and we’d see the numbers go back down,”

Back in his townhouse, Robert Witherspoon says he doesn’t want to file for bankruptcy, and he says he’s tried to start making mortgage payments again. He couldn’t because the bank wanted a lump sum up front, which he didn’t have. Witherspoon’s bank, JP Morgan Chase, wouldn’t comment other than to say it made several attempts to reach out to him. Now, Witherspoon is afraid he’ll get an eviction notice.

Witherspoon says he plans to move after the end of the school year, but he’s hoping to avoid being evicted – something that happened to him as a teenager.

“When you’re in high school and you come home and you see your bed outside the house and not in the house – I was totally embarrassed by that,” he says.

Of course, Witherspoon says his current situation is embarrassing, too. But even after the pain of foreclosure, he still wants to  someday  buy again.

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