Maryland’s Pre-Foreclosure Crisis Continues to Ease, But Challenges Remain for Struggling Homeowners

BALTIMORE — On a quiet suburban street in Maryland, Nicole Bennett sits on the porch of the home she has owned for nearly a decade. The mail she has avoided opening for days spills onto her lap, another reminder that she is edging closer to losing the house she worked so hard to buy. Like hundreds of other homeowners in Maryland, she is experiencing what has become an increasingly familiar financial nightmare: pre-foreclosure.

A Reprieve in the Numbers, But Not in the Struggle

For months, Maryland has seen a decline in pre-foreclosure rates—a reassuring signal that the housing market may be stabilizing. In September 2024, the number of properties in pre-foreclosure fell to 599, marking a 3.39% decrease from August and a staggering 41.51% decline from the same time last year. These numbers may suggest a recovery on the surface, but for those living through financial hardship, like Nicole, the crisis is still deeply personal.

“It’s like drowning a little at a time,” she says. “I keep thinking I’ll catch up next month, but next month comes, and I’m still behind.”

The mathematical decline in pre-foreclosures does not capture the anguish of homeowners wrestling with rising costs of living, inflation-driven interest rates, and the lingering effects of pandemic-era financial strains.

A Stark Comparison to Years Past

Zooming out, Maryland’s pre-foreclosure landscape has shifted dramatically over the past decade. Just three years ago, in 2021, the number of reported pre-foreclosures was a mere 781, a direct result of the government’s foreclosure moratoriums during the COVID-19 pandemic. But historic data tells us that Maryland is no stranger to housing instability.

At the peak of the foreclosure crisis in 2010, more than 64,000 homes in the state entered pre-foreclosure, a devastating fallout from the 2008 financial crash. While today’s numbers are comparatively lower, the nagging question remains: are families genuinely more financially secure, or are these declines masking a brewing economic storm?

Why Pre-Foreclosures Are Declining Now

A journalist’s first instinct in analyzing numbers like these is to ask: why the drop? The answer appears to be a patchwork of factors.

1. The Cooling of Pandemic-Era Protections
   Post-pandemic financial relief programs tapered off in late 2022 and early 2023. While some homeowners fell behind after these programs ended, many who took advantage of loan modifications or refinancing options during the pandemic are now on more stable footing.
2. A Stronger Labor Market—For Some
   Maryland’s employment numbers have improved in the past year, albeit unevenly. Those in tech, government, and white-collar industries have largely rebounded. Meanwhile, people working in retail, food service, and the gig economy are still facing financial precarity, making it unsurprising that pre-foreclosures continue affecting lower-income homeowners disproportionately.
3. Rising Home Values and Equity Cushion
   Unlike in 2010, when plummeting home values left borrowers underwater on their mortgages, many Maryland homeowners now have significantly more equity in their properties. This has provided a crucial safety net: homeowners falling behind on payments today often have the option to sell their homes rather than losing them to foreclosure.

The Hoofbeats of Another Housing Crisis?

Despite the recent decline in pre-foreclosures, economists warn that Maryland is not out of the woods. Interest rates remain at historic highs following the Federal Reserve’s aggressive battle against inflation. For homeowners in adjustable-rate mortgages, rising monthly payments are making it harder to stay current on loans. Coupled with soaring household costs—from utilities to groceries—it is not difficult to understand why many families are at a breaking point.

For Nicole Bennett, the future is uncertain. She is trying to negotiate a loan modification with her lender, but time is running out. “I see all these reports about how the economy is doing better,” she says, shaking her head. “But I don’t feel any of that relief.”

Her struggle, and that of thousands of others, underscores a fundamental truth: statistics tell only part of the story. Unless wages outpace inflation and affordable housing reforms take root, Maryland’s pre-foreclosure crisis may be in retreat, but it is far from finished.