Maryland Mortgage Market is Slow, Not Stagnant

While the residential mortgage market is ‘‘tightening up” across most of the nation, Maryland mortgage industry players are more sanguine.
‘‘The trend is that the market has slowed nationally, said S. Lynne Pulford, senior vice president of Sandy Spring Mortgage in Columbia. ‘‘There is a large inventory of both new and resale homes. Consumer confidence due to energy prices is having an [adverse] affect on the overall market and pricing.”

Not so in the Maryland housing market, Pulford said.

‘‘It appears that the Maryland market is stronger than others due to the base realignment and the net gain of new jobs and households flowing into Maryland,” she said, referring to the Pentagon’s Base Realignment and Closure process, which is expected to bring tens of thousands of jobs to the state.

‘‘We’re seeing strong numbers for mortgage and refinancing applications in Maryland,” said Charles DiPino, president of the Maryland Association of Mortgage Brokers and owner of Universal Trust Mortgage Corp. in Columbia. ‘‘It’s good to buy now. The weather has broke, housing prices are low and mortgage rates are good.”

Maryland’s unemployment rate, lower than the national average, is making a difference, he said.

‘‘Maryland is faring better than the rest of the country,” he said. ‘‘We’ve got a strong employment rate — nearly full employment. Incomes are strong in Maryland, and I think that will continue.”

The low jobless rate, strong economy and general demand for mortgage loans can be traced to geography, says Cary Reines, executive vice president of Mason Dixon Funding in Rockville.

‘‘Maryland benefits from its proximity to Washington, D.C., and federal government jobs,” Reines said. ‘‘The government is a big employer, and an employer that pays well. That makes a big difference in giving people the ability to afford housing.”

Reasonable mortgage rates are also a factor, Pulford said.

‘‘Long-term rates are still very favorable and continue to be in the low 6 percent range in Maryland as well as in the rest of the country,” she said.

‘‘Mortgage rates are excellent,” agreed DiPino. ‘‘They’re on a historic low end. And if the Fed lowers rates further, it’ll get even better. If we see rates stay low over a little time, we may soon see another real estate and [mortgage refinancing] boom. Wouldn’t that be nice?”

Repercussions from subprime market
Still, the home mortgage market is nowhere near where it was two years ago, many say.

‘‘There’s been a tightening in the subprime market, and Wall Street is not buying loans as much as it did,” DiPino said. ‘‘That’s hurt some customers. It’s really based on the real estate business. People are nervous. They’re not willing to take on a riskier loan. They want facets that are locked down. Housing values are stabilizing now, and they’re scrutinizing values more.”

According to Michael Galeone, executive vice president of The Columbia Bank, the bad credit mortgage market was ‘‘abused” during the mortgage boom of two years ago.

‘‘The subprime market got into trouble as lenders began lending to people with less-than-sterling credit qualifications,” he said. ‘‘Subprime lending lets you borrow based on the value of your home, maybe up to 125 percent of the value. The trouble happens when the market goes against those people.

‘‘People bought more than they could afford,” he said. ‘‘In the past, they could buy an $800,000 house at 3.5 or 4 percent interest. Then the market shifted and their monthly payments doubled. Many people didn’t have the cash to cover it, and they’re struggling.”

Galeone called subprime lending ‘‘a ticking time bomb. It creates a great potential for failure and can lead to high foreclosure rates.”

Lenders, Galeone said, have scaled back their marketing efforts in residential mortgages and have returned to more stable lending practices.

‘‘We lend prudently in the areas that we can,” he said, ‘‘such as commercial lending. We could generate more loans if we wanted to [approve riskier loans], but we’re more prudent.”

Subprime customers who took out interest-only mortgages and adjustable rate mortgages have run into foreclosure problems, Galeone said.

‘‘Foreclosures are accelerating,” he said. ‘‘People have seen their monthly payments double or triple as rates have gone up, and they’re finding it hard to continue to meet their obligations.”