Months of wrangling with GMAC came to a head with the knock on Sonja Bates' door June 3. The smiling men at the doorstep had bought her Montgomery Village home that morning at a foreclosure auction.

Bates, a 42-year-old out-of-work interior designer, had scraped together late lump-sum payments on her $1,350 mortgage through 2007 and most of 2008. Though talks with GMAC had long since soured, she was holding out hope for the federal Home Affordable Modification Program, which lowers mortgage payments and pushes lenders to modify home loans. And if not, she figured she could sell the home, which still had about $200,000 in equity.

Instead came the men from 101 Geneva LLC, which buys and resells foreclosed homes.

"I was in absolute total shock and headed for a complete nervous breakdown, basically," Bates said. "I've been going through a living nightmare."

State officials referred her to lawyers with the Maryland Legal Aid Bureau, who filed suit in Montgomery County Circuit Court to overturn the sale. At a hearing last month, Vicky Taitano and Kathleen Skullney pointed to a recent case in Frederick where the judge cited a higher standard for lenders to meet in resolving payment problems with Bates's type of loan, which is backed by the Federal Housing Administration. If the foreclosure was improper, the lawyers said, the home's sale was, too.

Lawyers for GMAC countered that the mortgage giant did everything it could to work with Bates.

On Sept. 2, Judge Mary Beth McCormick rejected Bates's claim, finding "no procedural irregularity" in GMAC's steps to foreclose.

Taitano said they would appeal — worrying as much for her client as for the case's implication for the growing number of Maryland homeowners trying to keep their homes.

"This shows that the courts are not willing to stand up to lenders and say ‘You can't do this to the citizens of Maryland,'" she said.

Cases shift

The circumstances of Bates's case are unusual — FHA loans carry unique regulations, and unlike many distressed homeowners, she was not "upside down" on her mortgage. As such, her case also embodies the changing struggle faced by that homeowners, lenders and government agencies: Maryland's foreclosure crisis is expanding amid a shifting landscape.

"These are not time-bomb loans. We're seeing more and more of them that weren't destined for failure out of the gate," said Mark Kaufman, deputy director of financial regulation for the Maryland Department of Labor, Licensing and Regulation. "The problems are much more people like Sonja Bates than the guys with the subprime loans. … It's continuing to evolve more towards your normal homeowners, and you're seeing it in cases like hers."

Montgomery County's most recent analysis revealed an unwelcome milestone: more than 10,000 mortgage defaults, notices of sale and lender purchases — classified as "foreclosure events" — since the beginning of 2007. Even signs of recovery — for example, 11 percent of foreclosed homes have been resold — come with the sobering corollary that the median home sale price in Montgomery County has in one year plummeted from $425,000 to $325,000.

The first three months of 2008 saw more than 1,600 foreclosure events. After state legislation took effect to require foreclosures to take 150 days, foreclosure events surged to nearly 2,000 during the first quarter of this year, by 20 percent the highest of any quarter on record.

The growth is most pronounced upcounty and in pockets midcounty, especially Germantown, Montgomery Village and Aspen Hill.

Germantown's 20874 ZIP code saw 65 foreclosure events in the fourth quarter of 2008. At the time, that was 20 more than the next most active ZIP code. That figure skyrocketed to 122 in the first three months of this year, while Aspen Hill's 20906 ZIP code doubled to 88 and Montgomery Village — 20886 — jumped from 43 to 76.

Based on data from April and May, county officials expect foreclosures to continue their upward trend.

Next steps

Under a push from Gov. Martin O'Malley, Maryland reached service agreements with six of the largest lenders, including GMAC, better enabling state officials to bring the players to the table to find ways to preserve homeownership. But as the economy continues to stagnate, Kaufman said, the negotiations oftentimes only delay the inevitable.

"The problems are more intractable. When a homeowner's income has been permanently impaired, giving the guy three months to get back on his feet, that's helpful, but you need a permanent solution," he said. "… You can't repayment plan your way out of this. You need [loan] modifications — and to some extent, we're not seeing enough modifications."

And as Bates's case shows, foreclosure and litigation cannot be avoided.

A GMAC spokeswoman declined to comment on Bates' case because of the appeal, but pointed to a U.S. Department of Treasury report last month that rated GMAC as the nation's third-best lender in terms of efforts to avoid foreclosure. Through mid-August, GMAC has preserved homeownership in about 107,000 distressed cases, the spokeswoman said.

Bates, who still lives in the house while her lawyers determine the requirements of their appeal, refutes GMAC's assertion that it tried to avoid foreclosing on her home. Her travails have given her a new sense of purpose: to empower other homeowners in or nearing trouble.

"So many people are lost, so many people don't know what to do," she said. "They need to know there are people out there willing to help, but you have to dig, dig, dig and never give up."