Maryland’s Governor Takes Steps against Foreclosure
By: Gerri L. Elder
Foreclosure rates across the United States are rising and the hardest hit areas are expanding. In Maryland, Governor Martin O'Malley recently cited an alarming rate of bank foreclosures when he announced new emergency regulations for loan servicing companies.
The Washington Post reports that under O'Malley's emergency regulations, loan servicing companies are now required to notify the state when a family is in jeopardy of losing their home so that the state government can offer assistance. The governor is disappointed in the poor customer service offered by major mortgage service companies and that the industry as a whole has not stepped up to help homeowners in distress. The mortgage loan service companies collect the mortgage payments, but do little else. They are able to assist homeowners by modifying the terms of the loans, but in most cases have failed to do so. In many cases, due to the apathy of the mortgage loan servicers and the fact that some homeowners did not know that their loans could be renegotiated, homes have ended up in foreclosure.
Of the homeowners who have tried to renegotiate the terms of their mortgage loans to avoid bank foreclosure, many have filed complaints stating that the mortgage loan servicers have been virtually impossible to contact. Consumers have stated that the telephone lines are either consistently busy or that they have been put on hold for large blocks of time with no one ever picking up to assist them. In the cases when consumers actually have been able to get a mortgage service representative on the phone, many report that they were not offered any assistance.
The governor of Maryland recognizes this problem and called mortgage loan industry officials to meet with him in Annapolis, Maryland. He has said that Labor Secretary Thomas E. Perez may consider revoking the operating licenses of mortgage loan service companies who do not meet their obligations to consumers.
O'Malley's new regulations for mortgage servicers make Maryland the second state to require by law that loan service companies provide the state with detailed information about homeowners who have adjustable rate mortgages (ARMs) that are about to reset to higher interest rates. California, which has also been hit hard with the foreclosure crisis, was the first state to require this information from lenders. The states plan to use the information to intervene before foreclosure is a reality for troubled homeowners.
The changes in Maryland do not stop at O'Malley's new regulations. The governor's administration has several bills pending in the Maryland General Assembly that were written to assist homeowners who are facing foreclosure and slow the foreclosure rate in the state. One proposal calls for greater penalties for mortgage fraud and another seeks to lengthen the time before a home can be foreclosed on in Maryland.
The governor has also set up a hotline that consumers can call if they are headed for foreclosure. Counselors are available to direct distressed homeowners to nonprofit housing advisers or may advise them to apply for Maryland's Bridge to Hope Loan Program, which provides gap loans at no interest to homeowners who are behind on their mortgage payments.
There is also a mass mailing going out to consumers in the areas with the highest rate of foreclosures that will advise homeowners of the options available to them in order to avoid losing their homes to foreclosure.