Foreclosure Task Force Proposes Remedies

Strict Lending Laws Sought

A task force appointed by Gov. Martin O'Malley (D) has proposed several ways to address Maryland's escalating foreclosure rate, including stricter oversight of mortgage lenders, an extended foreclosure process and tougher laws against fraud.

Del. Doyle L. Niemann (D-Prince George's), who served on the panel, said the task force will give the state the tools it needs to begin addressing a national problem that has hit Maryland particularly hard.

"It brought together everybody who has a stake in the foreclosure community," said Niemann, an assistant state's attorney in Prince George's. "It was very useful."

O'Malley organized the Maryland Homeownership Preservation Task Force to come up with a plan to educate people about homeownership, including ways to avoid foreclosure, and to review laws and regulations to determine whether they need to be reformed.

Gov. Timothy M. Kaine (D) announced this week that he is forming a similar panel to assess the foreclosure situation in Virginia and to help residents avoid losing their homes.

The task forces are a response to problems in the nation's subprime market, in which home buyers, many with poor credit, have received loans they cannot afford, often with adjustable interest rates.

Maryland's foreclosure ranking jumped from 40th in the nation last year to 15th this year, according to state officials.

Maryland Labor Secretary Thomas E. Perez, co-chairman of the task force, said something has to be done to "stop the bleeding." State officials predict the situation in Maryland could only get worse in the future.

Many of the adjustable-rate mortgages that were taken out during the housing boom of recent years will go up several percentage points, which could force some homeowners into foreclosure.

"The trend is troubling," state Housing Secretary Raymond A. Skinner wrote in the 52-page report. "It is likely that the spike in foreclosures has not yet reached its peak."

The recommendations include requiring lenders to verify that borrowers are able to repay their loans; designating and training a point person in each state's attorney's office to prosecute mortgage fraud cases; and prohibiting lenders or mortgage holders from beginning foreclosure action until 90 days after a borrower's default.

Several state lawmakers said they plan to offer bills during the coming legislative session to address the problem.

Sen. Thomas M. Middleton (D-Charles), chairman of the Senate Finance Committee, said he is considering a bill to regulate mortgage brokers as a way to weed out those offering bad loans. Nearly 70 percent of mortgage loans in Maryland are handled through brokers.

Phillip Robinson, an attorney with Civil Justice Inc., which helps homeowners facing foreclosure, said he hopes the state provides more money to the attorney general's office to investigate mortgage scams.

"We're hoping the legislature will take a look at the foreclosure process in Maryland, what's fair and equitable for homeowners and mortgage lenders," Robinson said. "The system has been in place for years and hasn't been significantly modified."