New Md. Rules Aim To Aid Those Facing A Risk of Foreclosure
Wednesday, February 20, 2008
Citing an "alarming" rate of mortgage foreclosures in Maryland, Gov. Martin O'Malley announced emergency regulations yesterday requiring loan service companies to tell the state when residents are in danger of losing their homes so the government can offer preemptive help.
O'Malley (D) said the mortgage industry has failed to help troubled homeowners, pointing to poor customer service at major loan service companies, which collect mortgage payments and are authorized to negotiate and modify loan terms. The governor has summoned industry officials to meet with him in Annapolis next week.
He said the state has opened a wide-ranging examination of one firm, Ocwen Financial, and Labor Secretary Thomas E. Perez said he would consider revoking operating licenses of companies that fail to meet their obligations to consumers.
The rate of foreclosure actions has soared across the state, with the Washington suburbs hit hardest. The number of foreclosures in Montgomery and Prince George's counties doubled between the third and fourth quarters of 2007, and O'Malley said he anticipates that the statewide total will continue climbing.
"The greatest threat to the strength and the growth of our middle class is the growing number of foreclosures in the state of Maryland," O'Malley said. "It is an escalating national crisis that threatens our way of life."
With the new regulations, Maryland became the second state after California to mandate that loan service companies provide detailed information about homeowners with adjustable rate mortgages that are about to reset to higher interest rates. This allows the state to identify residents facing foreclosure and offer them assistance before they lose their homes.
"We spent a couple of decades becoming very responsive to the urging and the hope that people have to own their own home," O'Malley said. "Now we have to become, overnight, responsive to the threat of people losing their home."
O'Malley's administration has several bills pending in the General Assembly to address troubles in the housing market, including proposals to lengthen the time before a home can be foreclosed on and to strengthen penalties for mortgage fraud.
The governor, joined at the State House news conference by Perez, Lt. Gov. Anthony G. Brown (D), Housing Secretary Raymond A. Skinner and two nonprofit housing leaders, had particularly sharp criticism for loan service companies.
O'Malley and Perez accused the industry of failing to respond to homeowners trying to renegotiate their mortgages, citing complaints from residents who said they placed calls only to find busy signals, long waits on hold and a lack of assistance.
"We need the loan servicers to join with us, and not from Topeka, Kansas, from some 1-800 number, but here in Maryland so that we can reach out and do a better job," O'Malley said.
Perez said Maryland is one of only a few states in which the state government awards licenses to loan service companies, and he said the state would consider revoking some companies' operating licenses.