O'Malley Signs Foreclosure-Relief Bills

By Philip Rucker
Washington Post Staff Writer
Friday, April 4, 2008

Maryland Gov. Martin O'Malley (D) signed into law yesterday a sweeping package of emergency legislation that provides immediate help to beleaguered homeowners facing foreclosure while overhauling state regulation of the mortgage-lending industry.

Under the new laws, which are among the most ambitious state-level efforts in the country to manage the housing crisis, the timetable of foreclosure is extended to 150 days from 15.

The bills subject the most egregious mortgage schemes to criminal prosecution and allow violators to be sentenced to prison. The bills also ban prepayment penalties and "foreclosure rescue transactions," in which homeowners are tricked into signing over their homes to third parties.

Maryland is among many states across the country that have enacted or are considering hundreds of proposals to address the rising rate of foreclosures. Congress is considering a bipartisan package of legislation to provide billions of dollars in tax rebates to the home-building industry, but critics say the measures will offer little to those at risk of losing their homes.

O'Malley said the new laws will provide comfort to distressed homeowners.

"There will no longer be in our state the draconian fast-track to foreclosure that has existed in the past," O'Malley said at a bill-signing ceremony in Annapolis. "People who unscrupulously try to prey upon the suffering and challenges of people who are economically vulnerable will face stiff criminal penalties when they try to profiteer on the backs of vulnerable people."

The legislature is still considering other foreclosure measures, including a bill requiring that people seeking subprime loans receive independent credit counseling before accepting risky loans. The proposal passed in the House yesterday and is headed to the Senate.

O'Malley's emergency laws took effect immediately. He and other state leaders were joined at the signing ceremony by dozens of Maryland residents who lost their homes to foreclosure.

"To lose even one home in our state unacceptable, and to lose thousands is a tremendous setback to our efforts to protect and strengthen our middle class," O'Malley said.

Senate President Thomas V. Mike Miller Jr. (D-Calvert) said the bills take "very dramatic steps" to rein in the housing crisis. House Speaker Michael E. Busch (D-Anne Arundel) said: "For people that want to see some action and results from their elected leaders, I think this is a great example today."

Kwaku Attapoku, an immigrant from Ghana who runs a transportation company in Howard County, recently lost his home to foreclosure. He came to the State House yesterday with his wife and 4-month-old son to thank O'Malley and the legislature for taking action, particularly in extending the foreclosure timetable.

"In my case, the law is coming too late, but it will help other people," Attapoku said. "It will give them a chance to fight these mortgage companies."

Del. Brian J. Feldman (D-Montgomery), who as chairman of the banking subcommittee shepherded some of O'Malley's foreclosure bills, said the legislation is a "pretty ambitious package."

"The process we followed here in Maryland is an excellent case study of how you tackle tough issues," Feldman said.

Maryland residents facing the possibility of foreclosure can seek help from the state government by calling a hotline, 877-462-7555, or visiting

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