Md., Lenders Make Deal To Assist Homeowners

Responding to the surge in mortgage delinquencies, Gov. Martin O'Malley will announce an agreement today with six loan service companies to provide help to homeowners before they lose their properties.

"These agreements are one important component in a broad-based strategy in homeownership preservation," Thomas E. Perez, secretary of labor, licensing and regulation, said yesterday.

HSBC, Ocwen, GMAC ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi, which handle nearly a quarter of the mortgage loans in Maryland, have agreed to a "cooling-off period" with homeowners facing foreclosure. During that time, foreclosure actions and the accrual of fees and penalties will be halted for 60 days.

The loan service providers agreed to assign certain employees to "Team Maryland" to serve as points of contact for homeowners in Maryland. The companies will also participate in conference calls with counselors and outreach workers and provide periodic data about loans to the state commissioner of financial regulation.

"For us, the goal is a meaningful and timely modification that will help homeowners stay in their homes," Perez said.

Maryland lawmakers have approved ambitious legislation to strengthen oversight of mortgage lenders and to help homeowners facing foreclosure. Among other provisions, those measures make more mortgage scams subject to prosecution, ban prepayment penalties and extend the foreclosure timetable from 15 to 150 days.

Perez described the legislation that extended the foreclosure process as a "de facto moratorium."

"When we passed the legislation, we bought time for Maryland homeowners, and these agreements [with the loan service companies] will allow us to use the time more effectively and hold servicers accountable," he said.

O'Malley is also scheduled today to release data that the state labor department began collecting in February from loan service companies licensed in Maryland. Maryland was the second state, after California, to adopt regulations to track the mortgage industry and the loan packages it offers to borrowers.

The report shows that loan service companies entered into agreements with borrowers on about 5,400 loans in August, up from about 4,200 in February. But the number of borrowers who have received help was offset by an increase in the number of people delinquent on their loans.

According to the report, 16.1 percent of homeowners were 60 days or more late on their mortgages in September. That's up from July, when the delinquency rate was 12.5 percent. The report expresses concern that more borrowers are not receiving help.

"Only 23 percent of troubled borrowers in May 2008 were receiving any loss mitigation assistance," the report states. "We remain concerned that only a small number of those experiencing difficulties are receiving sustainable loan modifications."

Mosi Harrington, executive director at the nonprofit Housing Initiatives Partnership in Hyattsville, shared that concern. She said her agency has "a terrible time engaging servicers" on behalf of homeowners. She said the companies don't do enough to help troubled homeowners. Some keep homeowners on the phone for hours; others hang up on them.

"I've had some tell me, 'It will be 60 days before I will get back to you,' " Harrington said.

In October, the Housing Initiatives Partnership worked on 65 cases and was able to revise the terms on 12 of them. "It is getting better," Harrington said.

The labor department report says that 8,978 Maryland homeowners received notices of intent to foreclose in September, up from 4,488 in May.

But overall, the number of foreclosure events in Maryland dropped 15.6 percent, from 9,453 to 7,974, from the second to third quarter of 2008, according to the state Department of Housing and Community Development. Officials said the drop is attributable in large part to state legislation that extended the foreclosure timetable. The average amount of time it took to complete a foreclosure went from 14 days to 135 days.

The extended timetable, which went into effect in April, was designed to give homeowners more time to renegotiate with lenders or receive counseling.