Governor Outlines Plan For Foreclosure Crisis

BERLIN – Just one month after his Homeownership Preservation Task Force released its grave final report on the growing foreclosure crisis across the state, Governor Martin O’Malley this week announced proposed emergency regulations and initiatives to help stem the tide of residents across Maryland including Worcester losing their homes.

O’Malley on Monday unveiled a multi-faceted plan to reverse the growing foreclosure trend in Maryland, where 33,000 homeowners are faced with the prospect of losing their homes. The number of properties entering the pre-foreclosure or foreclosure process increased by 639 percent from 2006 to 2007 and the numbers are going up everyday as more and more homeowners across the state are falling victim to sub-prime and adjustable rate mortgage woes.

In Worcester County, the percentage increase is even more pronounced although it is important to note the sample size is much smaller. The number of properties currently in the pre-foreclosure or foreclosure process total just under 1,700, according to the most recent data compiled by Realtytrac, an independent company utilized by the governor’s task force that tracks foreclosure events in specific areas.

According to Realtytrac, there are currently 1,689 properties in Worcester facing foreclosure, with 21 properties in pre-foreclosure, where notices of default of loans have been sent to property owners; 28 properties currently in auction because of foreclosures; another 23 repossessed by banks and/or lenders, and another 31 properties listed as for sale by owner in a last ditch effort to recoup losses threatened by foreclosure.

O’Malley on Monday announced a series of proposals to help save thousands of Marylanders from losing their homes including stringent regulations targeting predatory lenders. The governor also announced his “Bridge to Hope” loan program aimed at providing stop gap measures to qualified homeowners most at risk of losing their homes.

“Thousands of homeowners in Maryland and across the nation, through no fault of their own, have fallen victim to fraudulent schemes and scams by dishonest lenders and brokers in the wake of the sub-prime mortgage crisis facing our nation,” he said. “The proposals we are announcing today will help those families at risk of foreclosure, and create greater protections for future homeowners.”

Many of the governor’s proposals target scurrilous mortgage lenders preying on unsuspecting borrowers. Already the state’s Department of Labor, Licensing and Regulation’s Enforcement Division has handled more enforcement actions in the first three weeks of 2008 then in all of 2007 as a result of unscrupulous practices. For example, DLLR officials handled 205 cases of mortgage fraud in all of 207, compared to 271 already in 2008.

“These initiatives will also serve as a reminder for those in the mortgage industry that we will not stand by while Maryland’s middle class families fall victim to irresponsible, deceptive and predatory lending practices,” the governor said on Monday.

Beyond the enforcement side of the foreclosure crisis is an effort to increase consumer protection and prevention efforts. The governor’s two-pronged approach includes providing a leg up to those homeowners facing foreclosure in a variety of ways under the umbrella of the Bridge to Hope program. The Department of Housing and Community Development and the DLLR are working to help Maryland homeowners, whether they are trying to get out from under an unaffordable loan or trying to ensure they receive fair treatment for the mortgage industry.

For example, the Lifeline Loan program, administered by DHCD, was given a boost this week when O’Malley committed an additional $100 million to the loan fund as part of the Bridge to Hope initiative. The program allows homeowners with credit scores of 600 or better to refinance up to 100 percent of their loan value. Based on the best information available, the Lifeline Loan program could help as many as 30 percent of the homeowners facing foreclosure in Maryland.

“The Bridge to Hope will literally provide hope to hundreds of Maryland homeowners,” said DHCD Secretary Raymond Skinner this week. “We want to ensure that homeownership is protected and sustainable in Maryland. Through partnerships with housing counseling agencies throughout the state, we will implement practical solutions to foreclosure challenges.”

O’Malley also announced on Monday proposed sweeping changes in mortgage reforms. For example, the governor announced an emergency regulation that will make Maryland only the second state in the country to require loan servicers to file monthly disclosure reports about their loss mitigation and loan modifications in an effort to increase accountability.

Critical to the reform package is the effort to carefully track which homeowners are at risk and where they live, according to DLLR Secretary Thomas Perez. “There are thousands of Marylanders on the verge of foreclosure and we need information now to learn what actions servicers are taking to prevent foreclosure,” he said. “Date collection and reporting is a critical accountability tool that only one other state, California, has in place.”