Maryland law should give homeowners more notice of foreclosure attempts and more time to defend themselves, state officials said yesterday.
Gov. Martin O'Malley's administration is examining Maryland's foreclosure process to find ways to help homeowners, and Sen. Brian E. Frosh, the chairman of the Judicial Proceedings Committee, said he will conduct hearings this fall on Maryland's foreclosure laws with an eye to producing reform legislation for the 90-day General Assembly session that begins in January.
Yesterday, The Sun described the plight of Kwaku Atta Poku, a Columbia man who lost his home and was evicted with his wife and children after a refinancing, despite making every mortgage payment.
"My understanding is we have the fastest foreclosure process in the nation," Frosh said. "That's not a good thing. We want to make sure people have notice when they are foreclosed on and the opportunity to defend themselves. That's the basis of due process."
Atta Poku's mortgage company, Washington Mutual Inc., contended that the original mortgage was not paid off at the refinancing settlement, but Atta Poku and his lawyers say that it was. Some records, including the settlement check, were lost, however, and the homeowner was not able to prove in court that the debt had been paid.
No one, including a spokesman for Washington Mutual, blames Atta Poku for the foreclosure.
"The outcome in this case is most disturbing and regrettable," said spokesman Shane Winn. He suggested that a title company might have mishandled the refinancing but said it was Atta Poku's responsibility to investigate that. "The foreclosure wasn't our fault, and the courts agree with us," he said.
As a result of the foreclosure, Atta Poku is facing large debts, his credit is ruined, and the small taxi business he built and operated in Howard County is doing poorly. Atta Poku, a native of Ghana, moved here in 1992 and became a citizen in 2005.
Atta Poku said yesterday that he was pleased that "those who have read this have come to understand that [the foreclosure] was not my fault." He said he received calls from friends and acquaintances who hadn't known the circumstances of his financial difficulties before reading yesterday's article. "Now it's getting to the community."
O'Malley spokesman Rick Abbruzzese said the governor is worried about the rise in foreclosures linked to sub-prime loans - mortgages given to homeowners with poor credit that result in foreclosure far more often than do traditional loans.
O'Malley, who helped lead an overhaul of Maryland's ground rent system after a Sun report last year that Baltimore residents were losing their homes over small debts, is considering reforms and new programs to help homeowners caught up in foreclosure.
"The governor is very concerned about this issue involving sub-prime loans and foreclosures in the state of Maryland," Abbruzzese said. "The sub-prime issue is directly related to our foreclosure law. The two need to be looked at together."
Key issues that have emerged in Atta Poku's case and others are the amount of time people are given to fight the taking of their homes and the notice they receive.
"If you're a renter, they've got to put the notice on the door and say you've got so many days and you can go to small claims court," said Sen. Catherine E. Pugh, a Baltimore Democrat who pushed unsuccessfully for stronger notification requirements in this year's Assembly session. "Why we feel homeowners shouldn't have that same right is beyond me."
Atta Poku received a letter on Feb. 10, 2005, telling him that he was in default and facing foreclosure. Court papers were filed a week later. The house was put up for sale March 19, 2005, and sold 10 days later.
Atta Poku lost his final appeal May 8, when the Maryland Court of Special Appeals ruled that the foreclosure was legal. If he sues to recover damages, the court rulings can be used to defend the mortgage company's actions.
Maryland law does not require mortgage companies to prove that they notified a person facing foreclosure; neither does it require a court hearing.
"It seems to me that the notice provisions of the existing law are perhaps inadequate and the time [for foreclosure] is very, very fast. There's a huge amount at stake. The notice and timing are really skewed," Frosh said, adding that he would use Pugh's legislation as a starting point.
The committee hearings are expected to go on through December, he said, and result in corrective legislation.
William E. Erskine, a Columbia lawyer who sometimes represents homeowners facing foreclosure, said Maryland law changed a decade ago. Before 1997, he said, Maryland required personal service of a foreclosure action, but that requirement was eliminated.
"I find that somewhat disconcerting, considering what's at stake here," he said.
A growing problem
Last year, Erskine represented an elderly Columbia couple who nearly lost their home after a tax sale that came about when a long depression led a woman to hide unopened mail for several years, including the annual county tax bill.
"This is going to become a bigger and bigger problem in our society as we age. People don't know what to do with these notices," Erskine said.
Pugh said she has seen similar cases in her district and is confident that lawmakers will approve reforms next year.
"We've got to," Pugh said. "It just doesn't make sense. We talk about our desire to have everyone pursue the American dream, and that's home ownership. We ought to make every opportunity for them to keep their property."