Gov. Martin O'Malley announced an initiative yesterday aimed at preventing home foreclosures through credit counseling, enforcement of lending practice standards and refinancing assistance to stop what he said is a rising threat to the state's middle class.
The state has received commitments for $100 million in private capital to allow about 500 households to refinance from adjustable rate loans into fixed mortgages. It will use $10 million in surplus funds from the state's mortgage insurance program to leverage another $200 million in private sector capital and will spend $1 million for foreclosure prevention activities, such as counseling for homebuyers.
"We're going to stand up for the working people of our state and to protect that building block of wealth for the middle class that is homeownership," O'Malley said.
Maryland has historically had a lower foreclosure rate than the national average, but state officials said they've seen worrisome signs, particularly in the past few months. The proliferation of adjustable rate mortgages - and unscrupulous practices by some lenders - have put an increasing number of the state's homeowners in financial peril, they said.
Labor, Licensing and Regulation Secretary Thomas E. Perez said Maryland ranked 40th last year among the states in its foreclosure rate, but last month, it jumped up to 22nd.
"This problem is all over the state," Perez said. "The trend lines are moving in the wrong direction."
Advocates and Maryland officials say state law allows one of the quickest foreclosure processes in the nation. A lender can seize a home and sell it 15 days after sending out a notice of foreclosure, and state law does not require proof that the homeowner received the notice.
O'Malley also announced the creation of a task force that will study the problem of foreclosures in the state and recommend legal reforms in time for next year's General Assembly session.
"A lot of times, people feel like they failed or some think they weren't worthy of homeownership because they didn't read the 42 pages of fine print" on their mortgage, O'Malley said. "They're not alone. There is help from the state. Whether it's investigating an unscrupulous loan or counseling or getting them into a loan they can afford, there are things we can do to help."
More information on the state's programs is available by calling 877-462-7555 or visiting www.dhcd.state.md.us. Complaints about lending practices may be directed to the Department of Labor, Licensing and Regulation at 888-784-0136.
Previous coverage at baltimoresun.com/foreclosure