The O`Malley - Brown Administration`s Response to Foreclosures in

The O’Malley - Brown
Administration’s Response
to Foreclosures in
Governor’s Housing Conference
September 27, 2013
Maryland’s Foreclosure Response
Four Priorities:
(1) Intensive Public Outreach & Nonprofit Counseling
(2) Broad Stakeholder Engagement – Three Task
Forces Since 2007
(3) Consumer-Focused Legislative & Regulatory
(4) Aggressive Enforcement Against Foreclosurerelated Fraud
DHCD’s Role in Foreclosure Response
• MD HOPE Hotline
• MD HOPE Website
• “Mortgage Late? Don’t Wait!” Events
• Targeted outreach, advertising, and response to
consumer requests for assistance
• 20 foreclosure prevention releases since January 1
• Statewide network of housing counseling agencies
and legal service organizations
Section 2 – O’Malley Brown Approach
MD HOPE Program
Hotline Marketing Refresh
• New visual designs of advertising and
collateral material
• Posters displayed in retail outlets
• Direct mailing of postcards to reach almost
300,000 delinquent homeowners
Since 2007:
• More than 70,290 consumers have called the MD HOPE Hotline
• More than 591,350 have visited the MD HOPE website
• More than 91,165 people have been assisted by our forty-plus nonprofit partners in the
HOPE network
• More than 1000 volunteer lawyers recruited and trained through the Pro Bono
Foreclosure Prevention Project
• 43 “Mortgage Late? Don’t Wait!” workshops with more than 14,800 people in
Maryland Has the Fifth Highest HAMP Modifications per 1,000
Households in the Nation and Ranks Above Any State in the Region
June 2013*
*Ranking from the highest to lowest modification rate
Mediation Trends in Maryland
Mediation Trends in Maryland
Program Life:*
• Mediation Requests: 7,936 requests
• Mediation Closed Cases: 7,199
• Opt-in Rate: 25%.
Current Opt-in Rate: 22%.
*As of July 2013
DLLR’s Role in Foreclosure Response
• Division of Financial Regulation
• Licenses mortgage brokers, lenders and servicers
• Responds to consumer complaints and takes enforcement
action regarding mortgage and foreclosure related abuses
• Promulgates regulations associated with foreclosure
reform, mediation program and other legislation
• Conducts outreach – over 100,000 targeted outreach
packages per year
• Created and manages Foreclosed Property Registry
Consumer Outreach & Assistance
More than 750,000 NOI’s
received since April 2008
More than 150,000 in
calendar year 2012
More than 750,000
outreach letters to
homeowners facing
Foreclosed Property Registry
Online registry to address long delays between foreclosure sale and deed
recordation – accessible to state and local officials
• Target: Loan modification scams that charge
consumers illegal up-front fees for false promises
of assistance in obtaining a mortgage
modification or avoiding foreclosure.
Owings Mills man pleads guilty in mortgage-scam case
At least 48 homeowners fell victim to scheme, state says
• September 06, 2012 - By Jamie Smith Hopkins - An Owings Mills man has pleaded guilty
to mortgage fraud after prosecutors alleged he took money from at least 48 homeowners to
help them get loan modifications, then stole the monthly payments they thought were going
to their lenders, the state said Thursday.
• Rodney Getlan, 45, could be sentenced to as many as 90 years in prison. The state is
seeking a 40-year sentence with 10 years suspended, along with restitution of about
$400,000 to the victims.
National Mortgage Settlement
 Investigation started in October 2010 in response to “robo-signing”
 Negotiations included 50 state attorneys general, state banking
regulators, DOJ, HUD, Treasury
DLLR’s Commissioner of Financial Regulation represented Maryland on
the negotiating team and now serves on the Monitoring Committee
Settlement date: March 1, 2012
$25 billion in damages, fines and borrower relief
Participating banks (60% of nationwide market):
 Bank of America
 Citi
 Chase
 Wells Fargo
 Ally (GMAC)
National Mortgage Settlement at Work in Maryland
Maryland has received well over $1.4 billion in gross benefits from the 5
servicers in the settlement
 $1.3 billion in relief delivered to homeowners currently facing
foreclosure – Loan mods, short sales, deficiency forgiveness etc.
 Equivalent to relief delivered in VA and PA combined
 $24 million – payments to borrowers already foreclosed upon
 $64 million – refinancing commitments to underwater borrowers
 $60 million – fine
 $6 million to General Fund
 $54 million to housing initiatives – counseling, legal services,
local housing initiatives and state enforcement resources
Detail on State Portion of Settlement Funds - $54 Million
Neighborhood Stabilization Funds - In Collaboration with the Office of the Attorney General,
DHCD is overseeing the following:
• $8.6 million for Housing Counseling Agencies with $1.7 million dispersed as of Aug. 30.
• $6.2 million for Legal Services Agencies with $1.4 million dispersed as of Aug. 30.
• $10 million each to Prince George’s County and Baltimore City
• $16.9 million (up from $14 million*) for Neighborhood Stabilization
Enforcement Funds
• $2.8 million for OAG – legal and investigative positions
• $2.1 million for DLLR’s Division of Financial Regulation – legal, investigative and compliance
*Funding of $14 million from the settlement was later supplemented by $2.9 million of additional proceeds from subsequent settlement funds
Summary of Major Legislation
Aggressive and Collaborative Legislative
Approach to Combat the Foreclosure Crisis
In 2007, Homeownership Preservation Task Force
Co-Chairs: DHCD Secretary Skinner and Secretary Thomas E. Perez
Participants included all stakeholders – Lenders (bank and non-bank), brokers, real estate agents, attorneys,
non-profits, foundations, local governments, and consumer advocates and lenders
Produced landmark legislation reforming mortgage lending and foreclosure process
In 2010, Mediation Working Group
Produced Administration recommendations and ultimately legislation establishing Maryland Foreclosure
Mediation Program
In 2011, Foreclosure Task Force
Co-Chairs: DHCD Secretary Skinner and Secretary Alex Sanchez
Similar coalition of participants
Produced significant process reforms including Foreclosed Property Registry and accelerated process for
vacant homes
Summary of Major Legislation
• 2008 – Comprehensive Legislation for Mortgage and Foreclosure Reform
Credit Regulation - Mortgage Lending and Other
Maryland Mortgage Fraud Protection Act
Protection of Homeowners in Foreclosure Act
Foreclosure Process Reform Legislation – Timelines / notice etc
• 2010 - Foreclosure Process Reform Legislation – Mediation
• 2012 - Foreclosure Reform Legislation – Registry, Vacant Property
2008 Legislation
• Major Focus Areas of 2008 Legislation
1. Lending Reforms - Protecting Consumers by Curbing Risky
Practices and Correcting Defective Features of Loan
2. Addressing Fraud - Preventing harms and fraudulent acts
3. Foreclosure Process - Making the Foreclosure Process
Fairer with more time and notice so that homeowners can
avoid foreclosure
2008 Legislation - Lending Reforms
• Pre-payment penalties are banned for all mortgage loans
• Require Examination of Borrower’s Ability to Repay
• For ARMs, assure the borrower’s ability to repay the loan at the fully
indexed rate
• Include in the calculation the borrower’s total housing cost including taxes
and insurance, whether escrowed or not
• Consideration of a borrower’s debt to income, including existing debts and
other obligations
• Verification of the borrower’s gross monthly income and assets
• Requires review of 3rd party documentation reasonably believed by the
lender to be accurate and complete
2008 Legislation - Addressing Fraud
• Mortgage Fraud Protection Act
• Comprehensive criminal mortgage fraud statute that includes: Fines
and penalties, imprisonment, restitution, private right of action
• Protection of Homeowners in Foreclosure Act (PHIFA)\
• Foreclosure rescue transactions–a reconveyance of real property—
• Residences over 60 days in default subject to enhanced consumer
protections and notice under certain circumstances
• Addressed loan modification consulting
• The Commissioner of Financial Regulation now has concurrent
jurisdiction with the Attorney General to investigate and seek
injunctions in these cases
2008 Legislation - Foreclosure Process Reform
• Maryland had one of fastest foreclosure timelines in the US
• Comprehensive foreclosure reform initiated in 2008
• Extended period for notice and cure
Minimum foreclosure extended from 15 to more than 100 days
Notice of Intent to Foreclose (NOI) must be issued 45 days prior to ANY foreclosure being filed
• NOI may be filed as soon as 45 days after default
Copy of NOI provided to Commissioner
• Currently used for outreach - Over 100,000 packages sent each year
• Enhanced filing requirements
Original or certified copy of the mortgage or deed of trust
Statement of the debt remaining supported by affidavit;
The mortgage lender and originator’s license number if applicable;
Affidavit that defendant is not in the military
2010 Mediation Legislation
2010 Mediation Legislation:
Introduced Foreclosure mediation to ensure that consumers receive a meaningful
evaluation for available loss mitigation options prior to a foreclosure sale.
Mediation process – a opt-in system
Notice of Intent enhanced to include information on options available and loan
modification application
Foreclosure filing must include “Foreclosure Mediation Opt-In” form
Consumer has 15 days to opt-in and mediation session held at OAH within 60 days
At the mediation session, a representative from the mortgage servicer with
authority to make decisions, and a neutral third party mediator from the Maryland
OAH to meet discuss alternatives to foreclosure
Established Maryland Housing Counseling Fund, capitalized by lender fees at
foreclosure filing stage ($300) and homeowner mediation opt-in fee ($50)
Subsequent Mediation Reform Legislation:
2011 Mediation Legislation – process “tweaks”:
Increased time for borrowers to opt-in to mediation from 15 days to 25 days
Provided for changes to forms through regulation
Made certain changes relating to OAH (rules, timing)
2012 Foreclosure Task Force Legislation
Provided expedited process for vacant properties by which local governments
can issue certificates of vacancy that enables acceleration of process to
foreclose upon and sell vacant properties
Created foreclosed property registry
Lengthy delays between foreclosure sale and deed recordation left local authorities unable to
identify owners responsible for property maintenance and management
Office of the Commissioner maintains online database of foreclosed property -
Property must be registered within 30 days of foreclosure sale
Accessible to local jurisdictions 24x7

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