O’Malley agenda includes foreclosure mediation 

Posted: 7:04 pm Mon, January 25, 2010
By Nicholas Sohr
Daily Record Business Writer

Homeowners would be able to request face-to-face meetings with their lenders to find alternatives to foreclosure under a proposal announced Monday as part of Gov. Martin O’Malley’s legislative agenda.

The proposal would add a $100 fee for each foreclosure filed, a cost that lenders would not be allowed to pass on to borrowers.

The governor’s legislative package also includes a slate of business and green energy initiatives as O’Malley has made job creation his primary focus during the legislative session.

“There is no government program that is as important and empowering as a job which allows a family to raise their kids with dignity and respect and a roof over their heads,” O’Malley said.

O’Malley has been critical of mortgage lenders and servicers, saying some don’t do enough to ensure that homeowners who fall behind on their payments are offered the loan modification services to which they are entitled. The proposal would work within the existing foreclosure process — which was lengthened by the General Assembly at O’Malley’s urging in 2007 — to force more communication between lenders and borrowers.

The time frame attached to the mediation step was one of the key sticking points with the groups working on the legislation.

“It seems we went in the direction we were hoping to, which was to not extend the foreclosure process,” said Dave W. Pulford, past president of the Maryland Mortgage Bankers Association.

Pulford said Monday he had not seen the legislation, which had not yet been formally introduced, but was familiar with its substance.

“The biggest challenge that I think all lenders are facing today is we have pretty much a patchwork of legislation across the country that we have to spend time attending to,” he said.

The foreclosure mediation proposal would require lenders that send notices of foreclosure to borrowers to include applications for loan modification programs. The documents would also encourage homeowners to use counseling services.

Lenders would be required to submit sworn statements along with foreclosure filings showing they reviewed borrowers’ situations to determine if they qualified for loan modification programs.

Borrowers would have the option to request a meeting to review their modification and mitigation options. Revenue from the fees collected would be used to cover increased judicial costs and to boost funding for housing counselors at non-profit agencies.

The governor’s agenda also crystallizes promises he made in past weeks to boost alternative energy initiatives.

Proposals include ramped-up benchmarks for the amount of solar-generated electricity to be sold in the state and the renewal of a $25 million tax credit program for alternative energy production.

He will also propose a $2,000 excise tax exemption for electric vehicles. The three-year program would be capped at one credit per person and 10 per business. The governor’s policy analysts estimate the program would cost $270,000 in the upcoming fiscal year, or enough for 135 plug-in hybrid electric vehicles.

O’Malley’s agenda includes two bills that have already been introduced as emergency legislation: a job-creation tax credit and changes to the unemployment insurance system.

Under HB 92 and SB 106, Maryland businesses would be eligible for $3,000 tax credits for each worker hired off of the state’s unemployment rolls. The one-year incentive is capped at $250,000 per company. O’Malley is seeking $20 million for the program.

The unemployment insurance overhaul — HB 91 and SB 107 — would make the state eligible for $126.7 million in federal economic stimulus funds. The infusion would boost the Unemployment Insurance Trust Fund and pay for cuts to unemployment tax bills in 2010.

Business groups are opposed to the changes, which they say sacrifice long-term stability for short-term gains. The changes to unemployment eligibility would add an estimated $20 million in annual costs to the trust fund.