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Maryland banking official helped craft foreclosure settlement

Maryland’s Office of the Commissioner of Financial Regulation was one of only two state banking agencies to be represented on the executive committee that oversaw the investigation that led to the multibillion-dollar nationwide foreclosure settlement with the country’s five largest mortgage lenders.

Mark Kaufman

Mark Kaufman, Maryland’s commissioner of financial regulation, was involved in developing the 42 pages of servicing standards that were incorporated into the settlement.

The $25 billion agreement between 49 states and five of the nation’s biggest mortgage lenders was announced Thursday in Washington, D.C. Oklahoma struck a separate deal with the five banks. Government officials are still negotiating with 14 other lenders to join.

Maryland will get almost $1 billion of the settlement.

Kaufman’s role on the committee was bolstered by Maryland’s licensure requirement for non-bank mortgage servicers, he said.

“There’s no question, as a bank regulator, if someone asks you to participate in these sorts of things, that you … participate,” Kaufman said.

In early 2008, his office used its regulatory power to implement the first reporting requirement of its kind for a state, Kaufman said. The agency forced servicers to report information such as how many delinquent loans they had, and what mitigation efforts they were implementing.

“The servicers who are not the national banks, who are the ones we traditionally license, are the ones who service most of the subprime loans, so the servicing problem hit them first,” Kaufman said.

The goal of the servicing standards incorporated in the settlement is “to see the process operate the way it was intended to,” he said.

That means requiring concrete timelines for response from servicers, specifics regarding what fees can be charged and when, and a web portal that makes document sharing more efficient.

“The challenge now is seeing that they are implemented,” he said.

Anne Balcer Norton, Maryland’s deputy commissioner of financial regulation, was also extensively involved in the investigating. Norton, the former director of the foreclosure prevention division of St. Ambrose Housing Aid Center Inc., Baltimore’s oldest housing nonprofit, had ground-level experience with the crisis.

“Anne lived it with troubled borrowers facing foreclosure every day for several years,” Kaufman said.

From 1992 to 1994, Kaufman was a staffer on the U.S. Senate Committee on Banking, Housing and Urban Affairs, before spending 14 years as an investment banker. In April 2008, he became the state’s deputy commissioner of financial regulation and was nominated to the position of commissioner in September 2010 by Gov. Martin O’Malley.

All 50 attorneys general and 37 bank regulatory agencies were part of the multistate mortgage investigation. Maryland and New York were the only states with bank regulators on the executive committee. A representative of Pennsylvania’s Department of Banking was originally on the committee.