Foreclosed Home Auction Could be Delayed Further in Maryland

Foreclosed home auction by courts or trustees could be delayed further in Maryland if Governor Martin O’Malley, state legislators and banking regulators are able to craft another law that would require homeowners and lenders to meet in person to work out a repayment scheme that would prevent foreclosure.

Over the past two years, Governor O’Malley have championed several measures to prevent and mitigate foreclosures, such as the extension of the foreclosure time frame to 150 days, criminalizing mortgage fraud and prohibiting fraudulent mortgage rescue schemes from operating in the state. But despite these measures, foreclosure postings continued to increase across the state.

According to Alexander Sanchez, head of the Labor, Licensing and Regulation Department of Maryland and also the chief banking regulator, said that it has been difficult resolving the foreclosure problem. He explained that the major causes of the first flood of foreclosures – subprime loans and toxic mortgages – were replaced by unemployment, a factor even more difficult to address with quick results.

In November, one foreclosure action was filed for every 364 households in Maryland. Nearly 6,400 residential units were put into the foreclosure process, with 3,317 of them readied for foreclosed home auction and 711 units already repossessed by the banks.

According to Secretary Sanchez, the mediation meetings could be likened to settlement sessions in court proceedings. He added that bankers, housing advocates and other community representatives will meet to craft the legislation.

Currently, the state of Maryland requires lenders to notify homeowners 90 days in advance before pursuing a foreclosure sale. After borrowers default, lenders should notify the borrowers 45 days before issuing the notices of foreclosure and then wait for 45 days more before selling the properties.

As expected, bankers have opposed the plan to craft mediation legislation. Dave Pulford, former head of the Maryland Mortgage Bankers Association, said that the planned mediation would further increase their foreclosure costs. He complained that his bank and other banks have already modified a lot of mortgage loans, but the borrowers never made the first payments.

Mary Ann Scully, chief executive of Howard Bank, added that it has been difficult modifying loans for troubled borrowers who ask for help but do not provide the right financial documents.

In response, Shaun Adamec of the DLLR, insisted that a number of lenders and mortgage servicers have not really been doing their part in helping borrowers save their houses from foreclosed home auction.

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• Maryland Sees Huge Increase in First Quarter Foreclosures
• Florida Repo Homes for Sale to Soar with Foreclosure Bill
• Maryland to Offer Foreclosure Information Session in Frederick
• U.S. House Members Deliver Foreclosure Help to Constituents