Foreclosure mediation will help qualified homeowners obtain mortgage loan modifications or other alternatives to foreclosure
ANNAPOLIS, MD (July 1, 2010) – Today, Maryland’s new Foreclosure Mediation law will take effect, giving mortgage challenged homeowners another tool to help them save their homes. The program aims to give homeowners more time and a better opportunity to work with their lender, help qualified borrowers get relief through a loan modification and provide an independent party to help both sides come to a resolution.
“For homeowners who continue to be proactive, work in good faith and stay in touch with their lenders, this program is a valuable tool as they try to resolve their situation. This legislation will help keep more Marylanders in the homes they worked hard to purchase,” said Governor Martin O’Malley. “These new protections empower our fellow Marylanders, putting them on a more equal footing with mortgage companies that too often can’t be bothered to pick up the phone before beginning a foreclosure proceeding against a Maryland family. If a mortgage giant can pick up the phone to put a family into a home, they should be expected to pick up the phone before they throw a Maryland family out of a home.”
Under the program, when a lender notifies a homeowner about possible foreclosure, it also must provide information on options available to the homeowner about modification programs, such as the federal Home Affordable Modification Program, or those available through a lender as well as non-profit and government resources and assistance.
“The law is intended to ensure that a homeowner who qualifies for a modification is able to get one. In cases where a modification is not possible, the law is intended to ensure that lenders fully explore options for a graceful exit short of foreclosure, such as deed in lieu or cash for keys,” said Alexander M. Sanchez, Secretary of the Department of Labor, Licensing and Regulation.
Before a lender forecloses, it is required to file an affidavit attesting that it has fully evaluated the homeowner’s eligibility for loss mitigation programs, and state the basis for any denial. At this stage, the lender also must send a homeowner a “Request for Foreclosure Mediation” form. Homeowners who believe they should not have been denied for relief and wish to take part in the foreclosure mediation program must “opt in” to the program within 15 days and also must pay the $50 filing fee. Lenders are required to pay a fee of $300 with each filing. This is the only time a homeowner will be offered the opportunity to request foreclosure mediation. Commercial and other non-owner occupied properties are not eligible for foreclosure mediation.
Once a mediation request is filed with the Circuit Court, the court refers it to the Maryland Office of Administrative Hearings, which will schedule a mediation session. This session must be held within 60 days. Mediators aim to assist the parties in finding common ground and helping them reach a solution that is satisfactory to both parties.
“We encourage homeowners to contact their lender and a housing counselor at the earliest sign of financial difficulty,” said Maryland Department of Housing and Community Development Secretary Raymond A. Skinner. “The opportunity to participate in mediation occurs later in the foreclosure process and does not guarantee that a homeowner will avoid foreclosure.” A list of housing counseling agencies may be obtained by calling the MDHOPE hotline at 877-462-7555 or by visiting www.mdhope.org.
Since 2007 when Governor O’Malley created the Homeownership Preservation Task Force, Maryland has become a national model in combating foreclosures by developing a comprehensive strategy that includes legal and regulatory reforms and housing counseling and legal assistance networks. This coalition has assisted approximately 41,495 homeowners in the last three years with more than 12,500 of those as positive outcomes.