A Step Forward? Maryland Begins to Dig Itself Out of the Housing Fiasco

Ann-Marie Luciano

On Wednesday the Maryland legislature put its hat into the game of fixing the housing crisis. The legislature passed a series of bills designed to remedy different aspects of the broken housing system. The most significant aspects of the legislative package, spearheaded by Governor O'Malley and signed into law yesterday, will do the following:

• Create a new crime of mortgage fraud;
• Extend the foreclosure timetable from 15 to 150 days;
• Prohibit mortgage prepayment penalties;
• Ban "mortgage rescue schemes" whereby homeowners are tricked into signing over their homes to third parties;

How will this help Marylanders?

There are 13,000 Marylanders whose houses are in foreclosure. http://www.baltimoresun.com/news/opinion/editorial/bal-ed.housing03apr03,0,7965813.story According to RealtyTrac, in the month of February alone, more than 4,000 foreclosure actions were taken in Maryland, which represents a ninefold increase from February 2007.

Most of us don't need to hear the statistics to recognize how much the housing crisis has affected this area - all we need to do is hear the stories of our friends and neighbors who are either faced with the risk of foreclosure or who are stuck in homes that they are unable to sell in this market. Indeed, an article in the New York Times yesterday, Unsold Homes Tie Down Would-Be Transplants, describes how the housing market has affected employment mobility and prevent families from relocating to better jobs. http://www.nytimes.com/2008/04/03/business/03labor.html?em&ex=1207368000&en=c2b7394210f5379c&ei=5087%0A . At times like these when decent paying jobs are few and far between, the last thing anyone needs is to be handcuffed to a house in an area without real job opportunities.

Unfortunately, the bills recently passed by the Maryland legislature are focused more on preventing the crisis from getting worse than on helping those who already are facing foreclosure. In fact, the extension of the foreclosure timetable will only apply to those facing foreclosure after the date the bill was signed; this legislation will not help those with foreclosures already in progress.

Those who are already facing foreclosure may have to wait for help from Congress. The wait, however, may be long. There have been a myriad of different proposals made about how to fix the housing crisis, with some emphasizing helping businesses rather than homeowners. Expressing disappointment at the Senate's most recent proposals on how to fixing the mortgage crisis, a group of 15 civil rights, consumer and housing groups issued the following joint statement on Wednesday:

"At a time when Congress and the Administration urgently need to take significant action to combat record-high foreclosures and home depreciation, the Senate today chose to ignore the most effective solution. Lawmakers decided to exclude a provision that would allow courts to modify unaffordable mortgages, a provision that without any cost to taxpayers would help stabilize communities and prevent up to 600,000 additional families facing foreclosure. This missed opportunity is regrettable. Keeping it out of proposed legislation was a win for the financial services industry that brought us this mess and, in so doing, brought the country to the brink of recession. This is a loss not only for ordinary homeowners, but for us all, since today's Senate bill would allow massive and preventable foreclosures to continue weakening the entire economy.

"Sadly, as long as policymakers rely on inadequate voluntary measures, we will continue to see foreclosures tear down communities and wipe out the most important source of financial security that most Americans have. Twenty thousand homeowners with subprime loans are losing their homes every week. It is not too late to do the right thing. We urge both the Senate and the House to take fast action to lift the ban that now holds homeowners hostage to voluntary relief from their loan servicers and investors that may never come."

http://sev.prnewswire.com/banking-financial-services/20080402/DC1838802042008-1.html

If there is going to be legislation that will change the circumstances of those already facing foreclosure, the citizens of Maryland should appeal to their federal representatives, since the Maryland legislative package may be too late for them.