Maryland Lt. Gov. Anthony Brown has outlined the details of Gov. Martin O'Malley's efforts to establish a foreclosure mediation process in the state.
Under the proposed legislation, servicers would be required to include additional materials when sending notices of intent to foreclose to borrowers.
New documents would include a loss mitigation application with instructions for completion and follow-up; the Maryland HOPE hotline number; a detailed foreclosure timeline; explanation of the eligibility requirements for the lender's loan modification program; and additional loss mitigation and "soft landing" options, such as short sales, deeds-in-lieu, and/or keys for cash.
Homeowners who do not receive loss mitigation analysis would be able to request mediation, according to the legislation. The O'Malley proposal would require a lender representative to be available for the mediation and to have the authority to bring about a resolution.
"Despite resources like the federal Home Affordable Modification Program and other loss mitigation options, many homeowners who may be eligible for loan modifications do not receive them," Brown says. "This legislation will provide homeowners a chance to explore any and all options to find a positive resolution and remain in their homes."
The legislation would also prohibit lenders from filing a foreclosure action without prior completion of a loan modification review, requiring the lender to include an affidavit documenting completion of the review, reasons for denial, or demonstrating that a review could not be completed because the borrower failed to participate in the review process. Lenders would have to document other loss mitigation alternatives were considered.
In order to defray judicial costs for implementing a mediation program, the legislation would require lenders to pay "a significant fee" upon the filing of a foreclosure action, according to Brown's office.
SOURCE: Office of Lt. Gov. Anthony Brown