|
O'Malley Targets Mortgage Fraud
Monday, January 14, 2008
WBAL Radio as reported by Anne Kramer and Associated
Press
Calling Maryland's rising foreclosure rate an "unprecedented
crisis," Governor O'Malley today pitched a package
of mortgage reforms aimed at reducing foreclosures
by cracking down on scam lenders and giving delinquent
homeowners
more time to save their homes.
"These are really, really tough times, especially
for working families," O'Malley said, standing outside
a Prince George's County home in foreclosure proceedings.
Maryland has seen a history-making wave of foreclosures
in the past two years. During one quarter of 2007, foreclosures
statewide went up more than 300 percent from the previous
year. Some counties saw a rise of more than 2,500 percent.
The governor's plan would put stricter regulations on
mortgage brokers and create a new crime of mortgage fraud.
O'Malley wants to increase the amount of time before
a foreclosure could be completed from 15 days to 150
days.
O'Malley's plan puts most of its emphasis on the subprime
market, or the market for people who don't qualify for
traditional fixed-rate mortgages.
The changes would include a requirement that borrowers
be screened for ability to repay a loan over the long
haul, not just during an initial period of low interest
rates. The proposal would implement a virtual ban on "no-doc" loans,
or loans made without proof of income, and a ban on "conveyances" of
some properties in foreclosure, where homeowners sign
away their homes under the guise of foreclosure protection.
"They need to do it," said Charlene Williams
of Capitol Heights, who signed away her childhood home
last year after falling behind on mortgage payments but
is challenging the action in court. "I was approached
and told I could refinance, that we can help you, you
won't lose your home. ... I was scammed."
For homeowners who have already signed loans they can't
afford, O'Malley proposed a state fund offering up to
$15,000 in interest-free loans to catch up on mortgage
payments and prevent foreclosure.
"We are going to do everything in our power to
protect Maryland homeowners," O'Malley vowed.
But the governor's plan does not include more money
for consumer education about mortgage debt, or any new
requirements that people signing for risky loans receive
counseling or even a pamphlet explaining pitfalls of
some subprime loans.
"Nobody would disagree that counseling is important
for all consumers," said Vicki Schultz, a senior
adviser in a consumer protection agency for the state
Department of Labor, Licensing and Regulation. "But
there are concerns about how many counselors we have
available."
DLLR Secretary Tom Perez said the state would encourage
nonprofits to educate potential homebuyers, but the state's
main priority should be to tighten regulations on the
mortgage lending industry to prevent behavior that causes
foreclosures.
Perez compared current mortgage laws to "Swiss
cheese" and said the state would best serve homebuyers
by running fraudulent lenders out of state.
"We must have aggressive and effective regulation," Perez
said.
One Democratic senator who has proposed mortgage reforms,
Senator Catherine Pugh of Baltimore, said she was disappointed
O'Malley's plan didn't include some new educational efforts.
"I think we need to look at that," Pugh said.
When someone signs for the riskiest loans, "there
ought to be something at least handed to you" about
the loan, Pugh said, adding that she supports O'Malley's
proposals.
Bill Castelli of the Maryland Association of Realtors,
said education is important but doesn't necessarily have
to be required by the state who did not attend O'Malley's
announcement,
"Any help the state can give in that process is
important, but there are so many different things that
can be done in the private sector," Castelli said.
O'Malley's package also does not address businesses
that offer to buy homes for cash. Those companies have
been accused of ripping off homeowners by offering less
cash that the homes are actually worth and duping unaware
property owners.
Perez said the administration may consider backing legislation
on cash-for-homes schemes later.
"We can do more," Perez said.
The homeowner in foreclosure who hosted O'Malley's announcement,
Verna Floyd, choked back tears and told reporters that
any action from the state would be a positive development.
But she conceded that the reforms may not help people
already in trouble, like her.
"We learned too late that if something sounds too
good to be true, it probably is," Floyd said.
|
