ANNAPOLIS — Three mortgage-lending reforms aimed at slowing Maryland’s booming foreclosure rate are now law.
One of the bills signed by Gov. Martin O’Malley yesterday will crack down on unscrupulous lenders by creating a new crime of mortgage fraud. Another will increase the amount of time before a foreclosure can become final, from 15 to 150 days. The third will ban mortgage rescue scams in which homeowners unwittingly sign away their houses under the pretense of being able to get them back in a few months. All three take effect immediately.
The mortgage reforms were an easy sell to state lawmakers looking to do something about the foreclosure rate. Maryland had 9,000 foreclosures last year, and Mr. O’Malley said 2008 could see 25,000 foreclosures. In the fourth quarter of 2007, four Maryland counties witnessed the number of foreclosures double from the previous quarter.
“There is currently, throughout our country, an unprecedented crisis and emergency on foreclosures,” said Mr. O’Malley, who invited more than a dozen people who have experienced foreclosure to a State House ceremony where he signed the bills into law.
The bills are aimed at preventing future foreclosure spikes, though the governor conceded not as much can be done for people already in mortgage trouble.
“I hope that you all see we are trying,” the Democrat told the foreclosure victims gathered to watch the bills become law.
Lawmakers won’t leave for the year until Monday, and they’re considering more measures to address foreclosure rates. The biggest one still pending is a measure that would require consumer counseling — likely a 30-minute phone interview — before borrowers can get certain types of risky loans regulators say are most likely to trip up homeowners.
Those loans would include interest-only mortgages and some types of adjustable-rate mortgages that have interest rates that can spike dramatically.
That bill is pending in the House and has the support of the administration, said Thomas E. Perez, secretary of the Department of Labor, Licensing and Regulation, which regulates mortgage lenders.
“It’s part of the ounce-of-prevention approach,” Mr. Perez said after the other bills were signed.
The counseling bill wouldn’t take effect until the state hires enough mortgage counselors to handle demand, and the counseling process and those subject to it must be clarified. Raymond A. Skinner, secretary of the Department of Housing and Community Development, said the state should be able to handle the demand, especially if Congress authorizes more aid to the states for homeowner assistance, as expected.
“We’ve been beefing up our counseling resources,” Mr. Skinner said.
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