ANNAPOLIS | Gov. Martin O’Malley said Friday he is hoping an agreement with six mortgage-servicing companies to help struggling homeowners avoid foreclosure will pressure other companies to join the effort.
The six companies service about 23 percent of home loans in Maryland, and the governor said that their leadership should be an example to other companies in easing the foreclosure crisis. He hopes to add new company names to the agreement soon.
“I don’t know whether that’s going to happen, but we’re going to try to do that,” Mr. O’Malley, a Democrat, said. “And if I’m not able to share that with you, I will share with you who the worst ones and the most intransigent and the most irresponsible ones have been.”
The companies — HSCB, Ocwen, GMAC ResCap, Litton Loan Servicing, AmeriNational Community Services and Citi — have agreed to a cooling-off period for homeowners who are in trouble, creating a 60-day period when foreclosure actions could not be taken.
Companies have agreed to pool representatives to work with distressed homeowners. They also agreed to either create or continue company policies to give their employees incentives to modify loans and not create incentives to encourage foreclosures.
The companies will document communications among employees, agents and borrowers to increase transparency and create a case history.
“If we all know, then everybody knows, and we can quickly get to those who can be saved rather than wasting time on those that simply cannot be saved,” Mr. O’Malley said.
The agreement among the companies is another step the O’Malley administration has taken to address the home mortgage crisis that has affected the nation.
Laws backed by Mr. O’Malley have bought time in the foreclosure process, extending it to 150 days to give homeowners more time before a foreclosure sale.
Thomas Perez, the state’s secretary of labor, licensing and regulation, said the agreement will help make better use of that time.
“These servicers … have recognized that there are times when a half a loaf is better than no loaf at all and compromise can enable everybody to make the best out of an imperfect situation,” Mr. Perez said at a news conference.
Maryland also has made mortgage fraud a crime and required lenders to verify a borrower’s ability to repay a loan and strengthened the licensing requirements for mortgage professionals.