Fighting foreclosures could pack political punch
UPDATED. See below.
Today, Gov. Martin O'Malley will personally urge lawmakers to pass a measure that would increase the options for homeowners on the verge of foreclosure. This will be his first appearance of the year before legislative committees. Political observers call it a savvy move for a Democratic governor who faces reelection in a year that comes amid a prolonged economic downturn. See our story in this morning's Baltimore Sun.
We'll watch the hearings today to see how lawmakers feel about the proposal and gauge its chances of becoming law.
Some key points in the legislation:
* Before a foreclosure action can be filed in court, lenders are required to submit proof that they tried to modify the loan.
* If the borrower believes that he or she was wrongly denied loan modification, the lender must agree to a mediation session, which the court will organize.
The proposal also imposes a $100 fee to be paid by lenders whenever they file for foreclosure.
One potential problem: The court system, which would contend with a potential flood of foreclosure mediation sessions, isn't supportive of O'Malley's proposal as written. They cite the legislation's costs and lack of clarity as some of the reasons why. Court officials also point out that the proposal is "inherently unfair" in that it forces borrowers to show up in person for mediation but allows lenders to phone in.
A fiscal and policy analysis that became available this morning further explores costs.
Revenues could increase by about $200,000* next year, thanks to the $100 fee. But the analysis also speculates that court expenses could go up by $800,000 or more to establish a mediation program. (The analyst notes that he's just guessing because the court system failed to supply him with any real numbers.)
We aren't expecting to hear from the court system today. An official told us yesterday that they'd simply be submitting written testimony in opposition to the bill, not testifying at the hearings.
* Aides to the governor believe the legislative analyst grossly underestimated the potential revenue, saying it is likely to be $1.6 million or more per year. The analyst appears to have wrongly calculated revenue based on anticipated mediation sessions. However, the governor's proposal calls for the $100 fee to be assessed on ALL foreclosure filings, regardless of mediation.
Comments
Cha ching! another proposal that enriches lawyers and politicians, while sounding good to Joe Sixpack on the 6 o'clock news.
Posted by: Anonymous | February 16, 2010 12:03 PM
I thought O'Malley solved the foreclosure problem last year? Oh that's right, that plan didn't work either.
Posted by: Randy | February 16, 2010 3:07 PM
I thought O'Malley also fixed the "structural deficit" with the largest tax increase in MD history in the Special Session!!!!
Posted by: Voters Ignorance | February 16, 2010 4:55 PM
I'm unclear as to why the courts need to be involved with this endeavor to begin with. Mandating that lenders offer loan modifications when applicable and providing proof of such, should be adequate. Simplicity and clear guidelines are key to a successful outcome.
Posted by: NotableM | February 16, 2010 5:12 PM
Come on O'Malley talk the talk AND walk the walk...we need ACTION now! Make it work for the homeowners who are not getting help from the unscrupulous Big Banks!
Posted by: angela vermillion | February 16, 2010 5:51 PM
Do those who have paid their mortgages on time and may also be in a financial bind get the same opportunity to "modify" our loans? Or is this perk reserved for the irresponsible?
Posted by: Voters Ignorance | February 17, 2010 12:06 PM
I think this is good because there are mortgage companies not following through even when they offer the program. Sometimes in peoples lives thing happen and they have no control over it. There is always a person in the world that forget where they came from, have two incomes in the house or they have a high salary that show no mercy for anyone but them selves. People have lost jobs and are living off of Unemployment and they want to keep there homes because they have no where to go with there family. Have a heart people.
Posted by: Tonya | February 17, 2010 1:20 PM
FEE, a FEE by any other name is a TAX, TAX, TAX. This revenue starved state will pull mischevious trick for money. However, this little slight of hand will, in the end, cost more than it takes in, clog up the courts and only delay the inevitable, and that is forclosure.
Posted by: reader203 | February 17, 2010 11:02 PM