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New law offers mediation in Md. foreclosure cases

August 07, 2010|By ARNOLD S. PLATOU
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WASHINGTON COUNTY -- For those struggling to pay their mortgage, Maryland's new foreclosure mediation law probably couldn't have come at a better time.

Unless it had come sooner.

Consider these facts:

o Lenders filed 555 foreclosures against homeowners in Washington County from January through June, according to the county Clerk of the Court's office;

o On average, more than four additional homeowners were being threatened with loss of their homes here every weekday through early summer

o The 555 is much higher -- 23 percent more -- than the 450 filed in the county during the same six months of 2009

o In the wider Hagerstown-Martinsburg, W.Va., region, the number of foreclosure cases increased even faster.

According to RealtyTrac, the total rose 42 percent to 853 foreclosures filed in that region from January through June 2010, compared to those filed there in the first six months of 2009; and

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o There are more homeowners in the region who are now at least three months behind in paying their mortgages than were behind a year ago.

According to CoreLogic, which tracks such information, 8.05 percent of those in the Hagerstown-Martinsburg region were at least 90 days behind in June. In June 2009, it said, just 6.2 percent were that far behind.

So Maryland's new foreclosure mediation is likely to be much in demand.

"The best estimate was, we'll probably have about 5,500 of these (foreclosure mediation) cases per year," said Thomas Dewberry, chief administrative law judge of Maryland's Office of Administrative Hearings. The independent agency has the job of providing the foreclosure mediation statewide.

In other states that provide such mediation, Dewberry said, help is being sought by a sizeable number -- 12 percent to 23 percent -- of all those people threatened with losing their homes to foreclosure. In Maryland last year, about 43,000 foreclosures were filed statewide, he said.

A new tool

Starting last month, Maryland gave homeowners another tool to save their homes. The new law gives people the chance to meet with their lender and a mediator to talk about ways to resolve problems before a house is sold.

There's no guarantee that a foreclosure will be avoided.

But the new process will put residents "on a more equal footing with mortgage companies that too often can't be bothered to pick up the phone before beginning a foreclosure proceeding against a Maryland family," Gov. Martin O'Malley said in a press release. "If a mortgage giant can pick up the phone to put a family into a home, they should be expected to pick up the phone before they throw a Maryland family out of a home."

Under the law, when a lender notifies a homeowner about possible foreclosure, it must give information about modification programs. These might include the federal Home Affordable Modification Program or those available through a lender, as well as nonprofit and government resources and assistance.

"The law is intended to ensure that a homeowner who qualifies for a modification is able to get one," Alexander Sanchez, head of the state Department of Labor, Licensing and Regulation, said in a news release.

"In cases where modification is not possible, the law is intended to ensure that lenders fully explore options for a graceful exit short of foreclosure," Sanchez said.

One option he listed was "deed in lieu," where the homeowner signs the property over to the lender to avoid foreclosure proceedings. He said another option is "cash for keys," in which the owner accepts cash from the lender in return for giving up the keys and leaving the house without ripping it apart, as some frustrated families have done.

The centerpiece of the new law is requirements that reveal more of the process to the homeowner. For instance, lenders seeking foreclosure must now declare that they've fully evaluated the homeowner's eligibility for loss- mitigation programs. If they've decided the homeowner isn't eligible, the lender has to say why.

Then there's the opportunity for mediation.

The lender has to send the homeowner a "Request for Foreclosure Mediation" form. Homeowners have 15 days after they receive it to fill it out and file the request.

The state's Office of Administrative Hearings has to hold the mediation session sometime within the next two months -- or three months, if it thinks the extra month would somehow increase the chances that the homeowner and the lender could reach a deal.

To request mediation, a homeowner has to pay $50.

The property must be the person's home, according to Dennis Weaver, clerk of the Circuit Court in Washington County. So if you own an apartment building but don't live there, you aren't eligible for this mediation, he said.

If you are, you can take your request to Weaver's office in downtown Hagerstown.

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