Testimony of Governor Martin O'Malley
House Environmental Matters Committee
February 16, 2010
ORAL STATEMENT
Madam Chair, Members of the Committee, it is an honor to have the opportunity to testify before you today, and to join Congressman Elijah Cummings, a passionate advocate for the people of our state, for all the people of our state, a great champion of Maryland’s middle class families, as well as Secretary Skinner and Secretary Sanchez, who are both doing an outstanding job.
The progress of a free and democratic people depends on the strength, growth, diversity and upward mobility of its middle class. That is the land of greater opportunity.
Our Administration is therefore focused – and I know the General Assembly is focused as well – not only on creating and saving jobs, but saving as many homes as we possibly can in our state in the face of this recession.
To lose just one home – to have just one mother or father look their child in the eye and tell them “the bank told us we have to move” – is a tragedy which impacts us all. To have lost more than 315,000 homes across America to foreclosure in the month of January is a national crisis which has been verified here in Maryland as well.
In our State, where we are united by our belief in the dignity of every individual and our belief that there is no such thing as a spare Marylander or a spare American, these losses are unacceptable.
Protecting Homeownership
In the past three years, working together we’ve undertaken an array of reforms and actions with a unity of purpose: to save the homes of our fellow citizens. You passed – and I signed – what the Washington Post called some of the most “sweeping” foreclosure redemption statutes in America to combat foreclosure. We’ve reached agreements with multiple mortgage servicing companies to create a streamlined and transparent loss mitigation process. Through Judge Bell, we have been able to recruit 981 lawyers working on a pro bono basis to fight to preserve home ownership. Through the HOPE network, non-profit counselors – supported by state government – have assisted more than 35,000 Marylanders. And in 2009 alone, DLLR secured $2.9 million in refunds from financial institutions for consumers.
Our efforts together, as One Maryland, have saved more than 9,800 homes (9812). And in January we achieved a 23% reduction in foreclosure events. But too many of our fellow citizens continue to be put out on the street. Our work must continue. The recent decline in January is in stark contrast to the increases that have happened in the months just ahead of January.
Legislation
The legislation the Committee considers today, is designed to empower fellow Marylanders, putting them on a more equal footing with their mortgage companies. One of challenges that we found that never was spoken, non-profit housing counseling agents throughout the state, groups like collective banking group and others who tried to help in this fight, was when they tried to make a call, they could not get the mortgage companies to pick up the phone. We believe and by passing this legislation we will affirmatively and very directly say if you can pick up the phone to put a family into a home, shouldn’t you be able to pick up the phone before foreclosing on a home?
More specifically, it is designed to give borrowers the information they need at an early stage, as well as the right to have access to their lenders when they feel they are unfairly being denied a loan modification or other loss mitigation options.
Studies have shown that in states which have similar mediation laws, foreclosures are avoided in 70% of cases.
The legislation has four major components:
- It requires servicers to provide critical information about timelines and the tools available to borrowers that can save their homes – and to provide this critical information with every Notice of Intent. The required information will include:
- A loss mitigation application and instructions for completion and follow-up;
- The Hope hotline number;
- A foreclosure timeline;
- An explanation of eligibility requirements for loan modification programs; and
- Additional loss mitigation options and information on other options for a positive outcome.
- It seeks to limit the number of foreclosure cases that get filed in Court in the first place by prohibiting servicers from filing for foreclosure against a borrower until the servicer can file an affidavit that they have offered or tried to offer the borrower any and all available loan modification and loss mitigation options that are available.
- It says that eligible borrowers must have the right to mediation before a foreclosure sale can take place.
- It requires servicers to pay a modest $100 “cost of business” filing fee for foreclosures and uses the revenue to help fund housing counselors and defray judicial costs.
Conclusion
As I close, I’d like to thank the stakeholder workgroup that has been instrumental in working on this. I know there are some issues that remain to be worked out with the group and the courts are certainly concerned about the potential workload and whether or not the $100 cost of this filing fee is sufficient to help with the mediation costs that will be brought about by this, but we remain committed to getting input so that we have the best bill possible for Marylanders.
I also want to thank the institutions that have chosen to support these efforts, including notably Wells Fargo, who I understand has sent a representative here to testify. Much like this recession, no one knows for sure when this national foreclosure crisis will end. Until it does, we must do everything in our power to slow down this machinery that keeps throwing people out of homes without even picking up the phone. Other states that have taken these steps have had positive results for home ownership and the strength of their middle class.
I urge your favorable consideration of this bill so we can do even more than we have done to slow down, to put the brakes on this foreclosure machine. And I thank you very, very much for your time and attention and leadership.
