The Maryland General Assembly has passed a new law that implements a foreclosure mediation program across the state. The regulation goes into effect during the summer of 2010. The program will provide homeowners with an opportunity to meet face to face with their lender and/or bank, a highly trained and independent mediator, and an administrative law judge. The goal of this meeting will be to facilitate a mediation session that will, at the end of the day, allow a family to stop a foreclosure filing, stay in their home, and find a solution to their mortgage situation.
Unfortunately, various studies indicate that many people just can’t get a response from their lender when they are having mortgage difficulties. Even after multiple attempts to reach them many lenders have proven to be unresponsive. The lack of a timely response makes it difficult for people to get help. There are stories of homeowners talking to different people at their bank or lender on the phone when they call, or maybe even worse their paperwork gets “lost” by the lender.
Under the Maryland foreclosure mediation plan, the lender will be required by state law to send an application for a loan-modification, loss-mitigation program, or some other type of assistance program to the homeowner. The notification by the lender must be something that gives the homeowner a real opportunity to get help with their payments and catching up on any arreage. This notice is required to be sent to the homeowner at least 45 days before a foreclosure action is filed in the local court system. The law also requires that the lender will need to pay a $300 fee for a foreclosure filing and that cost can’t be passed to the borrower.
In addition, a loss-mitigation analysis will need to be completed to determine whether the homeowner is eligible for any type of assistance, and this analysis must be done 30 days before a foreclosure sale of the home.
Then, within 15 days of receiving the bank or lender's final loss-mitigation affidavit, which will need to state the reasons for denial of a loan modification if one was denied, the homeowner can then request a foreclosure mediation by just filling out a form that will accompany the affidavit. There is a small fee for this mediation. The form and the $50 fee must be mailed to the lender's foreclosure attorney and the Circuit Court where the foreclosure action was filed.
The borrower has a choice in this matter. If the borrower says yes to exploring mediation as a solution to their housing problem, everything will then stop at the Circuit Court level. This is according to the Chief Administrative Law Judge Thomas E. Dewberry, who leads the Office of Administrative Hearings (OAH). This is the office which will handle the mediation process. The OAH has 60 days to hold a mediation session with all parties. So all of this takes time, and the family can stay in the home as they pursue mediation and work towards a solution.
There are still some aspects of the program that are being worked out, including where some of the mediation sessions will take place. In the meantime, the Maryland Office of Administrative Hearings is trying to find room in a number of different Circuit Court buildings and other centrally located, convenient centers or offices. Most homeowners will probably go to the mediation sessions with housing counselors. They need to also be well prepared, and bring documentation, including pay stubs, financial records, and other documents.
The Maryland foreclosure mediation program has been well received. Civil Justice Inc., which provides free legal services to low- and moderate-income residents (including foreclosure counseling) has said that they are pleased that the state of Maryland continues to be at the forefront of efforts to keep homeowners in their homes, and he thinks the state program will be effective. Dial 1-877-462-7555, or speak to a Maryland HUD foreclosure counselor in order to apply or learn more.
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