State unveils plan to prevent foreclosures

Facing a historic economic mess and spikes in foreclosures, the state has finalized an agreement with six mortgage service companies to help struggling Marylanders keep their homes.

The plan to be announced today will establish a "cooling off period" for people who start to face foreclosure, halting all foreclosure actions and accrual of fees and penalties for 60 days. The companies that have agreed to cooperate with Gov. Martin O'Malley's plan are HSBC, GMAC ResCap, Litton Loan Servicing, Ocwen, Citigroup and AmeriNational Community Services.

Almost 25 percent of mortgage loans in the state will be covered by the agreement, according to the state Department of Labor, Licensing and Regulation.

Other parts of the plan will have those companies designate certain employees as "Team Maryland" to act as a point of contact for Maryland homeowners working through the state's Foreclosure Prevention Assistance Network.

Under the agreement, the companies also will create internal policies and incentives encouraging modification of loans rather than foreclosures.

The agreement comes at a time when foreclosures are rising in Anne Arundel County.

Foreclosure filings have jumped from 161 in September to 240 in October, said Lucinda Jones, the supervisor of civil records at the Circuit Court of Anne Arundel. She said the trend will probably continue this fall and filings could reach 270 or higher this month.

"We got a huge amount in yesterday," Ms. Jones said. "I do believe there is going to be a steady increase for the next couple of months."

The deal ends months of negotiations that began in February, when Mr. O'Malley criticized the loan industry for its lack of customer service and giving troubled homeowners busy signals as often as real assistance.

"The state of Maryland is committed to providing relief and offering solutions to homeowners at risk of foreclosure," he said in a release. "As a state, we have an obligation to protect our middle class families, particularly during this time of economic uncertainty."

Over the past year, Mr. O'Malley has been aggressive in changing the foreclosure process in Maryland as the implosion of the subprime and housing markets reverberate across the nation.

The governor created the "Bridge to HOPE"

Loan program, which provides small loans at zero interest to homeowners having difficulty with payments, and launched an advertising campaign to make sure troubled Marylanders don't wait to take action.

During the last General Assembly session, a host of housing reforms were passed to give people more time to keep their homes, including an extension of the foreclosure process to 150 days.

State officials encouraged Maryland residents facing foreclosure to call 1-877-462-7555 or visit www.MDHOPE.org.

"Maryland has been at the forefront of creating policies and reforms to combat the foreclosure crisis that has swept the nation," Thomas Perez, the secretary of the Department of Labor, Licensing and Regulation, said in a release. "These agreements are a critical component of our comprehensive efforts to provide homeowners with the resources and assistance they need to remain in their homes."

Some observers said the state's new agreement will help ease the situation here.

The plan is part of a "phenomenal" effort by Mr. O'Malley, said Sally Snowberger, the director of homeownership for the Housing Commission of Anne Arundel County.

"We've been working on this for a long time," she said. "People are not being foreclosed on as quickly had he not done this."

Tim O'Malley, senior vice president of sales and marketing at loan servicer AmeriNational Community Services, said his company is proud to be a part of the new agreement. Mr. O'Malley is not related to the governor.

"I think it goes a long way to put some procedures in place to help. It is the right thing to do," he said. "It is another example of the governor rolling up his sleeves and getting involved." (By LIAM FARRELL and KATIE ARCIERI, www.hometownannapolis.com)