Gov. Martin O'Malley accused the mortgage industry yesterday of failing to follow through on promised assistance for homeowners facing foreclosure and called on more than two dozen loan servicers to meet with him in Annapolis next week.
At a news conference yesterday, he joined administration officials and nonprofit housing counselors in relaying consumer complaints about busy signals at loan servicers, long waits on hold and a lack of assistance once homeowners do get in touch with customer service representatives.
"Far too often, homeowners who try to take action to avoid foreclosure are unable to even get their loan servicer on the phone," O'Malley said. "We need the loan servicers to join with us, not from someplace out in Topeka, Kansas, at a 1-800 number, but here in Maryland."
Underscoring the administration's hard-line stance, state regulators announced that they are opening an examination of one servicer, Ocwen Loan Servicing, after receiving several complaints. Labor Secretary Thomas E. Perez noted that Maryland is one of the few states that license servicers and said he plans to "exercise the full scale of our authority to hold them accountable to their obligations to protect consumers."
While state and federal officials have scrambled to ease the foreclosure crisis stemming from the subprime mortgage debacle, the first option for many consumers is to work with loan servicers. In addition to complaints of unresponsiveness, consumers say the process can be confusing because banks and lenders often resell their loans to investors, while other companies service the loans for a fee.
Reports of how much help is being extended to homeowners are mixed. Moody's Investors Service reported that in the first six months of last year, servicers modified the terms of just 1 percent of subprime loans whose interest rates had risen nationally. But industry officials say that was only part of the picture and that efforts to help homeowners have been ramped up since then.
The industry helped 869,000 homeowners with loan modifications and repayment plans in the second half of last year, according to the HOPE NOW alliance, a coalition of servicers, mortgage counselors and investors.
In Maryland, according to the Mortgage Bankers Association, servicers started foreclosure proceedings on nearly 6,300 Maryland homes in the third quarter of 2007 but agreed to changes to help a group of almost 5,800 borrowers avoid foreclosure.
