With the number of home foreclosures on the rise again in Maryland, Gov. Martin O'Malley's plan to require mediation before banks can begin proceedings to seize the houses of delinquent borrowers is a good idea, but it doesn't go far enough to help struggling property owners stay in their homes. What's needed are more resources to ensure adequate legal representation for troubled homeowners who have been the victims of predatory lenders.
Unscrupulous brokers and agents pocketed millions in fees during the housing bubble by targeting unsuspecting borrowers whom they knew could never repay the loans. Many of those homeowners are now losing their houses because they didn't know how to navigate the thicket of state and federal lending laws or interpret the fine print on their mortgage notes. But many could stay in their homes if they were able to obtain qualified legal guidance.
In addition to requiring mediation, as Mr. O'Malley intends to propose when the General Assembly returns in January, lawmakers need to increase funding for legal assistance to homeowners through nonprofit groups like the Legal Services Corporation, especially in areas of the state like Baltimore and Prince George's County, where low-income and minority communities have been particularly hard hit. Expanding access to the courts for homeowners facing foreclosure could help stabilize troubled neighborhoods and arrest falling home values until the market recovers.
