O'Malley asks state's highest court to halt foreclosures for 60 days

Letter from governor, congressional delegation calls for rapid action to protect homeowners

October 09, 2010|By Childs Walker, The Baltimore Sun

Gov. Martin O'Malley and the Maryland congressional delegation asked the state's highest court Saturday to halt home foreclosures for at least 60 days in response to recent revelations of widespread documentation errors by large financial institutions.

Gov. Martin O'Malley and Maryland's entire congressional delegation asked the state's highest court Saturday to halt all home foreclosures for at least 60 days in response to recent revelations that large mortgage lenders processed thousands of documents without proper review.

"We believe immediate action is necessary to ensure that defects in lenders' procedures and documentation that have come to light in recent days have not and will not result in miscarriages of justice for Maryland homeowners and Maryland courts," the political leaders wrote in an Oct. 9 letter to Robert M. Bell, chief judge of the Court of Appeals.

Last week, O'Malley, Attorney General Douglas F. Gansler and Rep. Elijah E. Cummings asked mortgage companies to halt foreclosures voluntarily until they could demonstrate that they had followed state law. But Saturday's letter represented an aggressive next step in the effort.

O'Malley spokesman Shaun Adamec said the letter was necessary because only one lender, Bank of America, responded to the call for a voluntary halt.

"We believe the best way forward probably lies in the court," Adamec said. "The letter is a way of saying that we stand behind any action the court deems appropriate."

Adamec said justices on the Court of Appeals have already begun discussions of their possible role in addressing the problem. Bell could not be reached for comment Saturday.

Bank of America announced Friday that it would halt foreclosures nationwide, and other large companies such as Ally Financial, JPMorgan Chase and PNC Bank have frozen foreclosures in 23 states, not including Maryland. The mortgage companies have acknowledged sending hundreds of thousands of incorrect affidavits related to foreclosures to courts in those states.

Employees of companies used by the banks to process affidavits have admitted "robo-signing" the documents without checking the accuracy of underlying mortgage information.

"Because most banks outsource document preparation and often use the same service providers or law firms to prepare foreclosure documents, it is highly likely that these practices are industrywide," the letter said in explaining the call for a halt to Maryland foreclosures.

In Maryland, mortgage companies do not have to sue to pursue foreclosure but must file affidavits with the courts documenting loan information for each case.

Lenders were trying to foreclose on more than 40,000 Maryland homes during the spring, according to the most recent figures from the Mortgage Bankers Association.

Adamec said Maryland homeowners should at least receive assurance that the sloppy preparation of affidavits did not influence their foreclosure cases.

"Honestly, it's hard to believe it didn't, given that these companies operate nationwide," he said.

childs.walker@baltsun.com

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