Foreclosure Crisis

The Maryland Senate gave preliminary approval yesterday to a bill that would allow state-chartered banks to continue to offer a type of home equity loan the state's highest court previously ruled was in violation of consumer protection laws. Sen. Thomas "Mac" Middleton, chairman of the Finance Committee, said that the court had erred in its ruling and that the legislature often steps in to clarify the law. The Senate might take a final vote on the bill this week; the House of Delegates unanimously approved similar legislation last week.

The housing rescue act signed by President Bush yesterday won't bring an end to the national foreclosure crisis, but it does take crucial steps to help lessen its impact in Baltimore and across the nation. Most important, the legislation protects the liquidity of Fannie Mae and Freddie Mac, the lending giants that hold or insure nearly half of America's mortgages. Nobody likes bailing out these federally chartered lenders. But Federal Reserve oversight will ensure that mortgage money will continue to flow, nationally and around the world, a vital condition for a housing recovery.

Sweeping legislation that offers help for every group battered by the mortgage foreclosure crisis will be voted on in coming days. The bill also includes something for almost everyone to hate. But Congress and President Bush should act quickly to make it law because it should give the nation some needed reassurance and the tools to help stabilize home values. The legislation promises a steady flow of affordable money to encourage banks to offer new mortgages, which are essential to any recovery.

The Obama administration has announced a major new effort to stem the foreclosure crisis by focusing on two groups: the unemployed and the rapidly growing share of homeowners who owe more on their mortgages than their houses are worth. Getting banks to temporarily reduce payments for the unemployed fits in with many previous efforts to help those who find they are unable, because of the economic downturn, to meet their mortgage obligations. But the second part of the plan, helping those with so-called "underwater" mortgages reduce the amount of principal they owe, may be more difficult for many Americans to swallow.

Rep. Elijah Cummings, ranking member of the U.S. House Committee on Oversight and Government Reform, praised the U.S. Department of Justice's decision Wednesday to sue Bank of America over alleged reckless mortgage lending practices. The government claims that loose mortgage lending standards by Countrywide Financial, which Bank of America bought in 2008, ended up costing taxpayers at least $1 billion. "I welcome this announcement and strongly commend the Obama Administration, the Department of Justice, and the Inspectors General for their diligence in seeking accountability and justice on behalf of the American taxpayers and homeowners," Cummings said in a statement.

WASHINGTON - Bad economic news just keeps piling up. Yesterday alone, three new milestones were reached: The number of workers filing unemployment claims hit an all-time high, sales of new homes reached an all-time low, and production of durable goods fell for the fifth straight month, boosting inventories to the highest level since the government began to keep count in 1992. And it's not over. Today, when the Commerce Department releases its initial estimate of gross domestic product - that is, the value of all goods and services produced by the economy - for the fourth quarter of last year, it will essentially wrap into one, sobering number all the grim developments that have been accumulating in recent weeks and months.

An Owings Mills man has pleaded guilty to mortgage fraud after prosecutors alleged he took money from at least 48 homeowners to help them get loan modifications, then stole the monthly payments they thought were going to their lenders, the state said Thursday. Rodney Getlan, 45, could be sentenced to as many as 90 years in prison. The state is seeking a 40-year sentence with 10 years suspended, along with restitution of about $400,000 to the victims, the Maryland Department of Labor, Licensing and Regulation said.

Just over 2,800 Marylanders have received some aid through the national mortgage-servicing settlement this year, with nearly 2,000 others in process, according to the settlement's monitor . The assistance, valued at $224 million, ranges from principal reduction to refinancing underwater borrowers. The average rate reduction for refinancing? More than 2 percent. Five mortgage servicers -- Wells Fargo, Bank of America , Citigroup, JPMorgan Chase and Ally Financial (the former GMAC)

Wells Fargo is offering eligible homebuyers in Baltimore a $15,000 down-payment assistance loan that is fully forgivable if the purchaser lives in the home for five years - part of a legal settlement over alleged discriminatory lending practices by the bank. “2013 promises to be the best year ever to buy a home in Baltimore city,” said Mayor Stephanie Rawlings-Blake at a new conference Monday morning in City Hall to announce the initiative. The new $4.5 million program, a large enough pot of money to help individuals purchase 300 homes, adds to an already robust set of incentives to buy a home in Baltimore.