New Maryland Rule Affords Homeowners Additional Rights
There were nearly 10,000 foreclosures across the state in the first four months of
2009.This trend is expected to continue for many months if not years. Maryland lawyers and the state judiciary of doing what they can to assist homeowners in dealing with imminent foreclosure of their homes. In so doing, more than 700 attorneys have volunteered their time under a statewide program known as the Foreclosure Prevention Pro Bono Project.
The Maryland Department of Housing & Community Development has an excellent website that links the user to valuable information about foreclosure assistance programs. It not only provides information to homeowners, but also to renters whose rental properties are in foreclosure.
Maryland laws regarding foreclosure proceedings have been amended over the past year
to afford more procedural safeguards to homeowners whose homes may unknowingly be in foreclosure. Previously, notice of the foreclosure could be sent via certified mail. Under the new law, the notice of commencement of foreclosure must now be personally served upon the homeowner. On May 1, 2009, the Standing Committee on Rules and Procedures proposed various amendments to the rules related to foreclosures. Among other things, the amendments afford homeowners "a fair opportunity" to raise objections and defenses to foreclosure actions. Although homeowners have always had the right to challenge a foreclosure, the new rule clarifies the timing of such challenges and is written is easier-to-understand language. A complete version of the amendments to Title 14 of the Maryland Rules dealing with foreclosure procedures can be viewed at the Maryland Judiciary Website.
What Could Make the Foreclosure Crisis any Worse?
All the reports in the media regarding the foreclosure crisis have centered around the fall in house values and continued unemployment. There is, however, another looming crisis out there no one is talking about yet, except for Credit Suisse. There are millions of loans out there known as "Option Arms" or adjustable rate mortgages. After a set time period (typically a couple of years), the interest rates on these underlying mortgage products reset or recast and adjust to the prevailing prime-rate plus several percentage points based upon the specific mortgage terms. Most of these resets are expected to occur between 2010-2012 where nearly $1 trillion worth of these Arm's will readjust during this period.
While interest rates are remaining low and inflation remains subdued, many mortgagors that pay these Arms have not refinanced to a fixed rate mortgage product because they are taking advantage of the lower rates that now exist. Lower rates of course means lower monthly mortgage payments.
The fear, however, is that interest rates will begin to tick up before mortgagors are able to refinance to a fixed rate mortgage product and homeowners in this predicament will no longer be able to afford their monthly payments. Even those homeowners intending to refinance may no longer be able to because of the loss of home equity and income. Once these resets occur, it will be like 2007 all over again.
Batten down the hatches as round 2 is coming!
Is the HAMP Modification Process Working?
Well it depends on who you ask. Do you remember what the President said way back when he announced the HAMP program and the other Government programs to modify mortgage loans on behalf of weary homeowners unable to pay their mortgage payments? The President said he hoped to help 6-8 million people modify their mortgages down to affordable monthly payments and have them keep their homes. After over a year since these programs have been put in place, only 398,000 modifications have become permanent!! A far cry from the 6-8 million people that were supposed to be helped under the Obama Plan! Currently there are approximately 367,000 active HAMP Trials pending, however, only 235,000 new trials were started over the last 5 months. All of these numbers are well below those contemplated by the White House. In my own practice, a successful modification is the exception not the norm. I often hear horror stories from my clients about how they have sent the same documents over and over, just to be told that they were never received. Bottom line, HAMP will never accomplish what it was set out to do. Unfortunately, it is middle class America that has to pay the price, again.