Governor O'Malley, County Executive Johnson Announce Partnership to Combat Foreclosure
Agreement Creates Credit Refinance Program to Help Prince George’s County Homeowners in Danger of Foreclosure
RIVERDALE, MD (July 29, 2008) –Governor Martin O’Malley, Prince George’s County Executive Jack Johnson and Maryland Department of Housing and Community Development (DHCD) Secretary Raymond A. Skinner today signed a Memorandum of Understanding to help provide relief to homeowners facing foreclosure. Under the agreement, the State and Prince George’s County will work together to develop a refinanced mortgage credit enhancement program to encourage local banks to refinance loans for individuals subject to foreclosure.
“The State of Maryland is committed to partnering with our local jurisdictions to provide relief and offer solutions to homeowners at risk of foreclosure,” said Governor O’Malley. “As a state, we have made great strides in protecting Maryland homeowners from foreclosure, but we can and we must do more. Today’s agreement will give Prince George’s County another tool to help distressed homeowners, and will help sustain homeowners through these difficult times.”
“We are very pleased to partner with the State of Maryland on this very important foreclosure initiative. Sustaining homeownership for the residents of Prince George’s County is a top priority for my Administration,” Johnson said. “There is a foreclosure crisis thousands of homeowners are facing throughout Prince George’s County and Maryland. We must act now and come to the aid of those families that are struggling to keep their homes.”
Under the agreement, DHCD will provide $2.5 million, and the county will provide $1.5 million to develop a refinanced mortgage credit enhancement program. This program will encourage local banks to refinance loans for those individuals subject to foreclosure who might require special underwriting criteria. The program will provide mortgage insurance risk coverage against a predetermined top portion of the refinanced mortgage. Earlier this year, a similar agreement was signed between the State and Montgomery County to help aid Montgomery County residents facing foreclosure.
“Partnerships with local governments like Prince George’s County is critical to implementing successful foreclosure prevention efforts,” said Secretary Skinner. “Working together with County Executive Johnson, we will continue to support homeownership counseling efforts and provide more refinancing options to Marylanders.”
In Maryland, property foreclosures soared to 12,849 in the second quarter of Fiscal Year 2008, representing a growth of about 13 percent from the previous quarter and a rise of 214 percent over last year. According to the Notices of Intent to Foreclose for the second quarter of 2008, property foreclosures reached a new high of 3,310 in Prince George’s County, up 3 percent from the data for the last quarter and 186 percent from the second quarter of 2007. Prince George’s County had the highest number of foreclosures in the second quarter statewide, accounting for over 26 percent of all Notices of Intent to Foreclose in Maryland.
In addition to the steps taken today, Governor O’Malley, Administration officials and the General Assembly have worked aggressively over the past year and a half to address what has become the worst housing crisis the nation has seen since the Great Depression. Governor O’Malley has signed into law legislation that The Washington Post called “among the most sweeping in the country” to keep families in their homes, including legislation that:
- Lengthened the foreclosure process to approximately 150 days, providing homeowners with more time and notice before a foreclosure sale;
- Made mortgage fraud a crime for anyone involved in the mortgage transaction and punishable by fine or imprisonment;
- Reformed lending practices by banning pre-payment penalties on mortgage loans, requiring lenders to verify a borrower’s ability to repay a loan and strengthening the licensing requirements for mortgage professionals.
Governor O’Malley also announced the “Bridge to HOPE” Loan Program, which provides small gap loans at zero percent interest to homeowners facing difficulty, giving them time to get back on their feet or find a solution. Families and individuals facing the possibility of foreclosure should call 1-877-462-7555 or visit www.MDHOPE.org for assistance. He also launched the “Mortgage Late? Don’t Wait!” campaign, a comprehensive, multimedia advertising campaign to help tackle rising foreclosures in the State and ensure Maryland homeowners are aware of the programs available to provide assistance and relief.
In addition, days ago, the United States Congress passed the Housing and Economic Recovery Act of 2008, which represents the most comprehensive response yet to the American mortgage crisis and will help families facing foreclosure keep their homes, help other families avoid foreclosures in the future, and help the recovery of communities harmed by empty homes caught in the foreclosure process. Under the bill, Maryland is slated to receive $181 million in Mortgage Revenue Bonds (MRB) funds and $1,123,669 in additional Low Income Housing Tax Credits, which will generate approximately $9 million in equity. The state and local subdivisions also will receive additional Community Development Block Grant (CDBG) funds to purchase and rehabilitate homes that already have been foreclosed upon to help revitalize and strengthen communities.
