Advocates are continuing their call for Maryland legislators to pass relief for homeowners, warning of a looming foreclosure crisis unless lawmakers take action.

New foreclosures are currently halted in Maryland as a result of Gov. Lawrence J. Hogan Jr.’s (R) stay on new notices of intent to foreclose * but advocates with the Maryland Judiciary Task Force warn that some foreclosures that were filed before the start of the pandemic are still proceeding, and that some homeowners might not be aware of their own forbearance options.

State data shows that the stay on new foreclosures has been effective in that no new notices of intent to foreclose have been sent out since Hogan first enacted his order last April, but foreclosures have still continued even despite options for forbearance offered to homeowners.

The task force, spearheaded by Progressive Maryland, includes a mix of advocates, experts and community leaders. At a Wednesday press conference, task force members said that some servicers aren’t complying with state orders to notify homeowners about forbearance options.

Scott Webber, a Montgomery County resident and task force member, knows all too well that foreclosures are still ongoing despite government protections: His own home was scheduled to be sold in a foreclosure auction in December, although that sale was canceled at the last minute.

Hogan’s order also allows homeowners who are having trouble paying their mortgage due to coronavirus-related issues to ask their loan servicer for a 180-day forbearance, with the option to extend that for up to an additional 180 days, but advocates say the legislature needs to ensure that loan servicers are following that guidance.

Webber previously told Maryland Matters that his own request for a forbearance was “completely ignored.”

At the Wednesday press conference, Webber said relying on loan servicers to send out appropriate notice is a bad idea * and warned of a looming foreclosure crisis if legislators don’t take action.

Elizabeth Johnson, the executive director of Strategic Housing Solutions and head of the Prince George’s County NAACP Housing Committee, said losing a home means a loss of generational wealth and a lack of future opportunities.

House Bill 1009, sponsored by Del. Vaughn Stewart (D-Montgomery) and cross-filed as Senate Bill 724 by Sen. Jill P. Carter (D-Baltimore City) would codify and expand the state’s emergency stay on foreclosures, including options for forbearance. It would also impose strict requirements for servicers to notify homeowners about forbearance options.

Carter warned fellow lawmakers during a Tuesday Judicial Proceedings Committee meeting that many Marylanders aren’t aware of their options for forbearance: She said a Census Bureau survey showed that, while 21% of all Maryland homeowners thought they would face foreclosure within two months, just 1% thought their payments would be deferred.

Also included in the bill are provisions codifying and extending the current stay on new evictions, as well as measures codifying the forbearance options on late fees and interest for hard-hit homeowners. Additionally, the proposal allows homeowners chances for mediation to avoid foreclosure.

Maryland took on a slew of foreclosure reforms after the financial downturn in 2007. Those reforms resulted in a “general lengthening” of the process, according to a Department of Legislative Services analysis of the bill, but also meant many homeowners were left in “limbo for years at a time.”

Marylanders with federally-backed mortgages, like those from Fannie Mae and Freddie Mac, have been given similar forbearance options to current state emergency orders by the federal government.

In urging the bill’s passage, Beth Jacobson, an expert on foreclosure and a member of the task force, emphasized the disparate impact of foreclosures on communities of color at the Tuesday hearing. She said African American homeowners are more likely to face foreclosure than white homeowners.

Lobbyists, some state officials push back on foreclosure bill

At a Tuesday hearing for Senate Bill 724, D. Robert Enten, the general counsel for the Maryland Bankers Association, argued that current emergency orders allow regulators leeway in dealing with foreclosures.

Enten worries that the proposal to codify those protections would limit how loan servicers and government regulators alike can handle an ever-changing situation.

“It preserves the ability of our regulators at the federal level and at the state level to deal with this situation as it changes, and that’s critical,” Enten said of current protections for homeowners.

Enten also pushed back on advocate’s claims that servicers benefit from foreclosures * one of the many issues that drove the 2008 housing collapse. Enten pointed to the often drawn-out foreclosure process as an existing incentive for servicers to avoid foreclosing on a home.

And according to the financial news publication Barron’s, economists don’t think the end of the pandemic will bring an unprecedented surge in foreclosures due to rising home prices and effective government protections for homeowners.

“There is no benefit to any lender, whatsoever, in dealing with having a foreclosure,” Enten said.

State officials have had a polarized response to the bill: Assistant Attorney General W. Thomas Lawrie described the bill’s protections as “absolutely necessary” for homeowners in a letter to lawmakers, whereas the Office of the Commissioner of Financial Regulation raised red flags over its broad scope in another letter.

“The OCFR is concerned that the bill’s broad scope undercuts any intent to enact a foreclosure moratorium and that those conflicts and uncertainty, along with the bill’s imprecise language, will confuse consumers, the courts, mortgage servicers, and negatively impact the Agency’s ability to effectively and efficiently supervise mortgage servicers and protect consumers,” the OCFR letter to lawmakers reads.

The push to codify protections for homeowners is part of a larger housing justice effort in the legislature; similar efforts seek to codify eviction protections and guarantee tenants the right to counsel in eviction cases.

By Bennett Leckrone