If you are a distressed homeowner living in Maryland, you will be getting some extra protection when it comes to foreclosures and staying in your home. On July 1, a new law will go into effect in the state that allows you to hold on to your home if you find yourself in financial trouble.
This new law will especially be effective in Maryland’s Prince George’s County as that area has an unusually high rate of foreclosure and delinquent mortgage payments. In fact, there were more than 1,370 foreclosures in that county during the month of April. That accounted for nearly one quarter of all foreclosures in the entire Washington region.
But that doesn’t mean that troubled homeowners have not searched for help. Thousands of people in the area have lost their jobs or had a reduction in salary in recent months. For awhile, troubled homeowners were trying to get modifications for their loans in hopes of making lower payments and staying current on their mortgages. However, in recent months, more and more homeowners are realizing that modifications are not the best financial decision for their situation. As a result, they have decided that it is in their best interest to simply allow the homes to go back to the lender and walk away from paying the mortgage. Many of the homeowners figure they will never have enough equity in their home to make it worth staying. Others simply do not have enough invested in their home to make it worth staying and struggling through the hardship.
The new law, however, will force lenders and banks to go through mediation with troubled homeowners before they can foreclose on their home. The lenders will need to try and work out some modification on the mortgage loan instead of foreclosing on the home. The program is receiving financial support to help make it successful from TARP, or the Troubled Assets Relief Program. Under the new regulations in Maryland, lenders must send homeowners an application loan to modify their home loan at least 45 days before they start any foreclosure proceedings.
Housing advocates supported this new law because the Obama administration’s loan modification program was not helping many people in the state. It was taking too long for banks to process any paperwork relating to loan modifications and few people could qualify for the modifications offered by the federal government.
Even if this does not prevent foreclosures from happening in Maryland, it will make homeowners think twice before they just pick up and walk away from their financial obligation. It could save some lives of families being put into upheaval over a foreclosure as well. Do you think this is a good idea or is the state doing too much to regulate the banks and lenders in their efforts to help this major problem?
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