Maryland’s Governor has signed into law emergency legislation that may help thousands of Maryland homeowners who are at risk of losing their homes. The emergency bills signed late last week include:

• The Real Property – Recordation of Instruments Securing Mortgage Loans and Foreclosure of Mortgages and Deeds of Trust on Residential Property bill. This legislation significantly lengthens the foreclosure process from 15 days to approximately 150 days, making it fairer for homeowners and providing them with more time and notice before a foreclosure sale. It also requires lenders to wait 90 days after default before filing the foreclosure action and to send a uniform Notice of Intent to Foreclose to the homeowner 45 days prior to filing an action. Additionally, the bill requires personal service when notifying a homeowner of impending foreclosure actions and requires that a sale may not occur for 45 days after service. A lender must produce proof of ownership when filing a foreclosure action. The bill codifies the right to cure, which will allow a homeowner to stop foreclosure by paying what is owed up until one business day before the sale.
• The Real Property - Maryland Mortgage Fraud Protection Act is a comprehensive criminal mortgage fraud statute that makes mortgage fraud in Maryland a crime for anyone involved in the mortgage transaction. The bill provides for significant fines and imprisonment for violators and gives the court authority to order restitution and forfeiture and enhanced penalties for cases involving vulnerable adults. The bill also authorizes the Attorney General, a State’s Attorney, and the Commissioner of Financial Regulation to take action to enforce the statute. The bill allows victims of mortgage fraud to bring private action against violators.
• The Protection of Homeowners in Foreclosure - Prohibition on Foreclosure Rescue Transactions – Enforcement is an emergency bill that bans foreclosure rescue transactions that scam homeowners out of their homes and the equity they’ve built. The bill also provides additional consumer protections for people who are trying to sell their homes because they are in default.

Foreclosure rates have risen dramatically across the nation, and Maryland has not escaped the trend. In the fourth quarter of 2007, Prince George’s, Montgomery, Washington and Worcester Counties saw the number of foreclosures double from previous quarter. In other Maryland counties, such as Kent, Garrett and Somerset, the numbers nearly tripled. Statewide, Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.

Earlier this year, Maryland introduced its “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. The statewide program is administered by the Maryland Department of Housing and Community Development’s Community Development Administration (CDA). Families and individuals facing the possibility of foreclosure should call 1-877-462-7555 or visit www.MDHOPE.org for assistance.

Federal Reserve Chairman Ben S. Bernanke told a gathering of the Independent Community of Bankers of America that they need to do a lot more to help distressed homeowners, especially those facing foreclosure. Bernanke called earlier today for a “vigorous response” to help stem rising home foreclosures, saying some banks and lenders could do more to help ease the U.S. housing crunch and keep more American’s in their homes.

Bernanke’s remarks, which can be read in their entirety here, are groundbreaking because they signify the first time someone with any power over the direction of the financial markets has publicly asked a question so many of us have been asking for over a year now… what’s the point in forcing people out of their homes when they can afford to pay their pre adjustable rate payments. As Larry Rubinoff asked in a guest blog post on FlippingFrenzy.com this past weekend, would it not be better to freeze the interest rate for a homeowner who has been paying at that rate rather than foreclosing and kicking them out onto the streets? In the extreme, would it not be better to cut the rate in half rather than foreclose?

At the end of the day, the proof will be in the pudding. If the bankers chose to respond vigorously, more of us will win. If they don’t, Bernanke’s 3,175-word speech will have been for not.