Maryland to Require Loss Mitigation Reporting
Maryland Governor Martin O'Malley on Monday unveiled new proposed legislation and industry regulations as the state grapples with an increase in foreclosure activity. Chief among them, at least from an industry perspective, was an emergency regulation that will make Maryland the second state in the country to require loan servicers to file detailed monthly disclosure reports about their loss mitigation and loan modification efforts. The reports will, according to a press statement, seek to "outline the precise nature and extent" of loss mitigation efforts by servicers. â€œThere are thousands of Marylanders on the verge of foreclosure and we need information now to learn what actions servicers are taking to prevent foreclosure,â€? Licensing and Regulation Secretary Thomas Perez said. â€œData collection and reporting is a critical accountability tool that only one other state, California, has in place.â€? It's unclear exactly what information Maryland is expecting servicers to report on, and how frequently. Beyond the emergency regulation, new legislation proposed by the governor's office would span from origination activities to servicing practices. The proposed legislative changes come as foreclosures increased more than six-fold in Maryland during the back half of 2007. Under the proposals, brokers would be held to a fiduciary duty on behalf of the borrowers they work with, and would be required to demonstrate a net tangible benefit on any refinancing activity. From a servicing perspective, in addition to new reporting requirements, the state wants to require a lender to wait 90 days after default before filing a foreclosure action, and institute a pre-notice of default requirement (a so-called 'intent notice') to be served 45 days prior to filing an action.