On November 7, 2008, Maryland Governor Martin O’Malley announced a voluntary agreement his office reached with some of the nation’s largest loan servicers. The agreement’s provisions are intended to help Maryland homeowners behind in their mortgage payments avoid foreclosure.

Specifically, the participating loan servicers have agreed to use certain procedures when working with Maryland borrowers who are trying to modify terms of their mortgages.

Suspend foreclosures and fees

Among other provisions, the servicers have agreed to temporarily suspend foreclosure actions and the accrual of fees and penalties during the time it takes the lenders to process a loss mitigation application.

[A loss mitigation application is the information a borrower submits to a loan servicer when the borrower requests to modify the terms of a loan.]

Improve customer service procedures

Other provisions aim to improve the servicers’ customer service practices. The servicer must acknowledge receipt of a loss mitigation application within five days, and servicers must process loss mitigation applications within two months.

Servicers also agreed to (1) designate employees to help Maryland homeowners, (2) encourage staff to modify loans rather than foreclose, and (3) disclose their loss mitigation guidelines to consumers.

Participating Servicers

The loan servicers participating in the agreement include:

1. AmeriNational,
2. HSBC Finance,
3. Citigroup,
4. GMAC,
5. Ocwen Financial Group, and
6. Litton Loan Servicing.

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