Commissioner Raskin at press conference held by Governor Martin O’Malley
Regarding Services Agreements in Annapolis, Maryland
November 7, 2008
First of all, on behalf of Maryland’s Office of Financial Regulation, congratulations to these six mortgage servicing companies for working so diligently and creatively to help set a new high bar in Maryland. Your cooperative spirit is a model for other servicers nationwide, and your willingness to work with our state’s innovative regulatory approaches to the foreclosure crisis marks you among the best servicers in our country.
These are difficult times and progress is not coming without considerable effort and cooperation. With your input and the input of vibrant housing counselors, we are working collaboratively to address and economic and human problem of truly epic proportions.
At the Office of Financial Regulation, we have developed several creative and effective regulatory approaches to working with mortgage servicers in our state. These new approaches make Maryland a true laboratory for innovative regulatory responses to the economic crisis, which we continue to wrestle with. Ours is one of the few states that licenses mortgage servicers, specifically, those not subsidiaries of banks.
In terms of mortgage servicers regulation, we have established an innovative reporting mechanism by which the Office of Financial Regulation has been gathering data, since
February of this year, regarding the size and condition of the portfolios being serviced and the level and type of mitigation activity performed by servicers. A very user-friendly template has been developed and is in fact a real time web based tool that mortgage servicers access each month to provide a 30-day overview of delinquency rates and the scope of their mitigation and modification efforts. Categories have been developed that are associated with types of mitigation activity such as repayment plans, rate freezes and outright principal reductions. Currently, about 65 mortgage servicers who service about
380,000 loans – or roughly 40% of loans in Maryland – report to the state.
This data provides an on-time view of the market conditions and servicer responses. It is part of a broader effort nationwide to measure and track performance. 3 of the servicers here today report to our office while others report nationally through HopeNow, the federal bank regulators, or through the interstate Foreclosure Prevention Task Force of which of office is a member. This reporting is an evolving effort in Maryland and nationwide.
From a regulatory perspective, this gives Maryland the ability to monitor in an unobtrusive off-site manner trends in the number of our residents facing delinquency and foreclosure and the extent to which they are obtaining responsive solutions from the state’s licensed servicers. Our residents deserve the opportunity to modify their mortgages and this reporting tool provides a window into the issue. The results suggest that while we are making progress, we have much work left to do. With the economy

slipping, the number of borrowers in delinquency continues to overwhelm the increasing efforts of servicers and too many borrowers are not being assisted. That is why this agreement and the commitment of the servicers here today is so critical.
The data also provides an oversight tool. As we gather more insight into the operations of our licensees, we are better able to tailor our oversight and examination efforts to meet this growing challenge.
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At the Office of Financial Regulation, we are also working to take advantage of other statutory and regulatory tools to assist homeowners and to encourage them to reach out to these and other servicers for assistance. Working with these servicers, we have come to appreciate further how critical it is for homeowners to seek assistance from their servicer as early as possible. Under the new foreclosure laws passed last spring, homeowners receive a warning notice 45 days prior to the initiation of the foreclosure process with contact information for their servicer. Our office receives copies of these notices and, in response, has sent roughly 40,000 targeted outreach packages to delinquent homeowners highlighting assistance that may be available and urging the homeowners to contact their servicers as soon as possible.
The other novel regulatory approach is a first-in-the-nation servicer duty of care. On
Monday of this past week, this Maryland regulation became effective and what it does is this: For the first time in the United States, mortgage servicers in Maryland are required by regulation to:
(a) Promptly provide borrowers with an accurate accounting of the debt owed when borrowers request an accounting;
(b) Make borrowers in default aware of loss mitigation options and servicers offered by the licensee;
(c) Provide trained personnel and telephone facilities sufficient to promptly answer and respond to borrower inquiries regarding their mortgage loans; and
(d) Pursue loss mitigation when possible.
Importantly, this new regulation provides a clear and affirmative duty for servicers to serve not only their investors, but also borrowers throughout our state.
Finally, thanks to Governor O’Malley and his Cabinet Secretaries for making sure that the plight of Maryland homeowners is not forgotten by the media. Thank you also to the public servants in the Office of Financial Regulation, a team 98 strong, who everyday work to make initiatives like these today possible and effective through their often invisible and un-sung devotion to the people of Maryland.