Foreclosure mediation

by Dan Krell © 2010

The 2010 regular session of the Maryland Legislature passed measures to assist and clarify issues regarding foreclosure. In addition to legislation that adds procedures to protect renters who live in homes in foreclosure, and clarifying that an individual must exercise the “power of sale” stated in a deed of trust – the requirement to provide a home owner the opportunity for mediation prior to a foreclosure sale will take effect July 1st, 2010.

Maryland H.B. 472: “Residential Property Foreclosure Procedures – Foreclosure Mediation” was the outcome of Governor O’Malley’s workgroup to explore the option of implementing a foreclosure mediation program to assist home owners stay in their homes while attempting to reduce the number of Maryland foreclosures. The bill was passed and recently signed into law.

The new law establishes additional rules for foreclosure filings as well as requirements to exhaust efforts assisting the home owner to retain their home, including mediation. As of July 1st, the new law requires any lender filing a notice of intent to foreclose (NOI), to provide the home owner an opportunity for loss mitigation (including mediation), as well as including additional foreclosure information.

To comply with the law, the NOI must either be accompanied by a preliminary or final affidavit for loss mitigation. The lender’s NOI will now include a statement recommending housing counseling; information on governmental foreclosure assistance; and an explanation of the Maryland foreclosure process (including time lines). Additionally, the NOI will be accompanied by a loss mitigation application; instructions for completing the loss mitigation application; a telephone number to call to confirm receipt of the application; a description of the eligibility requirements for the lender’s loss mitigation programs that may be applicable; and a preprinted envelope indicating the address of the person responsible for conducting loss mitigation on the lender’s behalf. Fees that are collected for the NOI will assist in funding mediation, housing counseling, and other foreclosure resources.

If the home in foreclosure is owner occupied, then the home owner can file a petition for mediation before the foreclosure sale date is scheduled. The request for mediation must be made within fifteen days of service or mailing of the final loss mitigation affidavit. The mediation will be conducted by the Office of Administrative Hearings (OAH), which has sixty days to schedule the mediation; the OAH has authority to extend mediation by no more than thirty days if needed. The OAH must report the outcome of the mediation either when the sixty days expires or after the expiration of any extension period that is granted. If no agreement is reached during mediation, the lender may schedule a sale date (which can be as early as fifteen days after the mediation hearing).

If mediation is requested by the home owner, the lender must be engaged in the process. The lender’s representatives who are present in mediation must have the authority to settle the matter or be able to readily contact someone who can. The home owner, when entering into mediation, may be accompanied by a housing counselor and/or an attorney.

Information regarding the new Maryland foreclosure mediation law will be available to home owners through approved housing counselors as well as the MDHope Hotline (1-877-462-7555). Additional assistance and additional foreclosure resources are available from the Maryland Office of the Commissioner of Financial Regulation (

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of May 10, 2010. Using this article without permission is a violation of copyright laws. Copyright © 2010 Dan Krell

Smile, your home is on candid camera!

Have you seen people in your neighborhood drive up to a home, pull out a camera and take some pictures? You might wonder if they’re casing your neighbor’s home, or if they’re terrorists. Certainly, it may seem disconcerting to have strange people take photos of homes in your quiet neighborhood. Who are these people and why are they taking pictures?

Most likely, these nosey folks are just your neighborhood real estate agents preparing a broker price opinion (bpo). A broker price opinion is a report that a lender will ask for to determine the marketability of a home in which they are the mortgagee (the lender). The report is used to assist the lender to understand market conditions by having the real estate agent provide recent sale and listing comparables for the home. Additionally, the lender asks for photos to note the condition of the home and the neighborhood.

A bpo is not an appraisal and should not be confused with one. An appraisal is provided by a licensed appraiser to ascertain a home’s value. A bpo, on the other hand, is provided by a real estate agent or broker with the intention of assisting buyers or sellers or prospective buyers or sellers in deciding the listing, offering, or sale price of the real property. (There is a controversy within the industry over the use of bpo’s.)

The lender uses the bpo for a number of reasons which include selling mortgages, eliminating private mortgage insurance, and loss mitigation. Although we now have a bad taste for the bundling and selling of mortgages on Wall Street, nevertheless this is how a majority of mortgages are sold. The broker price opinion is often used by investors to place a current market value on the mortgage asset by interpreting the bpo.

If you have asked your lender to reduce or eliminate your private mortgage insurance, there is a good chance your lender used a bpo in their decision process. A lender will look at current market conditions and recent sales to decide if a home has the potential of falling below the 80% loan to value threshold.

In the current market environment, loss mitigation is a more common reason for a bpo. Every lender has a loss mitigation department to determine how much they may lose if the home goes to foreclosure. Believe it or not, your lender may order a bpo if your payment is one week late!

Additionally, the loss mitigation department is the office you would communicate with in order to ask for a short sale on your home. So if you are asking for a short sale, you may see these surreptitious agents driving by and snapping photos. Sometimes, the lender may ask for an interior bpo, and you will have to invite the agent in your home.

So, if you see these folks poking around your neighborhood taking pictures, it is likely to be your local real estate agent; however, to be sure you should ask for their card. In taking their photos and inspecting properties, they should be law abiding (which means they do not peek into windows nor should they trespass). However, the police should be called if you have doubt about their identity, or you feel unsafe.

This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of December 1, 2008. Copyright © 2008 Dan Krell.