If becoming a barber seems like too much work, there?s an easier gig to get licensed for under Maryland law: high-dollar mortgage lending.
“I looked it up,” said Thomas Perez, secretary of the state Department of Labor, Licensing, and Regulation. “[It takes] 1,500 hours of apprenticeship to become a barber, a far less stringent set of requirements to become a [mortgage] broker.”
The ease in obtaining a license has opened the door to predatory lending and outright scams and has contributed to the state?s ongoing foreclosure crisis, he said. Changing that policy is among the solutions to the crisis that Perez, community groups and bankers discussed at a forum held Monday.
Between the first quarter of 2007 and the fourth quarter of 2009, an estimated 25,057 subprime mortgages will go into foreclosure, according to a U.S. Joint Economic Committee report. Those foreclosures will cause an estimated $2.73 billion loss of property value statewide, according to the report, with a property tax loss of $19.1 million.
“We need to address this as if it was a wildfire or a hurricane,” said Lloyd London of the National Community Reinvestment Coalition, “because there?s a lot of people being devastated and put out of business.”
Perez said short-term solutions for those already in foreclosure and long-term policy fixes to prevent future problems are needed. In addition to strengthening licensing requirements, Perez sought pressure on lenders to refinance those who default on mortgages, a longer foreclosure process allowing more chances for assistance and aggressive prosecution of fraud cases.
One of the state?s initial aid attempts, the Lifeline refinance mortgage program, has had trouble attracting those in need, said Bill Ariano, deputy director of the state Department of Housing and Community Development?s Community Development Association. Ariano said the FICO credit score needed to get into the program may be too high and that state authorities were evaluating the program.
Even if new solutions are implemented, experts said the subprime mortgage crisis might not abate soon.
“It looks to me that you?ll start to see this level off in late 2009,” said Ira Goldstein of The Reinvestment Fund. “A lot of these mortgages take a while to go bad. If you could hop in and be aggressive and get people out of those loans, you could maybe shorten that period.”
On the Net
For the full report, log on to www.trfund.com/mdforeclosure.pdf.
