We, the undersigned, are writing today to urge you to review what policies and reforms are needed to address a new industry of hedge funds coming to Maryland to buy and control mortgages. Unfortunately, if Maryland does not take immediate, proactive action, we are at risk of moving backwards and placing more Maryland homeowners and communities at risk of foreclosure.
Previously the Center for Popular Democracy described this new industry as follows:Nearly eight years after the start of the global financial crisis, hedge funds and private equity firms have found yet another way to make big profits: distressed housing assets. Often, the very same corporate actors that precipitated the housing crash in the first place are buying and selling off delinquent mortgages and vacant houses that are a product of the crash. Together, these Wall Street entities have raised over $20 billion to buy the notes for as many as 200,000 homes in the United States. The newly consolidated single-family rental market is a lucrative business. A 2014 study estimated that the four largest holders of these assets have seen as much as a 23 percent rate of return on the properties they purchased in the last three years.
Today, housing counselors, consumer advocates, and homeowners are fighting on the front-lines against these predatory hedge funds that do not want to be regulated. The hedge funds are flooding Maryland courts with foreclosures, adding bogus fees and charges to mortgage accounts, offering unaffordable loss mitigation options a – all while acting without a license. If a driver can go to jail for driving without a license, why can’t Maryland regulate these unlicensed mortgage actors?
Last year, these hedge funds argued to the Maryland Court of Appeals that they did not want to be regulated because it might mean they will have to pay taxes. We believe hedge funds doing business in Maryland and making money from that business should pay their fair share of taxes to Maryland and its local governments. These issues are not just issues of economic injustice, they are issues of basic fairness. Since the Consumer Financial Protection Bureau is currently handcuffed from committing to effective enforcement, the time is NOW for Maryland to step up its state-level enforcement and not allow the lessons of the recent past to repeat themselves. Maryland needs additional protections put into the law to help homeowners. Our state needs strong, independent enforcement of Maryland’s law governing mortgage lending and servicing in the State. Hedge funds buying mortgages are not entitled to special treatment.
The undersigned community members and organizations look to you, as leaders of the state, to enact legislation now to protect Maryland homeowners. Please join the movement to help ensure fair and honest consumer protection for Maryland families and homeowners.