Foreclosure & Alternatives Law
Foreclosure Laws in Maryland
The Maryland legislature has much to say on this subject. They have outlined carefully what type of foreclosure is available to you. With the housing market as it currently is, the government has decided to get more deeply involved and Maryland is no exception.
Types of Foreclosures
There are, as mentioned above, different types of foreclosure options. Those are:
- Assent to decree
- Non-judicial foreclosure
- Judicial foreclosure
In an assent to decree foreclosure, the owner of the property has signed a mortgage loan that has a provision in it that specifies that if the loan is not paid in a timely manner and the owner defaults on the loan, the property can be foreclosed automatically; however, this type of foreclosure requires that the lender file a complaint to foreclose. It is not necessary to hold a hearing prior to a foreclosure sale of the property.
In a judicial foreclosure, if the contract does not contain a power of sale or an assent to a decree, the lender has to file a complaint against the property owner/borrower and also get a decree of sale from a judge from the county in which the property is located prior to any proceedings. The court will make a decision as to whether a default has occurred. If you are a homeowner/borrower, you can easily see that having an attorney involved early can help in this dire situation.
If the court does decide that a default has occurred it will:
- Decide on the amount of the debt, including interest and costs
- Provide a timeframe for the payment to be made
- Give a ruling on whether the property can be sold if no payment is made in the timeframe specified
In a non-judicial foreclosure, the sale of the property happens when a sale clause is in the mortgage documents or the deed of trust. The power of sale clause is the section of the mortgage document that the owner/borrower has signed that pre-authorizes the property be sold to settle or pay off the balance of the loan if there is a default situation. In the mortgage document or deed of trust that contains this type of language, the lender may sell the property or appoint a trustee to accomplish the sale. While the permission is pre-authorized, lenders have to file an order to docket before any foreclosure can take place. However, no hearing is necessary for the sale to occur.
The notice of the sale of the property must be listed in a local newspaper in the county in which the property is located once a week for three consecutive weeks. The first advertisement must be within 15 days of the sale itself, and the third one must be a week before the sale occurs. A notice must be sent to the owner/borrower of the property between 10 and 30 days before the sale. Only the person authorized to conduct the sale can administer the proceeding, be it the trustee or the sheriff, and it can happen on the courthouse steps or at a different location as long as the address is in the advertisement. Any date changes have to be noted just as it was in the original notice. A report must be made to the court within 30 days of the sale of the property. Generally, lenders have three years to file a deficiency judgment.
As a borrower, you have certain rights in Maryland. For instance, you can ask for mediation once the foreclosure proceedings have begun. You have to pay a non-refundable fee of $50 to the Circuit Court if mediation is the route you want to go. A “Request for Foreclosure Mediation” form must be filed with the court in which the county the property is located.
If you are confused about what you need to do if you are being foreclosed on, you may need to talk to a professional, an attorney who knows the laws of the state of Maryland and can answer your questions.