Review of Recent Foreclosure Laws and Regulations

Categories :: Homeownership > Foreclosure

2011 Maryland Statutes

Senate Bill 205/House Bill 366 went into effect July 1, 2011. This law changes Real Property 7-105.1.  In a foreclosure, an order to docket or a complaint must have an affidavit as to accuracy of information.

Related to Senate Bill 205/House Bill 366, Senate Bill 450/House Bill 412 also changes Real Property 7–105.1. If the lender loses the note, the court will not accept a lost note affadavit, unless the affidavit says why the note is lost and what they did to try to get it back.

2010 Maryland Statutes

A new law that went into effect July 1, 2010 requires that an application to change the terms of the loan or help the borrower leave the property be sent to the borrower and record owner of a residential property at least 45 days before a foreclosure action is filed. There are new rules that are associated with the law.

The lender has to complete a report no later than 30 days before the foreclosure sale that says whether the borrower qualifies for a change in the terms of the loan or other program. The order to docket the foreclosure needs to include either 1) an affidavit saying the lender has completed a report on whether the borrower qualifies for any programs to change the loan or simplify leaving the property or; 2) a preliminary report saying why the report has not been finished.

If the home is owner occupied, the lender also needs to send a form to request foreclosure mediation to be filled out by the borrower. Foreclosure mediation is a conference held by the Office of Administrative Hearings to discuss programs to change the loan or simplify the borrower leaving the property. The borrower must file the request foreclosure mediation within 15 days of the mailing or service of the final loss mitigation affidavit from the lender along with a $50 filing fee. The Maryland Judiciary has a form that borrowers can file to request a waiver of the foreclosure mediation filing fee.

2008 Maryland Statutes

In April 2008 Maryland enacted emergency legislation intended to protect homeowners.
The new laws:

  1. Require that mortgage loans are only issued after the lender reviews whether the person applying for the loan can repay it. Read the Law: MD Commercial Law § 2-127
  2. Require that mortgages include the mortgage originator name and license number. Read the Law: MD Real Prop. § 3-104.1
  3. Require that a lender send a Notice to Foreclose to the homeowner at least 45 days before filing to foreclose, or 90 days after a default in the conditions of the mortgage, whichever is later Read the Law: MD Real Prop. § 7-105.1
  4. Make the seller wait at least 45 days after service of the Notice to Foreclose (for a total of at least 135 days from the default) to sell the property Read the Law: MD Real Prop. § 7-105.1(e)
  5. Allow the homeowner to stop foreclosure by paying the balance owed until one business day before the sale of the property. Read the Law: MD Real Property § 7-105.1
  6. Make it a crime to knowingly make or use any deliberate misstatement, misrepresentation, or omission during the mortgage lending process knowing that it will be relied on by someone else involved. This statute is known as the Maryland Mortgage Fraud Protection Act.  Read the Law: MD Crim. Proc. Title 13, Subtitle 4, MD Real Prop. Title 7, Subtitle 4 
  7. Authorize the Attorney General to investigate violations of the Maryland Mortgage Fraud Protection Act. Read the Law: MD Real Prop. § 7-405
  8. Require brokers to disclose finder's fee arrangements Read the Law: MD Comm. Law § 12-805
  9. Requires foreclosure consultants to be licensed. Read the Law: MD Real Prop. § 7-308
  10. Prohibits prepayment penalties for many mortgage loans Read the Law: MD Comm. Law § 12-105

2010 Maryland Rules

The Court of Appeals passed updated Rules reflecting new legislation passed in 2010.

Rule 14-202 includes definitions of "Final Loss Mitigation Affidavit," "Foreclosure Mediation," "Loss Mitigation Analysis," "Owner-Occupied Residential Property," and "Preliminary Loss Mitigation Affidavit."

Rule 14-205 adds the requirements of the new law to the conditions required for the foreclosure to go forward and 14- 206 has a note that in the case of an immediate foreclosure, the new law does not apply.  

Rule 14-207 requires a statement about whether the property is owner-occupied and if the final loss mitigation affidavit is attached in the order to docket or a statement that the property is not owner-occupied if it isn't. The Rule also requires lenders to produce any other documentation required by some federally related loans.

Rule 14-208 requires that the law be satisfied before a sale of the property.

Rule 14-209.1 describes when the lender may advertise the sale of foreclosed owner-occupied residential property and outlines the procedure for requesting foreclosure mediation.

Rule 14-211 includes the time for filing a stay of the sale of foreclosed property and includes a note that states that improperly denied loss mitigation can be a defense to a motion to foreclose.

Rule 14-212 provides the option of alternate dispute resolution for borrowers who cannot request foreclosure mediation.

2008-2009 Maryland Rules

In 2008, new rules were drafted governing the process for foreclosures. These rules are in Title 14 of the Maryland Rules. The new rules went into effect May 1, 2009:

  • Maryland Rule of Procedure 14-101
    • Foreclosure sale must happen in the county where property is located. If the property is on more than one county, the sale will be in the county where the case was filed.
  • Maryland Rule of Procedure 14-102
    • If the foreclosure purchaser is entitled to possession and the person in actual possession refuses to deliver possession, the purchaser may file a motion for judgment awarding possession of the property. If the purchaser does not yet have title to the property, s/he has to give a legal reason for awarding possession.
  • Maryland Rule of Procedure 14-201
    • The remedies described in this section may not be the only remedies under law.
  • Maryland Rules of Procedure 14-202
    • "Residential property" means real property with four or fewer single family dwelling units
  • Maryland Rules of Procedure 14-203
    •  A case for foreclosure can be filed in any county where any part of the property is located.
  • Maryland Rules of Procedure 14-204
    • An action to foreclose on the lien may be brought by either a party given "power of sale" by the lien documents or by a secured party under an "assent to decree."
      • A "power of sale" provision in a mortgage gives a party (usually the lender) the ability to foreclose on the property and sell it.  Read the Law: MD Real Prop. § 7-105
      • Under an "assent to decree" provision, a borrower allows secured parties to foreclose on a lien in case of default upon decree of the court. The deed of trust for the property may be foreclosed by the trustee (title company) or beneficiary (lender). Read the Law: MD Real Prop. § 7-105
      • An assent to decree or power of sale cannot be used unless the holders of at least 25% of the debt agree.
  • Maryland Rules of Procedure 14-205
    • In order to foreclose, the debt must have been recorded and the debt must be in default.
    • In accordance with Real Property § 7-105.1, an action to foreclose cannot be field until 90 days after a default and 45 days after a Notice of Intent to Foreclose.Read the Law: MD Real Prop. § 7-105.1
  • Maryland Rules of Procedure 14-206
    • A secured party may petition to have notice requirements waived if:
      1. the debt secured by the lien instrument was obtained by fraud or deception;
      2. no payments have ever been made on the debt;
      3. the property subject to the lien has been destroyed; or
      4. the default occurred after all stays have been lifted in a bankruptcy proceeding.
  • Maryland Rules of Procedure 14-207
    • A case under a power of sale is begun by filing an order to docket. No process will be issued.
    • A case under an assent to a decree is begun by filing a complaint to foreclose. No process will issue.
    • If the debt has no power of sale or assent to a decree, then the secured party may file a complaint to foreclose.
  • Maryland Rules of Procedure 14-208
    •  For a lien without assent to a decree or power of sale, a foreclosure of residential property requires service according to rule 14-209.
    • After a hearing a judge may order a sale before the end of proceedings.
  • Maryland Rules of Procedure 14-209
    • In a foreclosure of residential property without assent to a decree or power of sale, all papers have to be served to borrower and record owner.
    • Papers may be served in person or to any resident of age and competency at the property.
    • After two good faith efforts to serve process, papers may be served by mailing papers via certified, first-class mail and posting papers at property.
  • Maryland Rules of Procedure 14-210
    • Before selling the property, the seller will publish the notice of the sale at least once a week for three weeks. the first publication must be 15 days or more before the sale and the last publication has to be within one week of the sale.
    • Notice must also be sent within 30 days of sale via certified mail and first-class mail to:
      • the borrower
      • the record owner
      • the holder of any subordinate interest in the property
      •  "occupant" at the address of the property
      • More than 15 days before the sale, the seller must send notice to the county where the property is located.
    • The seller also needs to give notice to any person who has a subordinate interest in the property that he learns of.
    • The seller must also file an affidavit asserting the seller's compliance with the notice requirements.
    • Borrower, record owner, or party to lien have 15 days to file a motion to stay and dismiss after service.
    • The motion must:
      • be under oath or supported by an affidavit
      • state the legal argument why the court should dismiss the case
      • include any supporting documentation
      • state whether there are any collateral actions involving the property
      • state the date the party was served
    • The court may dismiss the motion for not being filed on time, for not complying with the rules, or for failing to state a valid defense
  • Maryland Rules of Procedure 14-212
    • In any case where a motion to stay and dismiss is filed and not dismissed, the court may order alternate dispute resolution
  • Maryland Rules of Procedure 14-213
    •  A bond put be filed with the court by the seller
  • Maryland Rules of Procedure 14-214
    • The rules for foreclosure sale:
      • Power of Sale
        • Secured parties or those named in ther lien document can conduct sale
        • If foreclosing a deed of trust, a trustee (or substitute) conducts the sale
      • Payment terms follow the terms of the lease, or if not specified, whatever is reasonable
      • Assent to a Decree
        • Sale conducted by trustee or substitute
        • Payment terms provided in court order
      • No Power of Sale or Assent to a Decree
        • Sale by trustee appointed by court
        • Payment terms are whatever is reasonable
  • Maryland Rules of Procedure 14-215
    • Procedure for ratification of sale follows 14-305 and 14-306.Upon ratification, seller conveys property to purchaser.
  • Maryland Rules of Procedure 14-216
    • Other who have interest in the property may, in the period between sale and ratification, make a claim on the proceeds of the sale.
    • At any time within 3 years of the sale a secured party may make a motion for deficiency judgment.
  • Maryland Rules of Procedure 2-122
    • Amends service of process requirements

2008 Maryland Regulatory Amendments

COMAR: Title 09, Department of Labor, Licensing and Regulation. Subtitle 03 Commissioner of Financial Regulation

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