No one purchases a home with the expectation of going through a foreclosure. Unfortunately, there are plenty of reasons why someone may fall behind on mortgage payments or fail to catch up on their defaults.
If you default on your mortgage, you are not alone. At the beginning of 2020, Maryland’s 0.21% foreclosure rate was the third-highest in the country.
Thankfully, you have legal options and processes as a Maryland resident to minimize your loss. If you must go through foreclosure proceedings, knowing what the process entails will help you make better decisions while navigating the system.
Working with our Maryland foreclosure lawyers can give you the guidance you need during this time and provide you with a better understanding of your rights and legal options as a homeowner.
Federal Foreclosure Laws
The 2008 foreclosure crisis placed exceptional financial stress on homeowners throughout the country, including Maryland. By 2014, the federal government put several new laws in place to protect homeowners from servicing errors that could lead to egregious financial hardships.
Federal foreclosure laws provide consumer protections by:
- Protecting homeowners from wrongful actions by banks or lenders
- Ensuring that servicers assist homeowners if they have difficulty making payments for their property
Federal laws extend protections to consumers before, during, and after a foreclosure.
Maryland Foreclosure Laws
Some states handle foreclosures with heavy involvements of the courts, while others require little to no court supervision. Maryland is a unique state because it is technically nonjudicial, but some aspects of the proceedings will require court involvement to ensure that the foreclosure process is legal and justified.
What to Expect During a Maryland Foreclosure
When you get a home loan from a Maryland lender, you will likely sign a promissory note that details your promise to repay the loan under specific repayment terms. You will also sign a deed of trust.
The document is similar to a mortgage, and it gives the lender interest in the property. If you do not make the necessary payments on time, the deed of trust’s power of sale clause will afford the lender the right to sell the house without court supervision to recoup the loan amount.
If you do not fulfill your loan terms, including the payment, you can go into foreclosure. Here is an overview of what happens during this process.
Defaulting on Payments
When you miss one payment and exceed the grace period, the lending bank may charge a late fee. Multiple missed payments will result in letters and calls to the residence in an attempt to collect them. At this point, your best course of action is to contact the lender early to resolve the issue.
Notice of Intent to Foreclose
Mortgage grace periods can last anywhere from 10 to 15 days, but if the lender doesn’t receive payment by the 90th day, they will send the consumer a notice of intent to foreclose at least 45 days after the date of the letter. The notice must inform the homeowner of the foreclosure basis, like nonpayment, and the loan owner’s contact information.
If the notice of intent to foreclose is for an owner-occupied residence, it must also include an application for loss mitigation and mediation information. Some notices may have a direct mediation offer before the lender formally files the foreclosure.
Mediation is a judicial procedure where the homeowner negotiates with the lending bank to work out a solution that benefits both parties. Through mediation, the homeowner can stay in on the property as they continue to fulfill the terms of their agreement.
Maryland law requires lenders to participate in mediation once they file for foreclosure, but they can schedule mediation before filing. Because this process will occur before a judge, it’s a good idea to seek legal counsel with Maryland foreclosure lawyers.
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Order to Docket
At least 45 days after sending the notice of intent to foreclose, the bank can file an order to docket with Maryland courts. When they file the order, the lender must also present a sworn statement of debt that includes:
- The total amount the consumer owes
- Late fees
- Attorney fees
- Court costs
- Filing fees
Loss Mitigation Affidavit
After formally filing for foreclosure proceedings, the lender will file a loss mitigation affidavit, a document that tells the courts the mitigation options the lenders extended to the borrower. If the lender did not extend loss mitigation options to the homeowner, the affidavit must explain why it was not possible.
The homeowner will receive a copy of the loss mitigation affidavit along with a mediation application. Mediation can occur 30 to 60 days from the date of the request. If the homeowner and bank cannot agree, the property will go up for sale.
Selling of the Residence
Before a foreclosure sale in Maryland, lenders must:
- Publish a notice of sale in a local newspaper for three straight weeks
- Send the consumer a certified notice of the sale date by first-class mail 10 days before the sale date
- Allow the consumer to pay arrears in full to stop the sale
Homeowners have until the business day before the sale date to pay all overdue balances. If the sale continues, it will occur at the property’s corresponding county courthouse by way of auction.
After the Foreclosure Sale
The court will ratify the sale after the auction to total the sale and apply it to the homeowner’s debt. Depending on the amount, the consumer can request the excess from the proceeds. However, they can be responsible for the difference if the auction does not satisfy the loan amount.
Should You Hire our Maryland Foreclosure Lawyers?
Going through a foreclosure on your home can be a frustrating, stressful ordeal. Maryland foreclosure lawyers from Phillips Law Office understand how traumatic the foreclosure experience can be, so we are here to help.
Our team has over 12 years of experience helping Greenbelt, MD, residents find solutions for their major debt issues, including foreclosure prevention. We know that no two legal cases are exactly alike, so we evaluate every case objectively to find the best possible outcome for our client’s financial troubles.
The Maryland foreclosure lawyers at Phillips Law Office stay informed about local and federal foreclosure laws to help our clients make informed decisions. Schedule a free, no-obligation consultation with our team today.