04 Jul Foreclosure in Maryland
Maryland is not the most consumer-friendly state when it comes to foreclosures. The timeframes are short, the notice requirements are minimal, and there is little leeway for error.
If you are in default under the terms of your mortgage or deed of trust (there are only technical difference between the two), your lender may file a foreclosure case with the Circuit Court in the county in which your property is located. There is no requirement that you be notified that the case has been filed, and the lender is not required to serve you with notice at this point. Because most mortgages require that you receive notice of default, however, you will generally receive a letter from your lender’s attorney that a foreclosure action has been filed and giving you a short time—normally thirty days—to bring the mortgage current.
Under a federal law known as the Servicemembers Civil Relief Act, members of the military have additional rights regarding lawsuits brought against them, including foreclosures. If you or a co-owner of a property in foreclosure is a member of the military, you should ask an attorney what additional rights you may have as a result of this statute.
Once the foreclosure case has been filed and any required advance notices have been given, a sale will be scheduled. State law sets specific notice requirements. First, notice of the sale, which includes its date, time and location and a description of the property, must be published in the legal notices section of a local newspaper for three consecutive weeks. The timeframes are short: the first advertisement must appear not less than 15 days before the date of sale, and the last advertisement must appear not more than 7 days before the date of sale.
Second, the lender or its lawyer (typically, the lawyer) must send you notice by certified and first class mail of the time, place and terms of the sale. This notice must be sent not later than 10 days before the scheduled sale date. Maryland law does not require that you receive the notice, only that it be properly sent.
What Can You Do To Stop the Sale of Your Property?
Once you receive notice of a foreclosure, you have only a short time to try to stop the sale. There are several things you can do:
1. Pay the full amount of the arrearages (the amount you’re behind), which includes principal, interest, costs and legal fees, to the lender before the sale. This is one of the two ways to be sure the foreclosure is stopped. (See Number 4 below for the other one.)
2. File a lawsuit in the Circuit Court asking the Court to stop the foreclosure. This is useful if you can prove that the lender made a mistake, the foreclosure action shouldn’t have been brought, or there is an error that should stop the foreclosure. Such an action is normally fairly expensive to pursue, particularly on an emergency basis, and there are no guarantees of success.
3. Work out a payment plan with the lender. Sometimes this works, sometimes it doesn’t. Often, lenders want a large up-front payment, with the balance to be paid over 3–6 months. Many of our clients report that they send in all of the financial information the lender asks for immediately, and then wait…and wait…and wait…until right before the foreclosure, when they’re told they don’t qualify. If it is less than two weeks before the scheduled foreclosure date and you still haven’t heard anything, we recommend that you think about Option Number 4.
4. Speak with an attorney about filing for Chapter 13. > A Chapter 13 stops the foreclosure, and typically gives you five years to pay back the arrearages.
If you do not take one of these actions or the foreclosure is not withdrawn, the sale will take place on the scheduled date. The auction is public, and open to anyone who wants to bid. The auction is usually conducted outside the Courthouse (not at your property). In many cases, the lender “bids in” the property, meaning that there are no buyers who are willing to offer more than the mortgage principal, and the lender becomes the new owner of the property.
Most people think that they have to immediately leave their home once the foreclosure has occurred. This is not true. A foreclosure purchaser cannot force you out until the sale has been ratified, or approved, by the Court, which usually takes about a month after the foreclosure. Next, the foreclosure purchaser must file a landlord-tenant action against you, which also usually takes about a month. Only then can you be evicted.
Once the sale has taken place, it usually takes about a month for it to be ratified, or approved, by the Court. After ratification, the sale is audited, and a determination is made as to who receives payment. If the sale price was less than the liens on the property and the expenses of sale, you may be liable for a deficiency judgment, where you are held personally responsible for the shortfall. Likewise, if the sale price was higher than the liens and expenses, you may be entitled to receive the surplus.
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