If you’re facing a foreclosure in Maryland, it’s important to understand how the process works so you aren’t caught off guard. Read on to learn about each step in a Maryland foreclosure—from missing your first payment up until the point you have to leave the home—and get valuable information about your rights during the process.
Lenders have to follow specific laws and procedures to ensure homeowners are informed of the reason for a pending foreclosure and what the homeowners can do to try to avoid it. If a foreclosure becomes inevitable, federal regulations and state laws—in theory—establish a structured, predictable process and timeline. Federal and state laws are supposed to prevent lenders from taking actions that might surprise homeowners, or that might be considered unreasonably demanding or extreme.
But lenders sometimes make mistakes and violate the law when processing foreclosures. So, it is strongly recommended that homeowners facing a foreclosure understand the specifics of both federal and state laws and procedures. If the lender makes a mistake, you might be able to stop the foreclosure. While the delay might only be temporary, it could buy you enough time to work out an alternative, like a loan modification.
Federal laws provide protection to homeowners before and during the foreclosure process, and the right to seek damages after a foreclosure, if the lender violates certain laws. For example, in most cases, a foreclosure can’t start until the borrower is more than 120 days late on payments. (To learn more about federal foreclosure laws, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
Foreclosures in any given state are generally classified as being either judicial, which require a great deal of court involvement and oversight, or nonjudicial, which means that foreclosures are generally carried out with little, if any, court involvement or supervision. (For more information about the difference between judicial and nonjudicial foreclosures, see How Judicial Foreclosure Works and How Nonjudicial Foreclosures Work.)
While Maryland is frequently said to have a nonjudicial process, it is more accurately described as “quasi-judicial” because the court has some control and certain filings are required to ensure that the foreclosure is justified and proper. However, the process does not require the same level of court involvement as a typical judicial foreclosure.
Here’s what Maryland homeowners can expect if they stop making their mortgage payments.
A homeowner is considered in default for nonpayment one day after the mortgage due date. This date is important because other dates in the process are measured from the default date. Once a homeowner is in default, the lender may begin calling, mailing, or sending electronic notices of delinquency and making other legal efforts to remind the homeowner that a payment has been missed.
The next important date occurs 45 days after default, when the lender normally sends the required notice of intent to foreclose and a loss mitigation application. (“Loss mitigation” is what lenders call the process of trying to work out an alternative to foreclosure.) The notice of intent to foreclose must inform the homeowner of the specific basis of the default, such as nonpayment. The notice will also provide the name and contact information for the current owner of the loan and servicer. This information can be very helpful, especially if a company different than the original lender currently owns or services the loan. (Learn why you might need to know the identity of the loan owner or servicer.)
The notice may also provide an offer to mediate before the lender files the order to docket (see below) with the court. Participating in mediation provides a good opportunity to avoid foreclosure. Ignoring the notice of intent to foreclose, though, might limit the homeowner’s chances to avoid foreclosure.
Under Maryland law, at least 45 days after the lender sends the notice of intent to foreclose and at least 90 days after the actual default, the lender then may file what’s called an “order to docket” with the court. Though, under federal law, the servicer generally has to wait until the borrower is over 120 days delinquent before filing the order with the court. (To learn more, see How Soon Can Foreclosure Begin?)
Along with the order to docket, the lender must file supporting documentation, including a sworn statement of debt which explains the total amount the homeowner owes, including principal, interest, and late fees, as well as costs associated with the foreclosure process such as attorneys’ fees, filing fees, and other court costs.
After the order to docket has been formally filed with the court, the lender must file a loss mitigation affidavit. The loss mitigation affidavit informs the court about which loss mitigation options have been considered, or contains a statement explaining why loss mitigation was not possible for the homeowner.
The lender then must provide a copy of the loss mitigation affidavit to the homeowner, along with a form allowing the homeowner to request mediation (if the homeowner hasn’t already gone through mediation). The homeowner has 25 days from when the lender mails or serves the final loss mitigation affidavit to submit a request for mediation and pay the mediation fee. If the homeowner requests mediation, the mediation will generally be scheduled within 30-60 days of the request.
Keep in mind that, while this opportunity to mediate is a valuable chance to avoid foreclosure, the homeowner should not pass up an earlier offer to mediate, if available. Once the order to docket has been filed, the lender will have incurred significant expenses—especially related to hiring an attorney—which are added to the homeowner’s tab.
If mediation isn’t successful, the lender can schedule the foreclosure sale no sooner than 15 days after mediation. During this time, the lender has to publish notice of the foreclosure sale in a local newspaper. The lender must also send the notice about the sale to the homeowner no less than 10 days prior to the sale. Similarly, if the homeowner doesn’t request mediation, the lender must then publish the notice of foreclosure sale in a newspaper as discussed above.
The sale, an auction, will be held at the courthouse in the county where the property is located. Any interested buyers can bid on the property.
Once the sale is complete, the court must ratify it. “Ratification” is the process of confirming the purchase, the total amount owing, and applying the proceeds to the debt. If the proceeds exceed the total amount owed, the homeowner may be entitled to the excess, upon request. But if the proceeds fail to completely satisfy the amount owed, the lender may seek a deficiency judgment against the homeowner. (To learn more about deficiency judgments after a Maryland foreclosure, see Deficiency Judgments After Foreclosure in Maryland.)
During the period of ratification, the homeowner may continue living in the home. After the court ratifies the sale, though, the new owner can get an order of possession from the court and evict the foreclosed homeowners from the home.
Foreclosure can be a traumatic and frustrating experience for homeowners unfamiliar with the process. If you’re facing a foreclosure in Maryland, having a general understanding of the laws and process can provide you some level of comfort. If you want to read Maryland’s foreclosure laws for yourself, go to Title 14, Chapter 200 of the Maryland Rules, which provides many of the procedural requirements for foreclosures. Real estate transactions are governed by the Real Property Article of the Code of Maryland. Title 7 of the Real Estate Article provides additional guidelines related to foreclosures.
If you need help understanding the law or have specific questions about your particular circumstances, consider contacting a local foreclosure attorney. If you can’t afford an attorney, consider talking to a HUD-approved housing counselor. To find a counselor, call the HOPE Hotline at 888-995-HOPE.