Maryland’s O’Malley acknowledges Foreclosure Crisis… Finally!

And then, and then… along came the Maryland House and Senate… It’s a new ball game in the Free State now…

Foreclosure Process Reform Bill – SB 216/HB 365

(amending Real Property Article § 7-105.1)

Signed into Law by Governor Martin O’Malley on April 3, 2008

Effective as to all Foreclosure Filings for Residential Real Property from April 4, 2008

The Foreclosure Process Reform Bill provides important protections for homeowners in the foreclosure process. It affords homeowners more time and notice before and after a foreclosure action is filed right up until the time of sale. It also gives homeowners rights in the process that they did not have before and more time to assert those rights should the plaintiff fail to comply with the law. Because of the emergency nature of this legislation, no foreclosure actions will be ripe for filing for at least 45 days from the law’s effective date since lenders will not have had the opportunity nor the requirement to send the requisite 45-day notice prior to the effective date of this law.

Before a lender may file for foreclosure, the lender must:

  1. Wait 90 days from homeowner’s default before filing the foreclosure action.

•· Default is defined by the mortgage instrument and, in most cases, it is the day after the payment was due.

•· For example, if a payment due by the 1st of the month, the homeowner is technically in default on the 2nd, as opposed to after any grace period allowed for late fees.

  1. Send a uniform Notice of Intent to Foreclose to the homeowner by certified and first class mail 45 days before filing a foreclosure action.

•· The Commissioner of Financial Regulation prescribes the uniform Notice of Intent to Foreclose that all lenders must use by regulation. The emergency regulation containing the Uniform Notice has been submitted for approval.

•· Until the regulation is approved, lenders may comply with the law by sending a 45-day Notice of Intent to Foreclose that contains information required by the statute, including:

• i. The name and phone number of the secured party, the servicer, and an agent who has authority to modify the terms of the loan;

• ii. The amount required to cure the default and reinstate the loan.

•· The lenders must also send a copy of the Notice to the Commissioner.

An order to docket or complaint to foreclose must now include:

  1. Affidavit stating the date of the default and the nature of the default and the date and fact that the Notice of Intent to Foreclose was sent;

  1. Original or certified copy of the mortgage or deed of trust;

  1. Statement of the debt remaining supported by affidavit;

  1. Copy of the debt instrument and an affidavit of ownership;

  1. Original or certified copy of the assignment of the mortgage if applicable;

  1. The mortgage lender and originator’s license number if applicable;

  1. Affidavit that defendant is not in the military;

  1. Copy of the uniform Notice of Intent to Foreclose; and

  1. Uniform Notice to defendant that complies with statute

After the foreclosure action has been filed, the lender must:

  1. Personally serve the owner of the property.

  1. Alternate service allowed in the case of failed attempts at personal service:
    • After at least two good faith attempts at personal service on separate days, the plaintiff may file an affidavit with the Court describing the attempts and effect service by mailing, both certified mail and 1st class mail AND posting on the property.

Before a foreclosure sale can occur, the lender must:

  1. Wait 45 days from the time the defendant was served.

  1. Publish a Notice of Sale for three successive weeks in a newspaper of general circulation in the county where the action is pending.

  1. Send the homeowner the notice previously required under § 7-105.2.

  1. Accept from the homeowner payment of the funds due to cure the default up to one business day before the sale.

•· The secured party or the agent must provide, upon request, the amount necessary to cure the default and reinstate the loan and instructions for delivering the payment

For more information or questions, please contact Vicki Schultz in the Office of the Secretary, Department of Labor, Licensing and Regulation at vschultz@dllr.state.md.us

Well, sleep tight Marylanders, the wolf at the door has been banished for 45 days. At least by the time the process can begin again it will be warm enough to be homeless comfortably. If anyone sees a man with only nine fingers showing, say hello to our Governer….the missing digit is stuck in the dyke. The water may have stopped flowing, but he is stuck on one issue and may miss the opportunity to come up with a meaningful plan.

With no other avenues of relief, investing in candles may be the way to go. At this point, all most of us can do is light a candle and say a prayer for those facing foreclosure.

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