Foreclosure is a secured parties (aka mortagee) ability to force the sale of of real estate to satisfy a loan if the mortgagor cannot keep up with mortgage payments. There are three ways to foreclose in Maryland: Nonjudicial, also called “power of sale”, judicial, and strict foreclosure. The most common of which is non-judicial. A NJ foreclosure can only be instituted if the security instrument contains a “power of sale.” To initiate a judicial foreclosure the instrument must contain an “assent to a decree”. If the security instrument contains both a power of sale or an assent to decree than either method can be chosen. If the security instrument contains neither, then a Civil Complaint to Foreclose must be filed and the case will proceed in the same manner as any other civil action, aka strict foreclosure.
Most foreclosures (nonjudicial) are initiated by filing an Order to Docket. Under MD. Code Real Property § 7-105.1 an order to docket foreclosure cannot be filed until 90 days after the date of default or 45 days after sending the debtor a notice of intent to foreclose. If the property is residential and owner-occupied, the notice must also include a loss mitigation application that allows the mortgagor to request a loan modification, or other alternatives to foreclosure by providing financial information. If an application is made, the mortgagee must certify that they have evaluated the loan modification. In addition, if they deny the application they must provide the reason.
For non-owner occupied residential property a loss mitigation application is not mandatory. However, the notice must contain a written notice of the determination that the property is not owner-occupied and a phone number that can be called to contest that determination.
An order to docket or complaint to foreclose on residential property must state or contain:
- An affidavit that states: (1) the date the default occurred, (2) that a notice of intent to foreclose was sent, the date it was sent, and that it’s contents are accurate.
- An original or certified copy of the mortgage or deed of trust.
- A statement of debt remaining and payable with a certified affidavit.
- A copy of the debt instrument with an affidavit supporting ownership of the instrument.
- Original or certified copy of assigment of mortage for foreclosure purposes or deed of appointment of substitute trustee.
- Compliance with Servicemembers Civil Relief Act.
- Filing fees
- State whether or not the property is residential and owner occupied.
- The final loss mitigation affidavit.
- The decision to participate or not in prefile litigation.>/li>
, and if so whether a final loss mitigation affidavit was attached.
The initial foreclosure filings must be personally served on the borrower and the record owner and it must include a copy of all papers filed to commence the action. If personal service cannot be fails then service can be done by both certified mail and posting to the premises.
A mortagor can submit a request for foreclosure mediation within 25 days after mailing a foreclosure loss mitigation affidavit in accordance with MD. Code Real Property 14-209.1(c) § 7-105.1. The mortgagor must participate in house counseling services. The mortagee can attempt to strike a mediation request, but there is a presumption that mortgagors are entitled to foreclosure mediation services.
If mediation is not successful the next step is sell the the home. A foreclosure sale cannot occur until 15 days after the foreclosure mediation has occured or after the Office of Administrative hearings files its report with the court that no mediation was held. There are additional notices that must be sent. The party making the sale must post a bond to the State of Maryland to follow the court order. The seller must post a notice in the news paper for the county to advertise the property and place of sale. An affidavit must be filed that the seller has followed the rules.
The mortgagor or any interested party can file a stay of the sale or dismissal of the foreclosure. The court can decide to deny the motion with or without a hearing. The motion must comply with Md. Rule 14-211.
Assuming the home is sold, it’s possible that there is a surplus or a deficiency. Generally the mortgagor is entitled to the surplus, however the mortagee can petition for the sale surplus if the mortgagor has wrongfully detained or damaged the property. If the sales price is not enough o pay for the loan, then the mortgagor can file for a deficiency judgment within three years.
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