Maryland Faces Backlog of Foreclosures
by: Paul McSheffrey
The Washington Post recently featured an article “Thousands of Marylanders are losing homes in second wave of foreclosures“, which discusses the large backlog of foreclosures in the state. As mentioned in the article, the foreclosure timeline in Maryland is now among the longest in the nation. Some of the reasons for this backlog include the various rules involved in foreclosing a residential property in Maryland. This article will summarize some of the timing and procedural requirements for judicial and non-judicial foreclosure in Maryland.
Under judicial foreclosure, the lender must file a complaint with the Circuit Court in the county where the property is located in order to commence foreclosure proceedings. If the court determines that a sale would be appropriate, a trustee is appointed to conduct the sale. Before a public sale may take place, a notice of sale must be given indicating the time, place, and terms of the sale. The notice must be placed in a newspaper of general circulation at least once per week for three weeks. The first publication must be no less than fifteen days before the sale and the last publication must be no more than one week before the sale.
No later than thirty days after a sale is made, the trustee must file a report with the court explaining the fairness of the sale. After the report is filed, the clerk of the court will file a notice in a local newspaper explaining that the foreclosure sale will be ratified by the court thirty days after the date of the notice unless exceptions to the report are made. If there are no exceptions to the report, the final order of ratification of the foreclosure sale is made by the court.
Non-judicial foreclosures involve a different procedure. In a power of sale or assent to decree, the borrower agrees to allow sale of the property upon a specified default. The secured party must send the borrower a notice of intent to foreclose at least forty-five days before filing an action to foreclose on residential property. An action to foreclose cannot be filed until the later of ninety days from the date of default, or forty-five days from the date the notice of intent to foreclose is sent. A loss mitigation analysis is also required, which the lender must complete before a sale can occur. This procedure determines if the borrower is eligible for a possible loan modification. If this is included with the notice of intent to foreclose, and the borrower completes the enclosed form, this can lengthen the foreclosure timeline.
Another aspect of the foreclosure process that can lengthen the timeline is the required “Request for Foreclosure Mediation” form. The borrower may at its option complete this form within fifteen days of receipt. The property may be sold forty-five days after the order of docket or complaint to foreclose is served on the borrower, assuming mediation is not requested and no motions to stay the sale were filed.
As discussed in The Washington Post article, the current backlog of foreclosures may take as much as a year and a half to be completed. Because foreclosures must be ratified by the court, the time it takes for a sale to be completed can be much longer than in some other states. The various steps required of a secured party and the options available to protect borrowers have contributed to an extended foreclosure timeline in the state of Maryland.
About the Author:
Paul McSheffrey, Esq. is Associate Counsel and Compliance Specialist at Bankers Advisory, Inc. He is a graduate of Northeastern University and earned his Juris Doctor at the New England School of Law. Paul is admitted to the Bar in Massachusetts and New York. He can be reached at paul@bankersadvisory.com
Paul McSheffrey, JD, is a senior regulatory compliance consultant with CLA. He is a graduate of Northeastern University and earned his juris doctor at the New England School of Law. He is admitted to the Bar in both Massachusetts and New York.
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