Receiving notice that your house is about to be foreclosed upon is one of the most traumatic things you can go through. However, when you sign your mortgage or deed of trust at the real estate closing and it is recorded in your County’s Land Records office, you give your lender the right to foreclose on the property if you default on the loan or fail to repay the loan according to the terms of the loan. A new foreclosure law went into effect in Maryland on April 4, 2008 and any foreclosure action filed after that date must comply with the new law. The foreclosure process and your rights in that process under the new law are outlined below.
What Will Happen if my Property is Going Into Foreclosure?
Before the foreclosure is filed
Before a foreclosure action is filed, you as the borrower and property owner should have received notice from the lender that there is a problem with your loan account and from the lender’s attorney that there is a default under the terms of the loan. Many mortgages require the lender to give notice of the default and of your right to remedy the default before filing foreclosure. Do not ignore or delay in responding to any written communication from your mortgage lender. The sooner you contact your lender, the greater the chance you can work out a solution to your situation.
In Maryland, before the lender can file a foreclosure case against your property, the lender must:
-Wait 90 days from the date that your loan is in default; and -Send you a Notice of Intent to Foreclose 45 days before the foreclosure case is filed.
-The Notice of Intent to Foreclose will provide you with important information about why your loan is in default, the amount you owe to bring your loan current, the last payment received, contact information for the lender or secured party, for the mortgage servicer that collects your mortgage payments and for the department that can help you work out your default (the loss mitigation department).
Filing the foreclosure case
To begin a foreclosure case, the lender must file the foreclosure with the Circuit Court in the county in which the property is located. The lender must file the following documents with the court:
-Statement of debt, under oath, which itemizes the entire amount the lender claims is due under the loan. This will usually include principal, interest, late charges, attorneys’ fees and all other charges that the borrower is responsible for under the mortgage;
-Certification that the property owner is not a member of the military service. Under a federal law, commonly known as the Soldiers’ and Sailors’ Civil Relief Act, members of the military service have specific rights when lawsuits are brought against them (including foreclosure proceedings) since they may not be in the U.S. due to a military assignment and unable to adequately defend their interests;
If you are a member of the military service and find a property owned by you is the subject of a foreclosure action, you should ask an attorney what additional rights you may have as a result of this federal statute.
-Statement, under oath, that indicates the date of default, the nature of the default and the date the Notice of Intent to Foreclose was sent;
-A copy of the Notice of Intent to Foreclose;
-Original or certified copy of the mortgage or deed of trust;
-Copy of the debt instrument and an affidavit of ownership;
-Original or certified copy of the assignment of the mortgage if applicable;
-The mortgage lender and originator’s license number if applicable; and
-A uniform Notice regarding the filing of the foreclosure action
Serving the Property Owner
The lender must personally serve you with all the papers filed when the case was docketed with the court. If the lender is unable to serve you after two good faith attempts on two separate days, the lender may file an affidavit with the court describing the attempts made to serve you and the lender may then serve you by sending you a copy of the court papers, by both certified and first class mail AND by posting the court papers on the property.
Before a Foreclosure Sale can be held
Before a foreclosure sale can be held, the lender must:
-Wait 45 days from the time the defendant was served.
-Publish a Notice of Sale for three successive weeks in a newspaper of general circulation in the county where the action is pending. The first advertisement should be published not less than 15 days prior to the date of sale and the last advertisement should be published not more than 7 days prior to the date of sale.
-Send a notice of the date of sale to the homeowner by certified and first class mail of the time, place, and terms of the pending foreclosure sale. This notice must be sent no later than 10 days prior to the scheduled sale date. Failure to receive the notice or to sign for it will not stop the foreclosure.
-Accept from the homeowner payment of the funds due to cure the default up to one business day before the sale. Payment of this amount which includes missed payments, late fees and costs will stop the foreclosure sale if it is made one business day before the sale.
-Note: 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
IS IT TOO LATE TO PREVENT THE SALE OF MY PROPERTY?
When you are facing foreclosure, it does not mean that all hope of saving your property is lost. If you have not spoken with your lender, contact your lender immediately and ask for the loss mitigation department of your lender to determine if your default can be cured under a plan.
Before the sale occurs, you have the right to go before the court to prove that you did not default on your loan and stop the sale. You may also go before the court to ask that the sale be stopped if you can prove that the lender committed fraud in obtaining the mortgage or they have violated certain laws when your mortgage was made. You may also have rights and defenses if the lender fails to follow the requirements of the foreclosure law. You should consult an attorney for advice and assistance if you believe you have a defense to the foreclosure.
If your lender is unwilling to work with you, filing a Chapter 7 or 13 petition in bankruptcy may be beneficial. A bankruptcy filing before the sale will stay or stop the sale. Filing bankruptcy after the hammer comes down at the auction will lose the house unless the sale was improperly conducted and you timely object to ratification. Generally, a Chapter 7 filing will provide you with a three-month opportunity to cure your default and, if you can afford your mortgage and a plan payment, a Chapter 13 filing will give you up to five years to bring your mortgage current and pay other debts once the plan is confirmed. Filing a bankruptcy petition is complex; credit counseling is required and most attorneys need three or four days to do so.
If someone approaches you to help stop your foreclosure, have any documents given to you reviewed carefully before you sign them or before you give any money to anyone. If you need help, contact the State’s HOPE hotline at 877-462-7555 to get help from its foreclosure prevention assistance network and nonprofit housing counselors throughout the state.
SALE OF THE PROPERTY
If a sale does take place, the property will be sold through a public auction open to anyone who desires to make a bid. Public auctions are usually held on the property or at the courthouse in the county where the property is located. The trustee must make a report regarding the sale to the court including an accounting of the sale. After the sale has taken place, but before the court has ratified the sale, you may file objections if the sale was improperly conducted. Only after the court ratifies the sale can the new owner petition the court to have you evicted from the property if you are still living there.