When you bought your Maryland home, the lender most likely required you to sign a deed of trust. This document gives the lender the right to sell the property through a process called foreclosure if you fail to make the loan payments. The lender then uses the proceeds from the foreclosure sale to pay off your debt.
The most common kind of foreclosure in Maryland is classified as nonjudicial, but the process is more accurately described as quasi-judicial; a court has some control, and certain court filings are required. To get details about Maryland quasi-judicial foreclosures, read on.
A notice of intent to foreclose must be mailed to the borrower at least 45 days before the lender files the foreclosure action. The notice of intent must include a loss mitigation application (that is, an application for the borrower to request an alternative to foreclosure) and mediation information (if applicable). (Md. Code Ann., Real Prop. § 7-105.1). (Learn about mediation in Nolo’s article Maryland’s Foreclosure Mediation Program.)
The lender officially starts the foreclosure by filing an Order to Docket with the court and serving a copy to the borrower, along with other foreclosure papers—like a form to request foreclosure mediation, if the borrower has not already attended mediation. (Maryland Rules 14-209, Md. Code Ann., Real Prop. § 7-105.1).
Also, the lender has to:
"Reinstating" is when you catch up on the defaulted mortgage's missed payments, plus fees and costs, to stop a foreclosure.
Maryland law permits the borrower to reinstate the loan at any time up to one business day before the foreclosure sale occurs. (Md. Code Ann., Real Prop. § 7-105.1).
In some states, the borrower can redeem the home within a specific amount of time after the foreclosure. While there is no statutory post-foreclosure right to redeem in Maryland, the borrower has up until the court ratifies the foreclosure sale to redeem the home.
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a deficiency. Some states allow the foreclosing lender to seek a personal judgment, which is called a deficiency judgment, against the borrower for this amount. Other states prohibit deficiency judgments with what are called anti-deficiency laws.
In Maryland, after the sale is complete, the court has to ratify it. (“Ratification” is the process of confirming the purchase, the total amount owing, and applying the proceeds to the debt.) After the court ratifies the sale, a court-appointed auditor determines how to distribute the sale proceeds and files a report. If the proceeds are insufficient to pay off the full amount of the mortgage debt, the lender may file a motion for a deficiency judgment. It must file the motion within three years after ratification of the auditor’s report. (Md. Code Ann., Real Prop. § 7-105.13, Maryland Rule 14-216).
This article contains citations to Maryland's foreclosure laws so you can read the statutes yourself. Keep in mind that statutes change, so checking them is always a good idea. (If you need help finding the statutes, see Finding Your State’s Foreclosure Laws.) How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure.
Also, if you want to get more information about foreclosure procedures in Maryland or find out about potential defenses to a foreclosure, consider talking to a lawyer. It's also a good idea to make an appointment to speak to a HUD-approved housing counselor if you want to learn about different loss mitigation options and how to apply for one.