Maryland Foreclosure Law
(Summary)
In Maryland, lenders may
foreclose on a mortgage or deed of trust in default using either the judicial, assent to decree, or non-judicial
foreclosure process.
Judicial
Foreclosure
In cases where the security
instrument contains neither a power of sale nor an assent to a decree, a lender must file a complaint against the
borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located
before foreclosure proceedings can begin. The court will then determine whether a default has
occurred.
If the court finds that a
default has occurred it shall: 1) fix the amount of the debt, interest, and costs then due; and 2) provide a
reasonable time within which payment may be made. The court may order that if payment is not made within the time
fixed in the order, the property must be sold to satisfy the debt.
Assent To Decree
Foreclosure
Assent to a decree foreclosure
is used when a provision in the security document declares an assent to the entry of an order for the sale of the
property upon a specified default. Lenders who use the assent to decree foreclosure must file a complaint to
foreclose. However, it is not necessary for a hearing to be held prior to the foreclosure
sale.
Non-Judicial
Foreclosure
The non-judicial process of
foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is
the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the
balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists,
the power given to the lender to sell the property may be executed by the lender or their representative, typically
referred to as the trustee.
Despite the permission given in
the power of sale clause, lenders in Maryland must still file an order to docket before foreclosure proceedings can
begin. However, it is not necessary for a hearing to be held prior to the foreclosure
sale.
Foreclosure Guidelines
Unless otherwise stated in the
original loan document or ordered by the court, the following guidelines must be adhered to in any foreclosure
proceedings:
- A notice of sale must be published in a newspaper of
general circulation in the county where the property resides at least once a week for three (3) successive
weeks, with the first publication to be not less than fifteen (15) days prior to sale and the last publication
to be not more than one week prior to sale. The notice of sale must also be sent by certified and by registered
mail, not more than thirty (30) days and not less than ten (10) days before the date of the sale, to the
borrower at their last known address.
- The sale must be conducted by the person authorized to
make the sale (i.e. trustee, sheriff) and may take place immediately outside the courthouse entrance, on the
property itself or the location advertised in the notice of sale, if different. The terms of the sale vary by
process.
- If the sale is postponed, notice of the new date of sale
shall be published in the manner the original notice of sale was given.
- Within thirty (30) days after the sale, the person
authorized to make the sale must file a complete report of the sale with the court. The clerk of the court will
then issue a notice containing a brief description to identify the property and stating that the sale will be
ratified unless cause to the contrary is shown within 30 days after the date of the notice. A copy of the
notice shall be published at least once a week in each of three successive weeks before the expiration of the
30-day period in one or more newspapers of general circulation in the county in which the report of sale was
filed.
- Lenders have a period of
three (3) years to file for a deficiency judgment, but it is limited to the balance of the loan in default
after the foreclosure sale proceeds have been applied.
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