Maryland Foreclosure Law

Lenders in Maryland can foreclose in both judicial and non-judicial methods, although some restrictions apply on the latter. The primary security instruments used are mortgages and deeds of trust. A typical Maryland foreclosure lasts about 90 days, although the timeline can vary depending on the complexity of the case.

Judicial foreclosure
This process is followed when the mortgage or deed of trust does not contain an Assent to Decree or Power of Sale clause, which would otherwise allow the lender to foreclose directly. In a judicial foreclosure, the lender sues the borrower for default in order to get a decree of sale from the court. The lawsuit must be filed in the county where the home is located.

Once the court confirms the default, it will determine the total amount of the debt, including interest, attorney’s fees, and other related costs. It will also give the borrower a reasonable time frame for settling this debt and curing the default. If the borrower fails to make the payment, the court may require that the property is sold as a form of payment.

Assent to Decree foreclosure
The Assent to Decree is a provision in the contract stating that the borrower agrees to any order of sale made when they default on the loan. To use this provision, a lender must record a complaint before they can foreclose. However, unlike a judicial foreclosure, the case is settled at the county office instead of being taken to court.

Non-judicial foreclosure
A non-judicial foreclosure is used when the mortgage or deed of trust contains a Power of Sale clause. This clause pre-authorizes the lender to sell the home in order to pay off the mortgage in case the borrower defaults. In Maryland, however, lenders have to submit an order to docket, although a hearing will not be necessary.

If a non-judicial foreclosure is approved, the sale terms defined in the Power of Sale are usually followed unless the court orders otherwise. If the clause does not contain sufficient terms, the foreclosure proceeds as follows:

First, a Notice of Sale is published in a local newspaper at least once a week for three consecutive weeks. The first ad should appear at least 15 days before the sale date, and the last no more than 10 days prior. Between 10 and 30 days before the sale, the same notice is also sent by certified mail to the borrower.

The foreclosure sale is conducted by a trustee, sheriff, or any person authorized in the contract to do so. It usually takes place at the courthouse entrance or the property itself. If the venue is neither of the two, it must be stated in the Notice of Sale. The sale can be postponed, but the new date must be published in a notice similar to the original.

After the sale, the person who conducted it must submit a complete report to the appropriate court. The clerk will then release a notice describing the property sold and giving a 30-day timeline for any opposing parties to speak up. This notice will also be published in a local newspaper once a week for three weeks, with all the ads appearing within the 30-day period.

Deficiency judgments and right of redemption
Borrowers do not have a Right of Redemption in Maryland. This means that they cannot regain possession of their home after it is sold, even if they gather the funds to make full payment and other costs. Lenders can also file a deficiency suit, a personal claim against the borrower, to cover the balance if it exceeds the value for which the home was sold.

Loan Modification Case Studies