FAQ: New Maryland Foreclosure Law (effective April 4, 2008)

September 18, 2008

A new foreclosure law went into effect in Maryland on April 4, 2008. A foreclosure filed after that date must comply with the new law.

The new foreclosure process and consumersÂ frequently asked questions are discussed below.

Under the new law, lenders may not foreclose on residential property until the LATER of:

90 days after default OR
45 days after a ÂNotice of Intent to ForecloseÂ notice is sent to the homeowner.

What is ÂdefaultÂ? What is the Âdate of defaultÂ?

Homeowners should check their mortgage documents to see exactly how their lender defines Âdefault.Â
Some lenders define ÂdefaultÂ as happening when a homeowner is even 1 day late with payment
Partial payments usually wonÂt help a homeowner avoid default.
Example: Your mortgage payment of $1000.00 is due January 1. You send in $500.00 on January 1. On January 2, your lender might deem your mortgage to be in default even though you sent in a partial payment.

My mortgage is in default. When is my lender likely to send the required ÂNotice of Intent to ForecloseÂ?

Different lenders use different timelines. Most lenders will start off using normal collections procedures to try to recover the past-due amounts. At this stage, the homeowner might get phone calls and standard collection letters from a debt collector.

But, at some point, the mortgage holder will switch to foreclosure mode and will send the homeowner the required ÂNotice of Intent to Foreclose.Â

[Note: this Notice must follow a certain format and will be different in content from a standard collection letter. There are also rules specifying how this Notice must be delivered to the homeowner.]

After default, the lender will often use standard collections techniques for around 15 days before sending the required ÂNotice of Intent to Foreclose.”

In the example from (1) above, the homeowner in default might expect to receive a ÂNotice of Intent to ForecloseÂ from his or her loan servicer in mid-to-late January if s/he went into default on January 2.

Some lenders will try to collect a little longer before sending the “Notice of Intent to Foreclose.”

I received my ÂNotice of Intent to ForecloseÂ on January 15. What is the earliest date the mortgage holder can file a foreclosure case with the court?

The lender cannot file a foreclosure action until the LATER of the following: 90 days after the homeowner went into default, OR 45 days after you received your Notice of Intent to Foreclose.

In our example, the homeowner went into default on January 2. 90 days later would be April 2.

The homeowner received the ÂNotice of Intent to ForecloseÂ on January 15. 45 days later would be March 1.

The later of these two dates is April 2.

So, the lender cannot file a foreclosure action with the court until April 2 at the earliest.