What Exactly Is the Foreclosure Process in Maryland?

Foreclosure is where a lender (your mortgage company, in most cases, or another lien holder) seeks to go through a legal process through which they force the sale of an asset that’s used as collateral for a loan. In most cases, it’s your house or a real property that you have. Typically, you have not been making your payments, and after a certain point, the law allows them to initiate a case in the circuit court to have permission to sell that house and get paid for what you owe on the balance of the loan. In some cases, if you owe more on it that what the property will auction for, they can come after you for the difference. Maryland is what’s called a recourse state, so under the law here, if you have a house that has no equity in it and the lender forecloses, they can come after you for the deficiency and get the remaining balance out of the foreclosure.

If I’ve Been Served With a Foreclosure Summons, How Long Do I Have to Respond?

Your foreclosure summons is actually called an Order to Docket in Maryland, and there are different points in time when you might respond to it. Our foreclosure process here has many steps. This is not like in most lawsuits, where the plaintiff files a complaint and then you typically file an answer to their complaint within a very short amount of time.

One of the different ways to respond would be to fill out a loss mitigation package asking the lender to either do a loan modification, a short sale, a deed in lieu of foreclosure, or some other type of repayment option. Another way is to request a mediation, where you would meet a representative from the lender and their attorney in a mediation proceeding. A mediator would be present to make sure that both sides talk to each other and try to work it out through some kind of loss mitigation option. A third way to respond to the foreclosure is to file what we call a motion to stay or dismiss the foreclosure case; this motion would get filed later in the process.

Can We Delay a Foreclosure From Going Forward?

There is a timeline that goes on from the moment that you miss your payment for the first time until the house is sold and the court determines how much you owe or how much you’re due. Throughout that timeline, there are various instances when things can be done to slow down the process or, hopefully, end it in your favor. It’s a pretty long process here with many steps, so you should consult with an attorney to determine which delay tactics might be available.

Do I Have Any Chance of Saving My Home Once a Lender Begins Foreclosure Proceedings?

There are different ways that you could potentially save your home. If you are in foreclosure, you can pay back the total amount that you owe, which is called the reinstatement amount. You can obtain that from your lender or their attorney. As long as you pay that amount in full, up to one business day before the auction, you have the legal right to bring your loan current, and then they will have to dismiss the foreclosure case.

Another way to save your home is to file a bankruptcy, which would give you something called an automatic stay. As soon as that is in effect, which is right when you file, the foreclosure case is put on hold. If you do a Chapter 13, primarily, you can use that to bring your payments current over a three- to five-year period.

Another way to stop the foreclosure is to work something out with your lenders using one of the loss mitigation options available. Typically, for saving your home, you are looking at either forbearance, repayment, or loan modification. The forbearance option is not usually available in a foreclosure, but it can be available beforehand in many cases. Forbearance is basically a pause button; the lender agrees that you don’t have to pay them for these months, but once the button is un-paused, then you have to pay those months you missed back (usually in the following month) and keep up with the payments that come due in the subsequent months.

For a loan modification, you have to submit a package to your lender along with supporting documentation and, if approved, they typically will take the amount that you owe and put it either at the end of the loan or back into the loan. Your payment amount and the term are redone to include the amount you owe. Sometimes, they will change the interest rates, or they may reduce the total amount that you owe on the loan. If your house is worth a lot less than what you owe on it, the lender might do that—it’s called a principal reduction.

So, there are really a lot of ways that you could potentially come out of the foreclosure, and sometimes in a more advantageous position than you were in going into the process.

For more information on Foreclosure Process in the State of MD, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (443) 492-9003 today.