MD Real Prop Code § 7-105 (2013) What's This?

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2013 Maryland Code
REAL PROPERTY
§ 7-105 - Sales

MD Real Prop Code § 7-105 (2013) What's This?

§7-105.

(a) In this section, “individual” means a natural person.

(b) (1) A mortgage or deed of trust may authorize the sale of the property or declare the borrower’s assent to the passing of a decree for the sale of the property, on default in a condition on which the mortgage or deed of trust provides that a sale may be made.

(2) A power of sale or assent to decree authorized in a mortgage or deed of trust may be exercised only by an individual.

(3) The individual selling the property under a power of sale need not be named in the mortgage or deed of trust.

(4) An error or omission in a mortgage or deed of trust concerning the designation of the trustee or the individual authorized to exercise a power of sale does not invalidate the instrument or the ability of the mortgagee or beneficiary of the deed of trust to appoint an individual to exercise the power of sale.

(5) If a mortgage or deed of trust allows for the appointment or substitution of a trustee or an individual authorized to exercise a power of sale, the holder of the mortgage or deed of trust may make the appointments or substitutions from time to time.

(c) A sale made pursuant to this section, §§ 7-105.1 through 7-105.8 of this subtitle, or the Maryland Rules, after final ratification by the court and grant of the property to the purchaser on payment of the purchase money, has the same effect as if the sale and grant were made under decree between the proper parties in relation to the mortgage or deed of trust and in the usual course of the court, and operates to pass all the title which the borrower had in the property at the time of the recording of the mortgage or deed of trust.

§ 7-105 - 1. Residential property foreclosure procedure; mediation.

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Final loss mitigation affidavit" means an affidavit that:

(i) Is made by a person authorized to act on behalf of a secured party of a mortgage or deed of trust on owner-occupied residential property that is the subject of a foreclosure action;

(ii) Certifies the completion of the final determination of loss mitigation analysis in connection with the mortgage or deed of trust; and

(iii) If denied, provides an explanation for the denial of a loan modification or other loss mitigation.

(3) "Foreclosure mediation" means a conference at which the parties in a foreclosure action, their attorneys, additional representatives of the parties, or a combination of those persons appear before an impartial individual to discuss the positions of the parties in an attempt to reach agreement on a loss mitigation program for the mortgagor or grantor.

(4) "Housing counseling services" means assistance provided to mortgagors or grantors by nonprofit and governmental entities that are identified on a list maintained by the Department of Housing and Community Development.

(5) "Loss mitigation analysis" means an evaluation of the facts and circumstances of a loan secured by owner-occupied residential property to determine:

(i) Whether a mortgagor or grantor qualifies for a loan modification; and

(ii) If there will be no loan modification, whether any other loss mitigation program may be made available to the mortgagor or grantor.

(6) "Loss mitigation program" means an option in connection with a loan secured by owner-occupied residential property that:

(i) Avoids foreclosure through loan modification or other changes to existing loan terms that are intended to allow the mortgagor or grantor to stay in the property;

(ii) Avoids foreclosure through a short sale, deed in lieu of foreclosure, or other alternative that is intended to simplify the mortgagor's or grantor's relinquishment of ownership of the property; or

(iii) Lessens the harmful impact of foreclosure on the mortgagor or grantor.

(7) "Owner-occupied residential property" means residential property in which at least one unit is occupied by an individual who:

(i) Has an ownership interest in the property; and

(ii) Uses the property as the individual's primary residence.

(8) "Postfile mediation" means foreclosure mediation that occurs in accordance with subsection (j) of this section after the date on which the order to docket or complaint to foreclose is filed.

(9) "Prefile mediation" means foreclosure mediation that occurs in accordance with subsection (d) of this section before the date on which the order to docket or complaint to foreclose is filed.

(10) "Preliminary loss mitigation affidavit" means an affidavit that:

(i) Is made by a person authorized to act on behalf of a secured party of a mortgage or deed of trust on owner-occupied residential property that is the subject of a foreclosure action;

(ii) Certifies the status of an incomplete loss mitigation analysis in connection with the mortgage or deed of trust; and

(iii) Includes reasons why the loss mitigation analysis is incomplete.

(11) "Residential property" means real property improved by four or fewer single family dwelling units that are designed principally and are intended for human habitation.

(b) Timing. --

(1) Except as provided in paragraph (2) of this subsection, an action to foreclose a mortgage or deed of trust on residential property may not be filed until the later of:

(i) 90 days after a default in a condition on which the mortgage or deed of trust provides that a sale may be made; or

(ii) 45 days after the notice of intent to foreclose required under subsection (c) of this section is sent.

(2) (i) The secured party may petition the circuit court for leave to immediately commence an action to foreclose the mortgage or deed of trust if:

1. The loan secured by the mortgage or deed of trust was obtained by fraud or deception;

2. No payments have ever been made on the loan secured by the mortgage or deed of trust;

3. The property subject to the mortgage or deed of trust has been destroyed; or

4. The default occurred after the stay has been lifted in a bankruptcy proceeding.

(ii) The court may rule on the petition with or without a hearing.

(iii) If the petition is granted, the action may be filed at any time after a default in a condition on which the mortgage or deed of trust provides that a sale may be made and the secured party need not send the written notice of intent to foreclose required under subsection (c) of this section.

(1) Except as provided in subsection (b)(2)(iii) of this section, at least 45 days before the filing of an action to foreclose a mortgage or deed of trust on residential property, the secured party shall send a written notice of intent to foreclose to the mortgagor or grantor and the record owner.

(2) The notice of intent to foreclose shall be sent:

(i) By certified mail, postage prepaid, return receipt requested, bearing a postmark from the United States Postal Service; and

(ii) By first-class mail.

(3) A copy of the notice of intent to foreclose shall be sent to the Commissioner of Financial Regulation.

(4) The notice of intent to foreclose shall:

(i) Be in the form that the Commissioner of Financial Regulation prescribes by regulation; and

(ii) Contain:

1. The name and telephone number of:

A. The secured party;

B. The mortgage servicer, if applicable; and

C. An agent of the secured party who is authorized to modify the terms of the mortgage loan;

2. The name and license number of the Maryland mortgage lender and mortgage originator, if applicable;

3. The amount required to cure the default and reinstate the loan, including all past due payments, penalties, and fees;

4. A statement recommending that the mortgagor or grantor seek housing counseling services;

5. The telephone number and the Internet address of nonprofit and government resources available to assist mortgagors and grantors facing foreclosure, as identified by the Commissioner of Financial Regulation;

6. An explanation of the Maryland foreclosure process and time line, as prescribed by the Commissioner of Financial Regulation; and

7. Any other information that the Commissioner of Financial Regulation requires by regulation.

(5) For an owner-occupied residential property, the notice of intent to foreclose shall be accompanied by:

(i) A loss mitigation application:

1. For loss mitigation programs that are applicable to the loan secured by the mortgage or deed of trust that is the subject of the foreclosure action; or

2. If the secured party does not have its own loss mitigation application, in the form prescribed by the Commissioner of Financial Regulation;

(ii) Instructions for completing the loss mitigation application and a telephone number to call to confirm receipt of the application;

(iii) A description of the eligibility requirements for the loss mitigation programs offered by the secured party that may be applicable to the loan secured by the mortgage or deed of trust that is the subject of the foreclosure action;

(iv) An envelope addressed to the person responsible for conducting loss mitigation analysis on behalf of the secured party for the loan secured by the mortgage or deed of trust that is the subject of the foreclosure action;

(v) If the secured party offers prefile mediation, a notice in the form that the Commissioner of Financial Regulation prescribes by regulation that states that:

1. The secured party offers prefile mediation;

2. The mortgagor or grantor may elect to participate in prefile mediation;

3. The mortgagor or grantor will not be entitled to postfile mediation if the mortgagor or grantor participates in prefile mediation, except as otherwise provided in a prefile mediation agreement;

4. The mortgagor or grantor is required to participate in housing counseling services as a precondition to prefile mediation; and

5. A fee will be charged for the prefile mediation and the amount of the fee; and

(vi) If the secured party offers prefile mediation, an application to participate in prefile mediation and instructions to complete and submit the application, all in the form that the Commissioner of Financial Regulation prescribes by regulation.

(6) For a property that is not an owner-occupied residential property, the notice of intent to foreclose shall be accompanied by:

(i) A written notice of the determination that the property is not owner-occupied residential property; and

(ii) A telephone number to call to contest that determination.

(d) Prefile mediation. --

(1) For owner-occupied residential property, a secured party may offer to participate in prefile mediation with a mortgagor or grantor to whom the secured party has delivered a notice of intent to foreclose.

(2) If offered by a secured party, a mortgagor or grantor may elect to participate in prefile mediation.

(3) If a mortgagor or grantor elects to participate in prefile mediation, the mortgagor or grantor shall notify the secured party by submitting the application described in subsection (c)(5)(vi) of this section not more than 25 days after the date on which the notice of intent to foreclose is mailed by the secured party.

(4) (i) As a precondition to prefile mediation, a mortgagor or grantor shall participate in housing counseling services.

(ii) The Department of Housing and Community Development shall prescribe the timing and form of certification of participation in housing counseling services.

(5) If a mortgagor or grantor submits an application to participate in prefile mediation to the secured party in accordance with paragraph (3) of this subsection, the secured party shall notify the Office of Administrative Hearings not more than 5 business days after the date on which the secured party receives the application.

(6) The Office of Administrative Hearings shall:

(i) Schedule a prefile mediation session not more than 60 days after the day on which it receives notice by a secured party of an election to participate in prefile mediation; and

(ii) Notify the parties and their attorneys, if any, of the date of the prefile mediation session.

(7) By regulation, the Commissioner of Financial Regulation shall:

(i) Establish the fee for prefile mediation; and

(ii) Prescribe the form and content of the notice about prefile mediation, the application to participate in prefile mediation, and instructions to complete the application.

(8) (i) Notwithstanding subsection (b)(1) of this section, if the secured party and grantor or mortgagor elect to participate in prefile mediation, an order to docket or complaint to foreclose may not be filed until the completion of prefile mediation in accordance with this section.

(ii) The date that prefile mediation is completed is the date that the Office of Administrative Hearings issues the report describing the results of the prefile mediation.

(9) The fee for prefile mediation collected under this subsection shall be distributed to the Housing Counseling and Foreclosure Mediation Fund established under § 4-507 of the Housing and Community Development Article.

(10) By regulation, the Commissioner of Financial Regulation shall establish a mediation checklist that describes the matters that shall be reviewed and considered in a prefile mediation.

(11) (i) At the commencement of a prefile mediation session, each party shall review the mediation checklist.

(ii) The mediator shall mark each item on the mediation checklist as the item is addressed at the prefile mediation session.

(iii) At the conclusion of a prefile mediation session, each party shall sign the mediation checklist.

(12) If the prefile mediation results in an agreement, the parties shall execute a prefile mediation agreement.

(13) In addition to describing the terms of the agreement among the parties, the prefile mediation agreement shall, in 14 point, bold font:

(i) Designate the person and address to whom the mortgagor or grantor may provide notice of a change of financial circumstances; and

(ii) State that the mortgagor or grantor is not entitled to postfile mediation unless otherwise agreed by the parties.

(14) The Office of Administrative Hearings shall draft the prefile mediation agreement and provide a copy of the executed agreement to the parties and their attorneys, if any.

(15) The Office of Administrative Hearings shall provide a report of results of mediation to the parties and their attorneys, if any.

(16) If a mortgagor or grantor notifies the person designated under paragraph (13) of this subsection of a change of financial circumstances, the designee shall:

(i) Determine whether the change of financial circumstances shall alter the mediation agreement or outcome of the prefile mediation; and

(ii) Notify the mortgagor or grantor of the determination by first-class mail before any additional action is taken with respect to foreclosure.

(17) (i) The parties to the prefile mediation agreement may execute an amended prefile mediation agreement based on a material change of financial circumstances of the mortgagor or grantor.

(ii) The secured party shall provide a copy of the executed amended agreement to the mortgagor or grantor.

(18) To the extent that a notice of intent to foreclose complies with this section and otherwise is valid under the law, a notice of intent to foreclose issued with respect to a property that has been the subject of prefile mediation continues to be valid for 1 year after the date on which the initial prefile mediation agreement is executed by the parties.

(19) Nothing in this subsection shall prohibit a secured party and mortgagor or grantor from engaging in loss mitigation by other means.

(e) Order to docket or complaint to foreclose. -- An order to docket or a complaint to foreclose a mortgage or deed of trust on residential property shall:

(1) Include:

(i) If applicable, the license number of:

1. The mortgage originator; and

2. The mortgage lender; and

(ii) An affidavit stating:

1. The date on which the default occurred and the nature of the default; and

2. If applicable, that:

A. A notice of intent to foreclose was sent to the mortgagor or grantor in accordance with subsection (c) of this section and the date on which the notice was sent; and

B. At the time the notice of intent to foreclose was sent, the contents of the notice of intent to foreclose were accurate; and

(2) Be accompanied by:

(i) The original or a certified copy of the mortgage or deed of trust;

(ii) A statement of the debt remaining due and payable supported by an affidavit of the plaintiff or the secured party or the agent or attorney of the plaintiff or secured party;

(iii) A copy of the debt instrument accompanied by an affidavit certifying ownership of the debt instrument;

(iv) If applicable, the original or a certified copy of the assignment of the mortgage for purposes of foreclosure or the deed of appointment of a substitute trustee;

(v) If any defendant is an individual, an affidavit that is in compliance with § 521 of the Servicemembers Civil Relief Act, 50 U.S.C. App. § 501 et seq.;

(vi) If applicable, a copy of the notice of intent to foreclose;

(vii) If the secured party and mortgagor or grantor have elected to participate in prefile mediation, the report of the prefile mediation issued by the Office of Administrative Hearings;

(viii) If the secured party and the mortgagor or grantor have not elected to participate in prefile mediation, a statement that the parties have not elected to participate in prefile mediation;

(ix) In addition to any other filing fees required by law, a filing fee in the amount of $ 300; and

(x) 1. If the loss mitigation analysis has been completed subject to subsection (g) of this section, a final loss mitigation affidavit in the form prescribed by regulation adopted by the Commissioner of Financial Regulation; and

2. If the loss mitigation analysis has not been completed, a preliminary loss mitigation affidavit in the form prescribed by regulation adopted by the Commissioner of Financial Regulation.

(f) Lost note affidavit. -- Notwithstanding any other law, the court may not accept a lost note affidavit in lieu of a copy of the debt instrument required under subsection (e)(2)(iii) of this section, unless the affidavit:

(1) Identifies the owner of the debt instrument and states from whom and the date on which the owner acquired ownership;

(2) States why a copy of the debt instrument cannot be produced; and

(3) Describes the good faith efforts made to produce a copy of the debt instrument.

(g) Failure to complete loss mitigation analysis. -- Only for purposes of a final loss mitigation affidavit that is filed with an order to docket or complaint to foreclose, a loss mitigation analysis is not considered complete if the reason for the denial or determination of ineligibility is due to the inability of the secured party to:

(1) Establish communication with the mortgagor or grantor; or

(2) Obtain all documentation and information necessary to conduct the loss mitigation analysis.

(h) Service of process; required documents. --

(1) A copy of the order to docket or complaint to foreclose on residential property and all other papers filed with it in the form and sequence as prescribed by regulations adopted by the Commissioner of Financial Regulation, accompanied by the documents required under paragraphs (2), (3), and (4) of this subsection, shall be served on the mortgagor or grantor by:

(i) Personal delivery of the papers to the mortgagor or grantor; or

(ii) Leaving the papers with a resident of suitable age and discretion at the mortgagor's or grantor's dwelling house or usual place of abode.

(2) The service of documents under paragraph (1) of this subsection shall be accompanied by a separate, clearly marked notice, in the form prescribed by regulation adopted by the Commissioner of Financial Regulation, that states:

(i) The significance of the order to docket or a complaint to foreclose;

(ii) The options for the mortgagor or grantor to take, including housing counseling services and financial assistance resources the mortgagor or grantor may consult; and

(iii) In the case of a mortgagor or grantor who has participated in prefile mediation, that the mortgagor or grantor is not entitled to postfile mediation except as otherwise provided in the prefile mediation agreement.

(3) If the order to docket or complaint to foreclose is accompanied by a preliminary loss mitigation affidavit, the service of documents under paragraph (1) of this subsection shall be accompanied by a loss mitigation application form and any other supporting documents as prescribed by regulation adopted by the Commissioner of Financial Regulation.

(4) (i) Except as provided in subparagraph (ii) of this paragraph, if the order to docket or complaint to foreclose is accompanied by a final loss mitigation affidavit and concerns owner-occupied residential property, the service of documents under paragraph (1) of this subsection shall be accompanied by a request for postfile mediation form and any other supporting documents as prescribed by regulation adopted by the Commissioner of Financial Regulation.

(ii) The order to docket or complaint to foreclose may exclude the request for postfile mediation form if:

1. The mortgagor or grantor has participated in prefile mediation and the prefile mediation agreement does not give the mortgagor or grantor the right to participate in postfile mediation; or

2. The property subject to the mortgage or deed of trust is not owner-occupied.

(5) If at least two good faith efforts to serve the mortgagor or grantor under paragraph (1) of this subsection on different days have not succeeded, the plaintiff may effect service by:

(i) Filing an affidavit with the court describing the good faith efforts to serve the mortgagor or grantor; and

(ii) 1. Mailing a copy of all the documents required to be served under paragraph (1) of this subsection by certified mail, return receipt requested, and first-class mail to the mortgagor's or grantor's last known address and, if different, to the address of the residential property subject to the mortgage or deed of trust; and

2. Posting a copy of all the documents required to be served under paragraph (1) of this subsection in a conspicuous place on the residential property subject to the mortgage or deed of trust.

(6) The individual making service of documents under this subsection shall file proof of service with the court in accordance with the Maryland Rules.

(i) Final loss mitigation analysis. --

(1) If the order to docket or complaint to foreclose is accompanied by a preliminary loss mitigation affidavit, the secured party, at least 30 days before the date of a foreclosure sale, shall:

(i) File with the court a final loss mitigation affidavit in the form prescribed by regulation adopted by the Commissioner of Financial Regulation; and

(ii) Send to the mortgagor or grantor by first class and by certified mail:

1. A copy of the final loss mitigation affidavit; and

2. A request for postfile mediation form and supporting documents as provided under subsection (h)(4) of this section.

(2) A final loss mitigation affidavit shall be filed under this subsection no earlier than 28 days after the order to docket or complaint to foreclose is served on the mortgagor or grantor.

(j) Filing completed request for postfile mediation. --

(1) (i) This paragraph applies to a mortgagor or grantor who:

1. Has not participated in prefile mediation; or

2. Has participated in prefile mediation that resulted in a prefile mediation agreement that gives the mortgagor or grantor the right to participate in postfile mediation.

(ii) In a foreclosure action on owner-occupied residential property, the mortgagor or grantor may file with the court a completed request for postfile mediation not later than:

1. If the final loss mitigation affidavit was delivered along with service of the copy of the order to docket or complaint to foreclose under subsection (h) of this section, 25 days after that service on the mortgagor or grantor; or

2. If the final loss mitigation affidavit was mailed as provided in subsection (i) of this section, 25 days after the mailing of the final loss mitigation affidavit.

(iii) 1. A request for postfile mediation shall be accompanied by a filing fee of $ 50.

2. The court may reduce or waive the filing fee under subsubparagraph 1 of this subparagraph if the mortgagor or grantor is eligible for a reduction or waiver under the Maryland Legal Services guidelines.

(iv) The mortgagor or grantor shall mail a copy of the request for postfile mediation to the secured party's foreclosure attorney.

(2) (i) The secured party may file a motion to strike the request for postfile mediation in accordance with the Maryland Rules.

(ii) The motion to strike must be accompanied by an affidavit that sets forth the reasons why postfile mediation is not appropriate.

(iii) The secured party shall mail a copy of the motion to strike and the accompanying affidavit to the mortgagor or grantor.

(iv) There is a presumption that a mortgagor or grantor is entitled to postfile mediation with respect to owner-occupied residential property unless:

1. Good cause is shown why postfile mediation is not appropriate; or

2. The mortgagor or grantor participated in prefile mediation and the prefile mediation agreement does not give the mortgagor or grantor the right to participate in postfile mediation.

(3) (i) The mortgagor or grantor may file a response to the motion to strike within 15 days.

(ii) The mortgagor or grantor shall mail a copy of the response to the foreclosure attorney.

(iii) If the court grants the motion to strike, the court shall instruct the Office of Administrative Hearings to cancel any scheduled postfile mediation.

(k) Transmission of request for postfile mediation. --

(1) Within 5 days after receipt of a request for postfile mediation, the court shall transmit the request to the Office of Administrative Hearings for scheduling.

(2) (i) Within 60 days after transmittal of the request for foreclosure mediation, the Office of Administrative Hearings shall conduct a foreclosure mediation.

(ii) For good cause, the Office of Administrative Hearings may extend the time for completing the foreclosure mediation for a period not exceeding 30 days or, if all parties agree, for a longer period of time.

(3) The Office of Administrative Hearings shall send notice of the scheduled foreclosure mediation to the foreclosure attorney, the secured party, and the mortgagor or grantor.

(4) The notice from the Office of Administrative Hearings shall:

(i) Include instructions regarding the documents and information, as required by regulations adopted by the Commissioner of Financial Regulation, that must be provided by each party to the other party and to the mediator; and

(ii) Require the information and documents to be provided no later than 20 days before the scheduled date of the foreclosure mediation.

(l) Postfile mediation checklist; foreclosure mediation procedures. --

(1) (i) By regulation, the Commissioner of Financial Regulation shall establish a mediation checklist that describes the matters that shall be reviewed and considered in a postfile mediation.

(ii) At the commencement of a postfile mediation session, each party shall review the mediation checklist.

(iii) The mediator shall mark each item on the mediation checklist as the item is addressed at the postfile mediation session.

(iv) At the conclusion of a postfile mediation session, each party shall sign the mediation checklist.

(2) At a foreclosure mediation:

(i) The mortgagor or grantor shall be present;

(ii) The mortgagor or grantor may be accompanied by a housing counselor and may have legal representation;

(iii) The secured party, or a representative of the secured party, shall be present; and

(iv) Any representative of the secured party must have the authority to settle the matter or be able to readily contact a person with authority to settle the matter.

(3) At the foreclosure mediation, the parties and the mediator shall address loss mitigation programs that may be applicable to the loan secured by the mortgage or deed of trust that is the subject of the foreclosure action.

(4) The Office of Administrative Hearings shall file a report with the court that states the outcome of the request for foreclosure mediation within the earlier of:

(i) 7 days after a foreclosure mediation is held; or

(ii) The end of the 60-day mediation period specified in subsection (k)(2) of this section, plus any extension granted by the Office of Administrative Hearings.

(5) Except for a request for postponement or a failure to appear, the rules of procedure for contested cases of the Office of Administrative Hearings do not govern a foreclosure mediation conducted by the Office.

(m) Scheduling of foreclosure sale on failure of postfile mediation or expiration of mediation period. --

(1) If the parties do not reach an agreement at the postfile mediation, or the 60-day mediation period expires without an extension granted by the Office of Administrative Hearings, the foreclosure attorney may schedule the foreclosure sale.

(2) (i) In the case of postfile mediation, subject to subparagraphs (ii), (iii), and (iv) of this paragraph, the mortgagor or grantor may file a motion to stay the foreclosure sale.

(ii) A motion to stay under this paragraph shall be filed within 15 days after:

1. The date the postfile mediation is held; or

2. If no postfile mediation is held, the date the Office of Administrative Hearings files its report with the court.

(iii) A motion to stay under this paragraph must allege specific reasons why loss mitigation should have been granted.

(3) Nothing in this subtitle precludes the mortgagor or grantor from pursuing any other remedy or legal defense available to the mortgagor or grantor.

(n) Prerequisites for foreclosure sale. -- A foreclosure sale of residential property may not occur until:

(1) If the residential property is not owner-occupied residential property, at least 45 days after service of process is made under subsection (h) of this section;

(2) If the residential property is owner-occupied residential property and foreclosure mediation is not held, the later of:

(i) At least 45 days after service of process that includes a final loss mitigation affidavit made under subsection (h) of this section; or

(ii) At least 30 days after a final loss mitigation affidavit is mailed under subsection (i) of this section; and

(3) If the residential property is owner-occupied residential property and postfile mediation is requested, at least 15 days after:

(i) The date the postfile mediation is held; or

(ii) If no postfile mediation is held, the date the Office of Administrative Hearings files its report with the court.

(o) Publication of notice of foreclosure sale. -- Notice of the time, place, and terms of a foreclosure sale shall be published in a newspaper of general circulation in the county where the action is pending at least once a week for 3 successive weeks, the first publication to be not less than 15 days before the sale and the last publication to be not more than 1 week before the sale.

(p) Right to cure default. --

(1) The mortgagor or grantor of residential property has the right to cure the default by paying all past due payments, penalties, and fees and reinstate the loan at any time up to 1 business day before the foreclosure sale occurs.

(2) The secured party or an authorized agent of the secured party shall, on request, provide to the mortgagor or grantor or the mortgagor's or grantor's attorney within a reasonable time the amount necessary to cure the default and reinstate the loan and instructions for delivering the payment.

(q) Limitations of actions for failure to comply. -- An action for failure to comply with the provisions of this section shall be brought within 3 years after the date of the order ratifying the sale.

(r) Distribution of filing fees. -- Revenue collected from the filing fees required under subsections (e)(2)(ix) and (j)(1)(iii) of this section shall be distributed to the Housing Counseling and Foreclosure Mediation Fund established under § 4-507 of the Housing and Community Development Article.

(s) Additional regulations. -- The Commissioner of Financial Regulation may adopt additional regulations necessary to carry out the requirements of this section.

§ 7-105 - 2. Notice to record owner of property of proposed foreclosure sale; limitation of actions

(a) "Record owner" defined. -- In this section, "record owner" means the person holding record title to property as of the later of:

(1) 30 days before the day on which a foreclosure sale of the property is actually held; and

(2) The date on which an action to foreclose the mortgage or deed of trust is filed.

(b) Notice to record owner of property. -- In addition to any notice required to be given by provisions of the Annotated Code of Maryland or the Maryland Rules, the person authorized to make a sale in an action to foreclose a mortgage or deed of trust shall give written notice of the proposed sale to the record owner of the property to be sold.

(1) The written notice shall be sent:

(i) By certified mail, postage prepaid, return receipt requested, bearing a postmark from the United States Postal Service, to the record owner; and

(ii) By first-class mail.

(2) The notice shall state the time, place, and terms of the sale and shall be sent not earlier than 30 days and not later than 10 days before the date of sale.

(3) The person giving the notice shall file in the proceedings:

(i) A return receipt; or

(ii) An affidavit that:

1. The provisions of this subsection have been complied with; or

2. The address of the record owner is not reasonably ascertainable.

(4) The person authorized to make a sale in an action to foreclose a mortgage or deed of trust is not required to give notice to a record owner whose address is not reasonably ascertainable.

(d) Additional notice on postponement of sale. -- In the event of postponement of sale, which may be done in the discretion of the trustee, no new or additional notice need be given pursuant to this section.

(e) Limitation of actions. -- The right of a record owner to file an action for the failure of the person authorized to make a sale in an action to foreclose a mortgage or deed of trust to comply with the provisions of this section shall expire 3 years after the date of the order ratifying the foreclosure sale.

§ 7-105 - 3. Notice to holder of subordinate interest; requests for notice; limitation of actions

(a) "Holder of subordinate interest" defined. -- In this section, "holder of a subordinate interest" includes any condominium council of unit owners or homeowners association that has filed a request for notice of sale under subsection (c) of this section.

(b) Written notice. -- The person authorized to make a sale in an action to foreclose a mortgage or deed of trust shall give written notice of any proposed foreclosure sale to the holder of any subordinate mortgage, deed of trust, or other subordinate interest, including a judgment, in accordance with § 7-105.2 of this subtitle and the requirements of Maryland Rule 14-210.

(1) The land records office of each county shall maintain a current listing of recorded requests for notice of sale by holders of subordinate mortgages, deeds of trust, or other subordinate interests.

(2) The holder of a subordinate mortgage, deed of trust, or other subordinate interest may file a request for notice under this subsection.

(3) Each request for notice of sale shall:

(i) Be recorded in a separate docket or book which shall be indexed under the name of the holder of the superior mortgage or deed of trust and under the book and page numbers where the superior mortgage or deed of trust is recorded;

(ii) Identify the property in which the subordinate interest is held;

(iii) State the name and address of the holder of the subordinate interest; and

(iv) Identify the superior mortgage or deed of trust by stating:

1. The names of the original parties to the superior mortgage or deed of trust;

2. The date the superior mortgage or deed of trust was recorded; and

3. The office, docket or book, and page where the superior mortgage or deed of trust is recorded.

(4) (i) Except as provided in subparagraph (ii) of this paragraph, failure of a holder of a subordinate mortgage, deed of trust, or other subordinate interest to record a request for notice under this subsection does not affect the duty of a holder of a superior interest to provide notice as required under this section.

(ii) A holder of a superior interest does not have a duty to provide notice to a condominium council of unit owners or homeowners association that has not filed a request for notice under this subsection.

(d) Requirements for filing action. -- The person giving notice under this section shall file in the action:

(1) The return receipt from the notice; or

(2) An affidavit that:

(i) The notice provisions of this section have been complied with; or

(ii) The address of the holder of the subordinate interest is not reasonably ascertainable.

(e) Notice to holder of subordinate interest not required. -- The person authorized to make a sale in an action to foreclose a mortgage or deed of trust is not required to give notice to the holder of a subordinate mortgage, deed of trust, or other subordinate interest if:

(1) The existence of the mortgage, deed of trust, or other subordinate interest is not reasonably ascertainable;

(2) The identity or address of the holder of the mortgage, deed of trust, or other subordinate interest is not reasonably ascertainable;

(3) With respect to a recorded or filed subordinate mortgage, deed of trust, or other recorded or filed subordinate interest, the recordation or filing occurred after the later of:

(i) 30 days before the day on which the foreclosure sale was actually held; and

(ii) The date the action to foreclose the mortgage or deed of trust was filed;

(4) With respect to an unrecorded or unfiled subordinate mortgage, deed of trust, or other unrecorded or unfiled subordinate interest, the subordinate interest was created after the later of:

(i) 30 days before the day on which the foreclosure sale was actually held; and

(ii) The date the action to foreclose the mortgage or deed of trust was filed; or

(5) With respect to a condominium council of unit owners or homeowners association, the condominium council of unit owners or homeowners association has not filed a request for notice under subsection (c) of this section.

(f) Limitation of actions. -- The right of a holder of a subordinate mortgage, deed of trust, or other subordinate interest to file an action for the failure of the person authorized to make a sale in an action to foreclose a mortgage or deed of trust to comply with the provisions of this section shall expire 3 years after the date of the order ratifying the foreclosure sale.

§ 7-105 - 4. Interest payable after sale in certain counties

(a) Interest remains payable. -- Absent a provision to the contrary in a mortgage or note secured by a deed of trust, in the enumerated counties, the interest provided in a mortgage or note secured by a deed of trust is payable for the time period provided in subsection (b) of this section or until the audit of the sale is ratified, whichever occurs first.

(b) Time periods specified. -- Under subsection (a) of this section, the time period following sale is:

(1) 60 days in Calvert, Cecil, Frederick, Garrett, Kent, Queen Anne's, Talbot, Caroline, Charles, and St. Mary's counties; and

(2) 180 days in Worcester County.

§ 7-105 - 5. Secured party may purchase at sale

No title to property acquired at sale of property subject to a mortgage or deed of trust is invalid by reason of the fact that the property was purchased by the secured party, his assignee, or representative, or for his account.

§ 7-105 - 6. Rights and remedies as between purchasers and tenants

(a) In general. -- Except as provided in subsection (b) of this section, any purchaser at a foreclosure sale of a mortgage or deed of trust has the same rights and remedies against the tenants of the mortgagor or grantor as the mortgagor or grantor had, and the tenants have the same rights and remedies against the purchaser as they would have had against the mortgagor or grantor on the date the mortgage or deed of trust was recorded.

(b) Rights and duties of successors in interest; notice to vacate. --

(1) For purposes of this subsection, a lease or tenancy shall be considered "bona fide" only if:

(i) The mortgagor or grantor or the child, spouse, or parent of the mortgagor or grantor under the contract is not the tenant;

(ii) The lease or tenancy was the result of an arm's length transaction; and

(iii) The lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a federal, State, or local subsidy.

(2) In the case of a foreclosure on any residential property, an immediate successor in interest who has acquired legal title to the property under the foreclosure shall assume the interest subject to:

(i) The provision by the successor in interest of a notice to vacate to any bona fide tenant at least 90 days before the effective date of the notice; and

(ii) The rights of any bona fide tenant as of the date of transfer of legal title under the foreclosure:

1. Except as provided in paragraph (3) of this subsection, under a bona fide lease entered into before the transfer of legal title, to occupy the premises until the end of the remaining term of the lease; or

2. Without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the notice required under item (i) of this paragraph.

(3) Subject to the receipt by the tenant of the notice to vacate under paragraph (2)(i) of this subsection, a successor in interest may terminate a lease effective on the date of the sale of the residential property to a purchaser who will occupy the property as the purchaser's primary residence.

(4) The notice required under paragraph (2)(i) of this subsection shall:

(i) Be in writing;

(ii) Be sent by first-class and certified mail, return receipt requested;

(iii) State the date on which the notice is being given;

(iv) State the date on which the termination of the tenancy is effective; and

(v) State whether the basis for termination of the tenancy is:

1. Expiration of the term of the lease;

2. Sale of the property to a purchaser who will occupy the property as the purchaser's primary residence; or

3. Termination of a month-to-month or other terminable-at-will tenancy.

(5) This section does not affect the requirements for termination of any federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or additional protection for tenants.

(1) If the required advertisement of sale so discloses, a foreclosure sale shall be made subject to one or more of the tenancies entered into subsequent to the recording of the mortgage or deed of trust or otherwise subordinated thereto.

(2) Any lease so continuing is unaffected by the sale, except the purchaser shall become the landlord, as of the date of the sale, on ratification of the sale.

§ 7-105 - 7. Effect of foreclosure on annual crops

(a) Crops remain the property of debtor. -- Except as provided in this section, unless the mortgage or deed of trust provides otherwise, if any property is encumbered by a mortgage or deed of trust, annual crops planted or cultivated by any debtor or those claiming under him do not pass with the property at any sale under or by virtue of the mortgage or deed of trust, but the crops remain the property of the debtor or those claiming under him.

(b) Reasonable rent may be established. --

(1) Notwithstanding the provisions of subsection (a) of this section, after the sale, the debtor or those claiming under him and the purchaser or those claiming under him may agree on a reasonable rental of the part of the property occupied by the crops.

(2) This rental is a lien on the crops and continues until paid in favor of the purchaser or those claiming under him, and neither the crops nor any part of them may be removed until after payment.

(3) If the parties are unable to agree on the rental, any party in interest may apply to the court having jurisdiction over the sale or the confirmation of it for the appointment of disinterested appraisers to determine the rental, whose award shall be final.

(1) In addition to any other remedy, the purchaser or those claiming under him, on ascertainment of the rent, may distrain for the rent or any part of it remaining due, as in the case of landlord and tenant.

(2) No provision of this section is intended to interfere with the right of the purchaser or those claiming under him to have possession of the property, except as to the part occupied by the crop, with necessary ingress or egress.

§ 7-105 - 8. Effect of order for resale on default

The entry of an order for resale on default by a purchaser at a sale under §§ 7-105 through 7-105.7 of this subtitle and Title 14 of the Maryland Rules:

(1) Does not affect the prior ratification of the sale and does not restore to the mortgagor or former record owner any right or remedy that was extinguished by the prior sale and its ratification; and

(2) Extinguishes all interest of the defaulting purchaser in the real property being foreclosed and in the proceeds of the resale.

§ 7-105 - 9. Notice to occupants of residential property in foreclosure action

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Bona fide tenant" means a tenant under a lease or tenancy described in § 7-105.6(b)(1) of this subtitle.

(3) "Residential property" has the meaning stated in § 7-105.1 of this subtitle.

(b) Notice of foreclosure action. --

(1) In addition to any other notice required to be given by this Code or the Maryland Rules, the person authorized to make a sale in an action to foreclose a mortgage or deed of trust on residential property shall send, at the same time as the notice required under § 7-105.1(f)(2) of this subtitle, a written notice addressed to "all occupants" at the address of the residential property in substantially the following form:

"IMPORTANT NOTICE

A foreclosure action has been filed against the property located at (insert address) in the circuit court for (insert name of county). This notice is being sent to you as a person who lives in this property.

A foreclosure sale of the property may occur at any time after 45 days from the date of this notice.

Most renters have the right to continue renting the property after it is sold at foreclosure. The foreclosure sale purchaser becomes the new landlord.

Most renters with a lease for a specific period of time have the right to continue renting the property until the end of the lease term. Most month-to-month renters have the right to continue renting the property for 90 days after receiving a written notice to vacate from the new owner.

You should get legal advice to determine if you have these rights.

Below you will find the name, address, and telephone number of the person authorized to sell the property. You may contact this person to notify him or her that you are a tenant at the property and to find out more about the sale. For further information, you may review the file in the office of the clerk of the circuit court. You also may contact the Maryland Department of Housing and Community Development, at (insert telephone number), or consult the Department's website, (insert website address), for assistance.

Person authorized to sell the property:

Name

Address

Telephone

Date of this notice".

(2) The written notice required by this subsection shall be:

(i) A separate document;

(ii) Printed in at least 12 point type; and

(iii) Sent by first-class mail.

(3) The outside of the envelope containing the written notice required by this subsection shall state, on the address side, in bold, capitalized letters in at least 12 point type, the following: "IMPORTANT NOTICE TO ALL OCCUPANTS: FORECLOSURE INFORMATION ENCLOSED. OPEN IMMEDIATELY.".

(1) In addition to any other notice required to be given by this Code or the Maryland Rules, the person authorized to make a sale in an action to foreclose a mortgage or deed of trust on residential property shall send a written notice of the sale not earlier than 30 days and not later than 10 days before the date of sale addressed to "all occupants" at the address of the residential property in substantially the following form:

"NOTICE OF IMPENDING FORECLOSURE SALE

A foreclosure sale of the property is scheduled to occur as follows:

Date:

Time:

Place:

Most renters have the right to continue renting the property after it is sold at foreclosure. The foreclosure sale purchaser becomes the new landlord.

You should get legal advice to determine if you have these rights.

Person authorized to sell the property:

Name

Address

Telephone

Date of this notice".

(2) The written notice required by this subsection shall be:

(i) A separate document;

(ii) Printed in at least 12 point type; and

(iii) Sent by first-class mail.

(d) Notice of eviction. --

(1) In addition to any other notice required to be given by this Code or the Maryland Rules, the person who purchases residential property in a foreclosure sale shall send, after the entry of a judgment awarding possession and before any attempt to execute the writ of possession, a written notice addressed to "all occupants" at the address of the residential property in substantially the following form:

"IMPORTANT EVICTION NOTICE

The circuit court for (insert name of county) has entered a judgment awarding possession of the property located at (insert address). YOU COULD BE EVICTED FROM THE PROPERTY ON ANY DAY AFTER (insert first date after which eviction could legally occur under State and local law).

Below you will find the name, address, and telephone number of the person who purchased the property or the purchaser's agent. You may contact this person to find out more about the court order. For further information, you may review the file in the office of the clerk of the circuit court. You may want to consult an attorney to determine your rights. You also may contact the Maryland Department of Housing and Community Development, at (insert telephone number), or consult the Department's website, (insert website address), for assistance.

Purchaser of the property or purchaser's agent:

Name

Address

Telephone

Date of this notice".

(2) The written notice required by this subsection shall be:

(i) A separate document;

(ii) Printed in at least 12 point type; and

(iii) Sent by first-class mail.

(3) The outside of the envelope containing the written notice required by this subsection shall state, on the address side, in bold, capitalized letters in at least 12 point type, the following: "Important notice to all occupants: eviction information enclosed. open immediately.".

(e) Affidavit of compliance. -- The person giving a notice required by this section shall file in the foreclosure proceeding after each notice is sent an affidavit of compliance with the provisions of this section.

(f) No further notice required on postponement of sale. -- In the event of postponement of the sale, which may be done in the discretion of the person authorized to make the sale, no new or additional notice need be given pursuant to this section.

§ 7-105 - 10. Right to collect rent from bona fide tenant in possession

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Bona fide tenant" means a tenant under a lease or tenancy described in § 7-105.6(b)(1) of this subtitle.

(3) "Foreclosure sale purchaser" means any purchaser at a foreclosure sale of a mortgage or deed of trust on residential property.

(4) "Residential property" has the meaning stated in § 7-105.1(a)(11) of this subtitle.

(b) Conditions. -- A foreclosure sale purchaser may not exercise any right to collect rent payments from a bona fide tenant in possession of a residential property unless the purchaser:

(1) Conducts a reasonable inquiry as required under Maryland Rule 14-102 into:

(i) The occupancy status of the residential property; and

(ii) Whether any individual in possession of the residential property is a bona fide tenant; and

(2) Serves on each bona fide tenant, by first-class mail with a certificate of mailing a notice that:

(i) Contains the name, address, and phone number of the purchaser or the agent of the purchaser who is responsible for managing and maintaining the residential property; and

(ii) States that rent payments must be directed to the purchaser or the agent identified in item (i) of this item.

(1) Except as provided in paragraph (2) of this subsection, a foreclosure sale purchaser waives any claim to rent payments from a bona fide tenant in possession of a residential property for any period of time before the purchaser satisfies the requirements under subsection (b) of this section.

(2) A foreclosure sale purchaser does not waive any claim to rent due and payable for use of the residential property for the 15 days immediately prior to the date that the purchaser satisfied the requirements under subsection (b) of this section.

§ 7-105 - 11. Certificate of vacancy or certificate of property unfit for human habitation.

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Certificate of property unfit for human habitation" means:

(i) In Baltimore City, a certificate of substantial repair; or

(ii) A certificate for residential property issued by a unit of a county or municipal corporation indicating that the county or municipal corporation has determined that the residential property is unfit for human habitation.

(3) "Certificate of vacancy" means a certificate for a residential property issued by a unit of a county or municipal corporation indicating that the residential property is vacant.

(b) Scope. -- This section applies only to a county or municipal corporation that issues a certificate of vacancy or a certificate of property unfit for human habitation.

(c) Request for certificate of vacancy or certificate of property unfit for human habitation. -- If a mortgage or deed of trust on residential property is in default, a person with a secured interest in the residential property may request that a county or municipal corporation issue a certificate of vacancy or a certificate of property unfit for human habitation.

(d) Issuance and scope of certificate; fee. --

(1) The county or municipal corporation shall issue to a secured party a certificate of vacancy for a residential property if the county or municipal corporation determines that the residential property is vacant.

(2) The county or municipal corporation shall issue to a secured party a certificate of property unfit for human habitation for a residential property if the county or municipal corporation determines in accordance with requirements of local, county, or State housing codes, that the residential property is unfit for human habitation.

(3) A certificate of vacancy or certificate of property unfit for human habitation issued under this subsection is valid for 60 days after the date the certificate is issued.

(4) A county or municipal corporation may charge a fee not exceeding $ 100 to a secured party to issue a certificate of vacancy or a certificate of property unfit for human habitation.

(e) Section 7-105.1 of this subtitle inapplicable to property with valid certificate. -- Except as provided in subsection (f) of this section, if a certificate of vacancy or certificate of property unfit for human habitation is valid at the time of filing an order to docket or complaint to foreclose, § 7-105.1 of this subtitle does not apply to an action to foreclose a mortgage or deed of trust on the property for which the certificate was issued.

(f) Challenge to certificate. --

(1) The record owner or occupant of a property may challenge the certificate of vacancy or certificate of property unfit for human habitation under this section by notifying the circuit court of the challenge.

(2) A secured party filing an order to docket or complaint to foreclose based on a certificate of vacancy or a certificate of property unfit for human habitation under this section shall serve the foreclosure documents in accordance with § 7-105.1(h)(1) of this subtitle along with a description of the procedure to challenge the certificate and the form to be used to make the challenge.

(3) If a challenge under paragraph (1) of this subsection is upheld, the secured party shall comply with the requirements of § 7-105.1 of this subtitle.

(g) Governmental entity may establish procedures for issuance of certificate. -- A county or municipal corporation may establish procedures governing the issuance of a certificate of vacancy or certificate of property unfit for human habitation under this section.

§ 7-105 - 12. Foreclosure sale of residential property

(a) Definitions. --

(1) In this section the following words have the meanings indicated.

(2) "Instrument of writing" has the meaning stated in § 12-101 of the Tax - Property Article.

(3) (i) "Residential property" means real property improved by a dwelling unit that is designed principally and is intended for human habitation.

(ii) "Residential property" includes:

1. A residential condominium unit; and

2. A unit in a cooperative project, as defined in § 5-6B-01 of the Corporations and Associations Article.

(4) "Tax" has the meaning stated in § 14-801 of the Tax - Property Article.

(b) Copy of ratification order. -- Except as provided in subsection (c) of this section, if residential property is purchased at a sale in an action to foreclose a mortgage or deed of trust on the residential property, the purchaser shall provide a copy of the court order ratifying the foreclosure sale to the supervisor of assessments for the county in which the residential property is located by the later of:

(1) 60 days after the entry of the court order ratifying the foreclosure sale; or

(2) If a motion is filed under Maryland Rule 2-535 before the expiration of the time period set forth in item (1) of this subsection, 30 days after the entry of a court order that resolves the motion without nullifying the ratification order.

(1) An instrument of writing transferring the residential property has been recorded in the land records of the county in which the residential property is located before the expiration of the time period set forth in subsection (b) of this section; or

(2) The foreclosure sale is subject to:

(i) A pending appeal of the ratification order;

(ii) A bankruptcy stay; or

(iii) An unexpired right of redemption in favor of the United States or any agency or department of the United States.

(d) Receipt. -- The supervisor of assessments shall provide a receipt to the person providing a copy of the ratification order.

(e) Failure to provide copy of ratification order. -- If a copy of the ratification order is not provided to the supervisor of assessments as required under subsection (b) of this section, any reduction in property tax received by the residential property because of its status as an owner-occupied principal residence from the date of the entry of the ratification order until the earlier of the receipt by the supervisor of assessments of a copy of the ratification order or the recordation in the land records of an instrument of writing transferring the property to a third party shall remain due and collectable as a property tax under Title 14 of the Tax - Property Article.

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2013 Maryland CodeREAL PROPERTY§ 7-105 - Sales

2013 Maryland Code
REAL PROPERTY
§ 7-105 - Sales