Each state has its own way of dealing with foreclosure proceedings on properties located within its boundaries. Lenders must follow the rules developed by the state, even if they are not headquartered in that state. Foreclosures in Maryland are handled through the judicial system. The state regulates when the lender can file foreclosure, when the borrower must be notified, and how long the court procedures should take. Overall, the process will take 150 days or more.
Maryland operates as a lien-theory state. When a home loan is obtained to purchase a property, the borrowers sign a security document called a mortgage before the loan funds. This document is filed with the county clerk where the property is located and acts to place a lien on the property. This lien is removed when the loan is paid in full. The mortgage document contains the specific terms and conditions of the loan, including the lender's right to foreclose if the borrower does not meet the terms of the loan. Foreclosure can be filed if the borrowers fail to make their monthly mortgage payments. A loan will generally be placed into default status when the bill becomes 30 days past due.
Maryland requires the lender to inform the borrowers that their loan is in default and that a foreclosure may occur if they fail to become current on the loan payments. In Maryland, this notice must be received by the borrowers at least 45 days before the lender files for foreclosure. The lender cannot file for foreclosure until the loan has been in default for at least 90 days. Only after these two guidelines have been met, and the borrower has made no effort to remedy the default, can the lender file the motion to foreclose.
The lender must present the foreclosure case to the circuit court of the county. To properly file, the lender must provide original or certified copies of the mortgage document, the notice of default sent to the borrowers, and an affidavit of ownership. Additionally, the lender must calculate the amount owed to them, which is what they will request in the foreclosure suit. The amount is generally the current loan balance, plus penalties, interest and attorney fees incurred in filing for foreclosure. Once the foreclosure is properly filed, the borrower must be personally served with the foreclosure notice. After the borrower is served, the lender must wait another 45 days before an auction sale can be held.
After 45 days, if the borrower has not answered the foreclosure by remitting a payment, the lender can schedule an auction sale date in accordance with the court's schedule. Once the terms of the sale are set, the lender must notify the borrower of the sale. Additionally, the lender must advertise the sale in local newspapers for three weeks. The borrower still has until the sale date to pay back the lender the amount requested in the foreclosure suit. If the borrower does not do this, the sale will proceed as scheduled. The sale takes place as a public auction and the property is sold to the highest bidder.