Receiving notice that your house is about to be foreclosed upon is one of the most traumatic things that you can go through. However, by virtue of the mortgage or deed of trust, which is signed at every real estate closing and subsequently recorded among the land records of the county in which the property is located, your lender has been given the right to foreclose on the property if the loan is not repaid in accordance with the terms of the loan.

If a default under the terms of a mortgage or deed of trust occurs, the lender may initiate a foreclosure case with the Circuit Court in the county in which the property is located. To initiate a foreclosure case, the lender must docket file the foreclosure with the court. The lender is not required to send a copy of the court papers to the property owner. By this time, however, you as the borrower and property owner should have received adequate notice from the lender that there is a problem with your loan account and from the lender’s attorney that there is a default under the terms of the loan. Many mortgages require the lender to give a notice of the default and your right to remedy it before the foreclosure proceedings can be filed. Do not ignore or delay in responding to any written communication from your mortgage lender.

Along with the foreclosure court papers, the lender must file, under oath, a statement of debt which itemizes the entire amount the lender claims is due under the loan. This will usually include principal, interest, late charges, attorneys’ fees and all other charges that the borrower is responsible for under the mortgage. Again, this statement of debt is generally not sent to the property owner. The lender must also certify that the property owner is not a member of the military service.

Under a federal law, commonly known as the Soldiers’ and Sailors’ Civil Relief Act, members of the military service have specific rights with respect to lawsuits brought against them (including foreclosure proceedings) since they may not be in the U.S. due to a military assignment and unable to adequately defend their interests. If you are a member of the military service and find a property owned by you is the subject of a foreclosure action, you should ask an attorney what additional rights you may have as a result of this federal statute.

Once these initial steps have been taken and the foreclosure case has been started, the lender may schedule a sale of the property. This, unlike the actual initiation of foreclosure proceedings, cannot be done without your knowledge. In fact, you will receive notice of the sale by two separate means. First, an advertisement of the sale including the date, time and location and description of the property must appear in the legal notices section of a local newspaper for three consecutive weeks in the area where the property is located. The first advertisement should be published not less than 15 days prior to the date of sale and the last advertisement should be published not more than 7 days prior to the date of sale.

Second, the lender or lender’s lawyer must give you notice by certified and first class mail of the time, place and terms of the pending foreclosure sale. This notice must be sent not later than 10 days prior to the scheduled sale date.

Once you have received these notices, it does not mean that all hope of saving your property is lost. If you have not spoken with your lender, contact the lender immediately. Find out the exact details of the default, which the lender believes you have committed, and what you can do to remedy this default. You must communicate with your lender.

If you think your lender has made a mistake and that there is no default under the loan, you should bring this to the lender’s attention as soon as possible. Even if your lender does not agree that is has made a mistake in declaring your loan a default, you have the right to go before the court to prove that you did not default on your loan. Seek professional assistance to prove that your loan was improperly declared in default.

Generally, the only legal basis upon which you can stop the foreclosure is if the debt and interest have been paid, there is no default, or the lender committed fraud in obtaining the mortgage. Objections may be filed after the sale has taken place, but before the court has ratified the sale, if the sale was improperly conducted. A bankruptcy filing prior to the actual sale will also "stay" or temporarily stop a foreclosure.

If a sale does take place, the property will be sold through a public auction open to anyone who desires to make a bid. Public auctions are usually held on the property or at the courthouse in the county where the property is located.

After the sale has taken place, it usually takes approximately 30-45 days for the sale to be ratified. After ratification, an audit of the sale is conducted, all expenses are claimed and a determination of how proceeds will be distributed is made. You may be entitled to any excess proceeds following payment of the principal, interest, cost, fees and any other liens on the property. Alternatively, if the sale proceeds are insufficient to pay off the expenses, you may be subject to what is called a deficiency judgement, which holds you personally responsible for the amount remaining due.

As a practical matter, if you are having difficulty meeting your financial obligations, you should consider the following suggestions:

• Contact your mortgage lenders and discuss the problem. They may be able to work out an arrangement to assist you over a difficult period.
• By all means pay your mortgage payment first. It is one thing to have your credit cards curtailed for non-payment; it is much worse to lose your home.
• Communicate with all your creditors in an effort to work out manageable payment terms.
• Contact the Consumer Credit Counseling Service of Maryland, a non-profit organization that can help you in restructuring your indebtedness.
• Consult a qualified lawyer who specializes in bankruptcy matters. The local lawyer referral services can assist you.
• In no event should you ever ignore or delay responding to a written communication from your mortgage lender.

There are many procedural steps and hurdles during the foreclosure proceeding where professional legal assistance will be of immense importance. But above all, the most crucial step to take in a foreclosure situation is to communicate with the lender as early as possible.

Foreclosure Proceedings in Maryland © 1986, MSBA, Inc. Revised 2000
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