As a state with the twelfth highest foreclosure rate in the nation, Maryland contains thousands of homeowners seeking means to stop foreclosure and save their homes in these difficult times. Maryland is another lien theory state, where the property serves as security for the mortgage loan. The state allows both judicial and non-judicial means of foreclosure, depending on the type of mortgage. It also allows assent to decree foreclosures, whereby the mortgage includes a clause assenting to a foreclosure decree when a homeowner fails to meet specific conditions of the note. The lender must file a complaint but is not required to attend a hearing to begin the foreclosure. These processes generally take between 90 and 100 days to execute, depending on the format. That allows the borrower significant time to attempt to redeem their property, since there is no legal means to redeem it after the foreclosure. The lender also has the right to seek deficiency judgments according to Maryland law.
Avoiding Foreclosure through Lender Assistance
A lender can be a homeowner’s greatest asset if they are struggling to save their home. Lenders are also struggling to keep up with the number of borrowers who default on their loans. If they believe a lender will be able to get back on track by changing the terms of the loan, it may be worthwhile to them to help by showing forbearance to allow a few late or missed payments, by modifying the terms of the loan, or by allowing a homeowner who is expecting additional income in the near future to reinstate their loan.
Government Assistance
The government is another source of help for those facing foreclosure. They have set aside monies to be used as incentives for lenders who work with borrowers to refinance high interest or variable rate loans. In addition, they have passed laws to help those who have found help through their lenders.
- The Homeowner Affordability and Stability Act
- The Hope for Homeowners Act, which also offer incentives to lenders who offer reduced principal or waivers on early payment or late payment fees.
- The federal Mortgage Forgiveness Debt Relief Act of 2007, which prevents the IRS from taxing forgiven debt amounts as income.
To learn if they qualify for any of these programs, borrowers should consult a foreclosure avoidance counselor from the U.S. Department of Housing and Urban Development (HUD), which is usually free.
Bankruptcy Options
Bankruptcy was designed to provide relief for those in serious debt problems, although new restrictions have made it more difficult to qualify. Those who do will realize an immediate court-ordered stay, or hold, on creditors’ collection efforts or on foreclosure procedures while they decide which type of bankruptcy is appropriate.
- Chapter 13 – this type of bankruptcy allows the debtor to work out a new repayment plan that is more appropriate for their financial status. If it is approved, and if they complete the new program, they should be able to have their debts cleared and save their home.
- Chapter 7 – this type of bankruptcy is more difficult to qualify for, but it may allow most of a borrower’s debts to be discharged, or erased. It also generally requires some personal property to be liquidated. Most states have some homestead exemptions, although Maryland does not.
Avoiding Foreclosure through Home Sales
When other options fail, a homeowner may have only one more solution: to sell their home. If they can do so for a profit on their own, they may not only be able to pay off their mortgage, but have additional income to relocate and pay off other debts. Today’s market may make such an offer unlikely, but the homeowner may be able to negotiate with their lender to accept a short sale.
A short sale occurs when the lender accepts a sale price lower than the remaining mortgage amount to satisfy the loan. Since Maryland allows deficiency judgments, the agreement should be made in writing to protect the homeowner.
The homeowner may also ask the lender to accept the deed in lieu of foreclosure. Again, the loan would be satisfied by the transfer, which the lender should confirm in writing to eliminate the possibility of a deficiency judgment.
Getting Legal Help Stopping Foreclosure in Maryland
Without legal representation, it is easy for homeowners to be unaware of their options to stopping a foreclosure in Maryland. In addition, they may fail to meet all the qualifications for certain programs without a lawyer to guide them through the application process. Finally, it is vital to avoid scams and use only reputable means to save their home and repair their credit score. A dedicated lawyer working with a knowledgeable HUD counselor can provide the assistance a homeowner needs.
