With the rising tide of mortgage foreclosure actions, Maryland has implemented new legal protections for homeowners. The laws are intended to: (a) protect homeowners who have been fraudulently induced to enter into high-interest loans; and (b) provide homeowners with information about alternatives to foreclosure and the importance of filing an answer if they are served with a foreclosure complaint.
The most recent legal protections went into effect in April, 2008. Among other protections, the new laws: (a) mandate that lenders provide the homeowner with a written notice of intent to foreclose at least 45 days prior to filing a foreclosure action in court; (b) require that lenders wait until 90 days after a default in payment before commencing a foreclosure case; (c) require that the foreclosure court papers be personally served upon the borrower; (d) require lenders to publish a notice of sale in a newspaper at least three times before the foreclosure sale can take place; and (e) give homeowners the opportunity to pay overdue payments up until one day prior to the scheduled auction.
The goal is to ensure that homeowners are given increased time to explore alternatives to foreclosure. In responding to foreclosure complaints, homeowners should ascertain whether their lender complied with the new procedural requirements. Where the required notices were not properly served, a homeowner should specifically raise the lender’s noncompliance with the law as an affirmative defense in their answer to the foreclosure complaint. By asserting the newly available affirmative defenses, homeowners may be able to delay foreclosure and motivate lenders to provide non-foreclosure options, such as short sales and loan modification.
Previously, in 2005, the Maryland legislature passed legislation requiring lenders to provide specific notice to homeowners regarding their rights in foreclosure actions. This law took effect on May 26, 2005 and, among other things, requires that foreclosure notices contain specific warnings and information.
Like other states, Maryland experienced record numbers of foreclosures in 2009. Prince George’s County and Baltimore County have experienced the highest number of foreclosures overall. However, the increase in foreclosure rates has affected every part of the state. Statewide, foreclosure filings in August, 2009 were up by more than 70% as compared to August, 2008. These grim statistics reflect the increase in unemployment, large number of high-interest mortgages, and crumbling property values. Even the most desperate homeowners should file answers when served with foreclosure complaints. Homeowners who answer foreclosure complaints are generally able to slow the foreclosure process. In many instances, homeowners who have filed answers to foreclosure complaints have found that their lenders are more willing to consider various options, including loan modifications and short sales, that were not made available previously.
Foreclosure answer forms are available for download, and are relatively easy to complete and file with the court. A foreclosure answer need not be lengthy or complex. The principal purpose is to concisely deny those allegations in the complaint that are false, and to set forth any affirmative defenses which may be applicable. In foreclosure cases, answers often contain the following affirmative defenses: (a) the mortgage was entered into fraudulently or in violation of the Truth in Lending Act; (b) the lender failed to comply with applicable notice periods; and (c) the lender failed to personally serve the foreclosure summons and complaint. These are just some of the affirmative defenses to foreclosure that a homeowner should consider asserting in their answer form.