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Changes to take place in Maryland's foreclosure law

September 01, 2012

Three changes in Maryland’s law this fall should help neighborhoods that have been hurt by the housing foreclosure crisis, an official said late last month.

The changes were approved by the state legislature earlier this year after being recommended by a special task force appointed to study such problems, said Kathleen Murphy, president of the Maryland Bankers Association and a task force member.

Murphy said the state is in the process of writing regulations to carry out the changes, which are to take effect Oct. 1.

She provided information about the changes:

• To speed up the time it now takes for vacant properties in foreclosure to be put up for sale, “there will be a process where the lender can apply to the local government for a certificate to confirm that the property they’re foreclosing on is vacant,” Murphy said.

“If that’s the case, they can move in a more expedited fashion to file the foreclosure action and to move to sale,” she said.

If the homeowners are still living in the house, the process will stay as it is. With the notices lenders are required to send to borrowers, “it takes about 623 days now, from the first day the borrower misses a payment, until the foreclosure sale occurs,” Murphy said.

• The borrower will be allowed to request mediation before a lender can file to foreclose on the loan, Murphy said.

At present, the mediation can come only after the filing of a foreclosure, she said. When the new law takes effect, “they can go to mediation much earlier,” she said.

And, she said, “there’s now a mediation checklist to make sure every process of short sale and (other options) have been considered by the lender.

“The idea is going back to that graceful exit by the borrower. There are borrowers out there now who just don’t want to continue with the pressure of the payment.”

The new, earlier mediation will also be available to borrowers who want to modify their loan payments so they can keep their homes, Murphy said. That way, telling the lender about recent changed circumstances such as landing a job, might lead to a new payment plan, she said.

• Maryland will have a foreclosed property registry. Whenever a foreclosed property is sold, regardless of whether the new owner is a lender or an individual, the new owner’s name will be put in the new registry, she said.

“The registry will allow local governments to know who to go to if the property falls into disrepair,” Murphy said. “So if the lawn needs cutting or the roof falls through because of a hurricane, they will know who to go to.”

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— Arnold S. Platou

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