• Mortgage Lending And Foreclosure
  • August 10, 2017 | Authors: Peter B. Rosenwald; Lawrence D. Coppel; Christia A. Pritts; Marjorie A. Corwin; Andrew D. Bulgin; D. Robert Enten; Christopher R. Rahl; Robert A. Gaumont; Chastity E.C. Threadcraft
  • Law Firm: Gordon Feinblatt LLC - Baltimore Office
  • Closed End Mortgage Lending – Elimination of Duplicative Disclosures
    SB392 (Chapter 484)
    (effective July 1, 2017)

    Since 1989, Maryland has required licensed mortgage lenders and brokers to provide certain unique disclosures, commonly referred to as the Maryland financing agreement and Maryland commitment. Failure to provide these disclosures can lead to regulatory penalties and civil liability. Chapter 484 recognizes that much, if not all, of the information required to be disclosed in the Maryland financing agreement and Maryland commitment is found in required federal Truth in Lending Act and Real Estate Settlement Procedures Act integrated disclosures (TRID) for closed end mortgage credit. Chapter 484 establishes that disclosures provided by a licensee to a borrower in compliance with TRID will satisfy requirements under Maryland law to provide a Maryland financing agreement or Maryland commitment. Chapter 484 directs the Commissioner of Financial Regulation to monitor TRID requirements implemented by the federal Consumer Financial Protection Bureau and notify the Governor and the General Assembly if the Commissioner determines that federal disclosure requirements are modified or proposed to be modified to be less stringent or less consumer friendly.

    Practice Point: TRID does not apply to some mortgages, such as reverse mortgages or open end lines of credit (HELOCs), and Maryland disclosures for those loans are not changed. Licensees may want to contact their forms providers and find out if changes will be implemented to reflect the elimination of certain unique Maryland disclosures for loans subject to TRID.

    Mortgages and Deeds of Trust – Prerequisites to Recording
    HB595 / SB376 (Chapters 520 and 521) and HB404 (Chapter 425)
    (effective October 1, 2017)

    Under existing law, deeds, mortgages, and deeds of trust must contain a certification that the instrument was prepared by an attorney or a party to the instrument. (St. Mary’s County has a local law to this same effect, and Chapter 425 rescinds that local law effective October 1, 2017.) Chapters 520 and 521 amend this requirement, providing that a mortgage, deed of trust, assignment of a mortgage/deed of trust, or release of a mortgage/deed of trust does not need the preparation certification. This revision may reduce the burden faced by lenders that document a significant volume of mortgages and deeds of trust.

    Practice Point: Language was included in these Acts to acknowledge that one of the parties to a mortgage, deed of trust, or assignment of mortgage/deed of trust may prepare that instrument.

    Recordation and Transfer Tax – Principal Residence Surrendered in Bankruptcy – Exemption
    HB469 (Chapter 538)
    (effective July 1, 2017)

    This Act exempts from recordation and transfer taxes the recordation of a deed transferring residential real property to the secured party under a purchase money deed of trust when the property was the grantor’s principal residence and the property was surrendered to the secured party in connection with a Chapter 7 bankruptcy.

    Notices of Foreclosure Sale and Postponement or Cancellation of Foreclosure Sale
    HB26 / SB247 (Chapters 346 and 347)
    (effective October 1, 2017)

    These Acts expand upon the existing written notice requirements necessary for a residential foreclosure sale. In addition to the existing duty to provide notice of the time, place, and terms of a foreclosure sale to the record owner of the subject property, the Acts require the person authorized to conduct a foreclosure sale to give written notice to a condominium or homeowners association that recorded a statement of lien under the Maryland Contract Lien Act at least 30 days before the proposed sale date. Additionally, in the event the foreclosure sale is postponed or cancelled, the person authorized to conduct the foreclosure sale must give notice within 14 days of the postponement or cancellation to the record owner and, if applicable, the condominium or homeowners association. Under current law, the person authorized to conduct the foreclosure is not required to provide notice of the cancellation or postponement of a sale.

    Practice Point: These new notice requirements are relatively minor, so these Acts should not dramatically increase the burden on secured parties pursuing foreclosure.

    Residential Property – Vacant and Abandoned Property – Expedited Foreclosure
    SB1033 (Chapter 617)
    (effective October 1, 2017)

    This Act provides procedures for secured parties to petition the court to proceed with an expedited foreclosure of vacant and abandoned residential real property. If the deed of trust has been in default for at least 120 days and the secured party can establish certain other indicia of abandonment (such as boarded up windows, disconnected utilities, the absence of furnishings, accumulated litter, destruction or vandalism of the property), the secured party may petition the court for an expedited foreclosure. If the court grants the petition, then the secured party can proceed with an expedited foreclosure and avoid the usual requirements in a foreclosure of residential property, including possible mediation and certain notice requirements. Essentially, if the court grants the petition for immediate foreclosure, the foreclosure will proceed like a foreclosure of commercial real property rather than residential property.

    Practice Point: This Act will allow secured parties to avoid the needless accrual of time and expenses typically associated with foreclosure of residential abandoned properties. Importantly, taking the actions described in this Act is completely voluntary. A secured party may always follow the normal requirements for residential property foreclosures even if the property is vacant and abandoned.

    Residential Property – Notice of Foreclosure
    SB875 / HB1048 (Chapters 348 and 349)
    (effective October 1, 2018)

    These Acts provide that a person authorized to sell residential real property subject to a foreclosure must file with the Maryland Department of Labor, Licensing, and Regulation (DLLR) certain information concerning the property. The information provided to DLLR includes basic information, such as the property’s address, tax identification number, whether the property is vacant, and if known, the owner’s contact information. The new notice required under these Acts must be filed within 7 days of filing the foreclosure order to docket. DLLR will provide the form of the notice. These Acts should not prove to be overly burdensome, but does increase the compliance burden for the party conducting the foreclosure. These Acts have a delayed effective date of October 1, 2018.