Last month, Robert Scott, a partner here at Ballard Spahr, wrote about recent changes in Maryland foreclosure law. He explained the effect of a new law that requires a foreclosing lender to seek a deficiency judgment in its foreclosure action, as opposed to a separate action for breach of the promissory note. The revised law also requires a lender to seek a deficiency judgment within three years of the date on which the foreclosure sale is ratified, rendering inapplicable the old 12-year statute of limitations typically used for instruments under seal.
While the new law most directly impacts mortgage lenders and servicers, it is indicative of the broader protections put into place for homeowners and borrowers by the Maryland legislature over the past six years, including:
- Enacting the Maryland Mortgage Fraud Protection Act in 2008;
- Lengthening the foreclosure process;
- Requiring more robust notices to homeowners in foreclosure;
- Regulating foreclosure consultants who purport to help homeowners through the foreclosure process; and
- Requiring mediation in foreclosure cases.
These changes were a direct consequence of the foreclosure crisis that coincided with the “Great Recession” of 2008-09, and are consistent with a nationwide pro-borrower shift.
Even as the economy (slowly) improves, lenders and other residential real estate businesses should be keenly aware of the ever-increasing protections afforded to homeowners.