Maryland Foreclosure Defense Alert! Governor Puts Strict Rules In Place For Foreclosures During COVID-19 Pandemic

Maryland Governor Larry Hogan has given Maryland foreclosure defense experts and homeowners a helping hand in Maryland. Hogan has issued an Executive Order stating the following until the pandemic is over:

• Foreclosure sales will only be valid if the servicer has notified the borrower of their rights to request a forbearance.
• The Governor’s orders prohibit residential and commercial evictions if the tenant can show they suffered a substantial loss of income.”
• Mortgage servicers must certify they have notified the borrower of their right to request a forbearance.

Hogan’s executive order is similar to Section 4022 of the CARES Act. The Order grants borrowers a right to request forbearance if they are experiencing financial hardship due to the pandemic.

The Maryland Commissioner of Financial Regulation (MCFR) must stop accepting Notices of Intent to Foreclose until January 4, 2021. This would effectively prohibit new foreclosure initiations until that date.

The MCFR will only accept Notices of Foreclosure after a servicer certifies that they notified the borrower of their right to request a forbearance.

Maryland Foreclosure Defense Alert! Governor Hogan Puts Restrictions on Residential Foreclosures

Hogan’s order bars foreclosures sales of residential property.

However, there are exceptions to the moratorium. Mortgage servicers can only proceed with foreclosures if the following criteria are met:

1. Mortgage servicers must send borrowers written notice stating distressed homeowners’ right to request a forbearance. Servicers must do this 30 days prior to initiating foreclosure.
2. The servicer must comply with all of its obligations under the CARES Act.

Non-Federally Backed Mortgage Loans:

1. The servicer must notify the borrower in writing, they may request a forbearance on the loan. This is regardless of delinquency status for a period of up to 180 days.
2. Servicers must allow homeowners to extend their forbearance for an additional 180 days if needed.
3.  The servicer must also provide a borrower with forbearance if they request one.
4. The borrower is only required to state financial hardship caused by COVID- 19.
5. Mortgage servicers are also barred from charging borrowers any additional fees, penalties, and/or interest.
6. Servicers are also barred from charging any additional interest beyond the amounts scheduled or calculated during the forbearance agreement.

The Governor’s order also suspends the operation of the Commissioner’s Notice of Intent to Foreclose Electronic System until January 4, 2021. The Commissioner is also to stop accepting Notices of Intent to Foreclose (the notice). This effectively imposes a moratorium on the initiation of new foreclosure actions.

Mortgage servicers must send borrowers a notice at least 45 days before initiating foreclose. 

Mortgage servicers must also certify they have complied with the Governor’s order.

Governor Hogan Puts Prohibition on Residential and Commercial Evictions

The Executive Order also prevents Maryland courts from ruling on evictions and barring from issuing judgments if the tenant can show they suffered a substantial loss of income.

The Executive Order defines “Substantial Loss of Income” as follows:

1. A substantial loss of income resulting from COVID-19 or related to the state of emergency. This includes job loss and a reduction in compensated hours of work. The order also covers people who faced the closure of their place of employment.
2. The order also covers the people who need to miss work to care for a home-bound school-age child.
3. A substantial loss of income resulting from COVID-19 or the related proclamation of a state of emergency.
4. The order also covers someone with a catastrophic health emergency.
5. As well as, a lost business and required closure or loss of employees.

Feel Free to call us for more information or to get a copy of Governor Hogan’s order at 888.737.6344.