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Two Bills That Affect Maryland Foreclosure Notices

By John Ansell, Rosenberg & Associates

The Maryland legislature has passed House Bill 26 (“HB26”) which amends the foreclosure notice provisions contained in Maryland Real Property Article 7-105.2. HB26, slated to take effect on October 1, 2017, provides that notice of a foreclosure sale must be sent to a condominium association (COA) or homeowner’s association (HOA) which has recorded a lien against the property at least 30 days before the date of the proposed sale. This change now explicitly requires notice of sale be sent to any COA or HOA that has a lien recorded against the property at least 30 days prior to the scheduled sale. Since the current law requires notice to all subordinate lien- or judgment-holders (whose liens are recorded and indexed at least thirty days prior to the sale), this change is not particularly significant.

Further, and more impactful, the bill provides that in the event of a cancellation of a foreclosure sale, the trustee must send notice of the cancellation to the record owner and to any COA or HOA to whom notice of the sale was sent, within 14 days of the cancellation. The statute does not mandate a particular form for the notice.

The legislature in Annapolis also passed House Bill 1048 (“HB1048”), which adds a new registration component to the Maryland foreclosure process. Once it becomes effective, the law will require the property to be registered with the states’ Department of Labor and Licensing Regulation within seven days of docketing the case. While none of the information to be collected for this registration is unusual, the eventual registration process (either through a form drafted by the Commissioner of Financial Regulation, or directly through electronic registration) includes the requirement to provide the contact information for the “person authorized to manage and maintain the Property before the foreclosure sale.” Thus, in order to comply, servicers will need to provide property preservation contact info to their law firms early in the process (if relying on firms to handle the registration). This Bill also further extends State preemption of current foreclosure registry requirements to include this new registration. Interestingly though, the statute defines this new notice as not a public record, but says the registration notice can be made available to the jurisdictions, a person who owns property on the same block, or the HOA or COA. Fortunately, the legislature explicitly moved back the effective date of this bill from the first draft until October 1, 2018.

In summary, while neither of these Bills make any fundamental changes to Maryland’s foreclosure rules, they are additional administrative and procedural steps that will need to be monitored to ensure compliance.

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