On April 8, 2008, several measures became law that offer substantial protections to Maryland homeowners facing the possibility of foreclosure. These protections make it particularly important for homeowners to file answers in court when confronted with foreclosure. Among other things, the new laws:

1. Mandate that lenders send a notice of intent to foreclose at least 45 days prior to filing a foreclosure action in court;
2. Require that lenders wait until 90 days after a default in payment before commencing a foreclosure case;
3. Require that the foreclosure court papers be personally served upon the borrower; if personal service is unsuccessful, the papers may be served by posting on the property and mailing;
4. Require lenders to publish a notice of sale in a newspaper at least three times before the sale can take place; and
5. Give homeowners the opportunity to pay overdue payments up unti one day prior to the scheduled auction.

In 2010, the mortgage foreclosure crisis that has gripped the United States took an unexpected turn: the validity of tens of thousand of foreclosure judgments was called into question as revelations of widespread robo-signing came to light.

Robo-signing refers to the widespread practice amongst bank attorneys (a/k/a “foreclosure mills”) of using computer-generated, false signatures to churn out tens of thousands foreclosure pleadings. The practice of robo-signing is deceptive and violates state foreclosure laws that require attorneys to personally review and sign legal documents filed in court.

In October, 2010, it was disclosed that two of the law firms that account for a substantial number of foreclosure filings in Maryland had engaged in robo-signing of thousands of legal foreclosure filings. Two attorneys, one based in Hunt Valley and the other in Bethesda, have filed more than 20,000 foreclosure cases in Maryland courts since 2008.

In response to the robo-signing scandal, Maryland’s highest court ordered the review of thousands of foreclosure cases.

The revelation of the unsavory tactics employed by lenders gave homeowners an additional tool to use in fighting to stop foreclosure. Now, more than ever before, courts are strictly scrutinizing foreclosure complaints. This makes it particularly beneficial for Maryland property owners to file answers to their lender’s foreclosure complaints. The increased scrutiny being placed upon financial institutions makes it more likely that foreclosure complaints will be dismissed, and also provides more incentives for banks to agree on settlement terms and restructuring of loans.

Before commencing a legal foreclosure action in Maryland, a financial institution is required to provide homeowners with certain mandatory notices, including:

• Notice of Intent to Foreclose must be mailed at least 45 days before filing a foreclosure action in court. The notice must include specific information about the mortgage, an application for loss mitigation and instructions to complete the application.
• A foreclosure action (order to docket) cannot be filed with the courts until your loan is 90 days past due. The order to docket (OTD) is a large set of documents which must include some of the documents from settlement, the notice of intent to foreclose and either a preliminary loss mitigation affidavit or final loss mitigation affidavit.

Unless the foregoing notices have been issued, the financial institution may not be given a judgment of foreclosure. If a Maryland homeowner has not receive the notices, they may have meritorious affirmative defenses that they can assert in their foreclosure answer. Homeowners who do not answer their lender’s foreclosure complaint may be sacrificing valuable legal rights.

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