Real Property - Residential Foreclosures - Commencement Restrictions
HB769 revises Maryland’s residential foreclosure laws by adding new restrictions for foreclosing on owner-occupied residential property when the mortgage is “materially delinquent,” meaning no payments have been made by anyone other than the secured party for the prior five years, subject to exclusions for periods when foreclosures were barred by executive order or similar official action. The bill also requires a secured party seeking to foreclose on such a mortgage to send loan-related correspondence to the mortgagor each billing cycle, or alternatively provide a 90-day notice on a form developed by the Commissioner of Financial Regulation, before the foreclosure or judicial sale may proceed during the transition period.
The bill amends the contents of an order to docket or complaint to foreclose by requiring an affidavit stating whether the debt instrument is a materially delinquent mortgage and, if so, that the secured party has satisfied the new statutory requirements. It also adds a ten-year deadline from the claimed default date for commencing a foreclosure, and requires additional documentation when the foreclosing party acquired debt that had already been in default for five or more years. The bill further permits a mortgagor to raise laches as a defense in an action to enforce a materially delinquent mortgage and allows courts to attribute delay to the secured party and grant appropriate relief.
The bill’s impact is to create a new layer of procedural and timing protections for homeowners facing foreclosure on long-delinquent owner-occupied properties, while imposing ongoing notice obligations on lenders, servicers, and other secured parties. It also expands the filing requirements in foreclosure cases and gives the Commissioner of Financial Regulation authority to develop a notice form and related implementation details. In practical terms, the measure affects mortgage lenders, loan servicers, foreclosure counsel, and homeowners in residential foreclosure proceedings.
The available voting history shows strong support: the House passed the bill on third reading by a unanimous 138-0 vote. No committee transcript excerpts were provided, but the committee report was favorable with amendments, suggesting the bill was generally well received while still being refined during the legislative process.
The main points of contention implied by the text are the added burdens on secured parties versus the added protections for mortgagors. Lenders and servicers may view the bill as increasing compliance costs, documentation requirements, and limits on when foreclosure can begin, especially for older defaulted loans. Homeowner advocates would likely support the bill’s emphasis on notice, delay-based defenses, and restrictions on foreclosing after prolonged inactivity. The laches provision and the special treatment of debt acquired after long default are the most notable substantive changes.
HB769 amends Article 7-105.1 of the Real Property Article and adds new Section 7-105.19 to the Maryland Code, changing the procedural prerequisites for foreclosing on owner-occupied residential property. It imposes new affidavit and documentation requirements, a ten-year commencement limit tied to the claimed default date, and ongoing loan-related correspondence obligations for materially delinquent mortgages, while also authorizing a laches defense in enforcement actions. The bill affects mortgage holders, servicers, foreclosure practitioners, and homeowners, and gives the Commissioner of Financial Regulation authority to prescribe a notice form.
The bill appears to have had broadly favorable sentiment in the House. It received a favorable committee report with amendments and then passed third reading unanimously, 138-0. That voting pattern suggests little overt opposition in the chamber, though the amendments indicate the proposal was adjusted during committee review before final passage.
The central policy tension is between foreclosure access for secured parties and added protections for mortgagors facing long-delayed enforcement. The bill’s new correspondence requirements, ten-year filing limit, and laches defense favor homeowners and may be viewed by lenders and servicers as increasing litigation risk and compliance burdens. Another likely point of concern is the special rule for debt acquired after five or more years of default, which could complicate enforcement for purchasers of distressed mortgage debt. No recorded transcript debate was provided, so these contentions are inferred from the bill’s structure rather than from stated objections.