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There are basically four stages of foreclosure. We are offering legal assistance at three of them.
Stage 1 - Behind in mortgage and/or received a Notice of Intent to Foreclose. - This is not a legal emergency. This means a case could be filed in court in 45 days. At this stage, clients should be directed to contact their lender or servicer directly and ask to be considered for the Home Affordable Mortgage Program. (HAMP). They can do the contacting directly or make an appointment with a housing counselor. I recommend they do both. Housing counselors and banks are overwhelmed right now. Its important to get the paperwork from the lender and get it filled out and back in. We do not do that, the client does. Please tell clients that under no circumstances should they pay anyone to contact their lender.
In these cases, refer client to lender for HAMP and/or Housing Counselors.
Non Profit Housing Counselors in Prince Georges County are:
Initiative Partnership (HIP)
6525 Belcrest Rd # 555
Hyattsville, MD 20782-2067
5601 Old Branch Avenue
Camp Springs, MD 20746
SEED - SOWING EMPOWERMENT IN ECONOMIC DEVELOPMENT
Riverdale Rd. Riverdale
For Montgomery County - Have them call CCCS.
For Howard County - Ask Barbara
Also can refer clients to Community Legal Services – Laura Bowman Pimental Foreclosure Paralegal. 301-864-4907 ext. 16.
Stage 2 - Client has received by personal service or certified mail or posted on property a Notice of Order to Docket.
This means the foreclosure case has actually been filed in court and a sale could take place within 45 days of service of the notice. If we are going to file a motion to stay the sale, we are supposed to do it within 15 days of service, but the rules allow for a later filing for good cause. If client is being considered for a HAMP modification and told it will take 30 days to evaluate, and it seems from income that a modification would help the client, we might file a motion for a stay. Or if the loan seems horribly predatory, as in it was an ARM which was affordable before it went up and there are other things that make it foreseeable that the client would default, we might need to file.
If it seems compelling and time is short, I recommend consulting with Kathleen at X7810.
NOTE: There is no such thing as a court date for a sale. The sale happens after the Order to Docket unless a Motion for Stay of the sale is filed and a hearing is granted. You can check Case Search to see what stage the foreclosure is in. All of our counties show up on Case Search.
Stage 3 - The House has Been Sold but 30 days have not gone by - This is the time between the sale and the court's ratification of the sale. Exceptions to the Sale can be filed during this time, anytime before the 30 days have passed. In exceptions, we tell the court the sale was not done properly or fairly and ask that it be canceled. We would do this if the client complied with the lender or servicer's instruction to send in a certain amount of money but the sale went ahead. We would file exceptions if the client was being considered for a HAMP modification when the sale took place, or If the client had a lot of equity was not not considered for modification or a sale of the property.
If the sale has just taken place and it looks like there might be a good reason for exceptions, I can look at it when I get back. If time is short for exceptions, consult with Kathleen.
Stage 4 - The sale has been ratified and client has been served with an Order to Show Cause for Possession, or a realtor has posted a notice to leave. The Order to Show Cause is served as a court summons and client has the opportunity to request a hearing. At this stage, generally the only thing we would do is help the client negotiate a Cash for Keys deal. Instead of going through with an eviction, the purchaser (who is usually the bank) would rather pay about $1500 or $2000 and get an agreement to a move out date than evict the client by paying the Sheriff and movers. Most clients at this stage understand the house is gone and they have to get out. Some think its a hearing on the foreclosure. It is not a hearing on the foreclosure. I do not go to these hearings. I just help more needy clients with the cash for keys negotiations.
In these cases, advise the client to ask for a cash for keys deal, or help the client negotiate one.
The Maryland Rules spell out all of this in Title 14. My Rules are marked so if anyone gets that far in a case, you might want to look at my copy in my office.
Tenants in Foreclosure – PL-111-22 Federal Law to Prevent Mortgage Foreclosures; Sec. 7 is called Protecting Tenants in Foreclosure Act. If a tenant has a month to month agreement or less than 90 days left in the lease, tenants must be given 90 days notice to vacate the property.
If tenants have a valid lease with longer than 90 days, and foreclosure purchaser does not intend to occupy the house as a primary residence, the purchaser takes subject to the lease and has to honor it.
This also applies to Sec. 8 tenants.
But it has to meet the law’s definition of a bona fide tenancy.
Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if--
(1) the mortgagor or the child, spouse, or parent of the mortgagor under the contract is not the tenant;
(2) the lease or tenancy was the result of an arms-length transaction; and
(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property or the unit’s rent is reduced or subsidized due to a Federal, State or local subsidy.
So a client can’t say, my spouse/child/parent was not on the loan so I will sign a two year lease for her and that has to be honored so we all stay in the house for two years.
The tenants provision expires at the end of 2012.
Some tenants find out that the house is in foreclosure and decide they do not have to pay their mortgage anymore. We need to advise them especially if they have a lease, they should not be doing anything to violate the lease by not paying because their lease will probably remain valid.
Bankruptcies in Foreclosure – 30 day automatic stay -. Chicas example. Just trying to buy time, Can’t afford a 13. Will file a 7 to keep them in the house as long as possible. They were duped by the system. They have four children including a senior in high school. Cant afford rent either
Advising people who are underwater to walk away after the foreclosure and file a Ch. 7 Especially elderly people with protected income who could downsize and have enough income to rent an apartment. Case above is the same thing except trying to buy time for them because of lack of income and big family makes it hard for them to afford rent.
People with equity in their homes: Big danger here, is that they call to talk to someone about their loan and are offered a modification. If they have no income they will not get the modification and the foreclosure process continues while they are being considered for modification. They are denied the modification and their house is sold immediately. Homes with equity are being sold quickly because the lender will get their money back.
Have not seen lots of deficiency cases but they have three years to sue, under rule 14-216 so it might be an issue.
Loan Mod Scams – get materials from MICPEL training.
Foreclosure rescue scams – April Richardson at PG atty general’s.
Also in mortgages where it looks like the mortgage broker committed fraud, DLLR (GET THE NUMBERS FOR THESE THINGS) .