Maryland Enacts Foreclosure Mediation Law
. On April 13, Maryland Governor Martin O'Malley signed a law (H.B. 472) giving homeowners the right to mediate foreclosure with a neutral third party and requiring lenders to conduct loss mitigation analyses before foreclosing home loans. The law applies to 1-4 family residential properties occupied as the borrower's primary residence and is effective July 1, 2010.
- Under the law, a lender must offer a loss mitigation application to a borrower in connection with the statutory notice of intention to foreclose; if mitigation is denied, the homeowner can request foreclosure mediation from the Maryland Office of Administrative Hearings. The lender cannot file for foreclosure until at least 45 days after the notice of intent to foreclose is sent to the borrower with the required loss mitigation application. Following completion of the loss mitigation analysis, the lender cannot foreclose for 30 days. If the borrower requests mediation, the lender cannot foreclose until at least 15 days after mediation.
The law also creates a Housing Counseling and Foreclosure Mediation Fund that will be funded with fees imposed under the new law (the law sets a $300 foreclosure filing fee supplement for lenders and a $50 mediation request fee for property owners). The fund will (i) support housing counselors, (ii) provide legal assistance to homeowners trying to avoid foreclosure, (iii) support nonprofit housing counseling agencies, (iv) help the state advise homeowners facing financial difficulties, and (v) assist in funding the cost of foreclosure mediation.
For a copy of the bill, which includes the forms that will be used for preliminary and final loss mitigation analysis, please see http://mlis.state.md.us/2010rs/bills/hb/hb0472e.pdf