Resources for Maryland
JUST SAY NO TO FORENSIC LOAN AUDITS
The FTC cracks down on forensic loan audits, finding that the audits were unlikely to help homeowners in default. Click here
for full text of the article.
Maryland U.S. District Court Judge Benson Everett Legg blasts a fake loan audit in Stojinski v. JP Morgan Chase Bank, et al.
for full text of the opinion from DEAN blog.
MARYLAND FORECLOSURE INFORMATION
MORTGAGE LOAN ASSISTANCE OPTIONS
As soon as you determine that you will have problems making your mortgage payment, contact your loan servicer to see what your loan assistance options are.
- Home Affordable Modification Program (HAMP)
- Investor/in-house/traditional modification
- Modifications pursuant to settlements
- Repayment plan
- Combination of repayment plan and forbearance
- Property rent back
- Home Affordable Foreclosure Alternative (HAFA)
- Short sale
- Cash for Keys
- SUN Initiative Program
If your loan is owned or guaranteed by Fannie Mae or Freddie Mac, you must be reviewed for a HAMP modification.
If your servicer is participating in HAMP, your loan must be reviewed for HAMP, however it will be the investor's decision as to whether you are approved for a HAMP modification.
To see if your servicer is participating in any HAMP or HAFA programs, visit the Making Home Affordable
Visit Making Home Affordable at CheckMyNPV.com to conduct your own net present value (NPV) evaluation of your mortgage for the Home Affordable Modification
Borrowers can input the values provided in the Notice of Non-Approval received after
being denied for a HAMP modification or substitute with estimated NPV values to
compare the respective outcomes.
Please note that this calculator provides only an estimate of the servicer's NPV
***NOTE: IF YOU ARE NOT YOUR MAKING MORTGAGE PAYMENTS BECAUSE YOUR SERVICER IS REJECTING YOUR PAYMENTS OR BECAUSE THERE IS A DISCREPANCY IN WHAT YOU BELIEVE YOU OWE, YOU MUST SAVE THOSE MORTGAGE PAYMENTS (IN YOUR BANK ACCOUNT, ETC.) AND HAVE THEM AVAILABLE TO PAY ONCE THE ISSUE HAS BEEN RESOLVED. THE FACT THAT YOU ARE IN A DISPUTE WITH YOUR SERVICER DOES NOT MEAN THAT YOU ARE NOT LEGALLY OBLIGATED TO MAKE THOSE PAYMENTS AT SOME POINT IN THE FUTURE. DO NOT SPEND THE MONEY OR USE IT PAY OTHER BILLS. THE DISPUTE WILL NOT SUFFICE AS A DEFENSE FOR NOT OWING THE MONEY. ***
One of the most important things to remember is that there is a difference between being in "foreclosure status" with your mortgage servicer and being in legal foreclosure. Once you are served with the Order to Docket, your case is now in legal foreclosure and you are a party to a lawsuit. At this point, you are responsible for timely participating in your modification/work out situation with your servicer AND timely participating in your foreclosure case in the court. (NOTE: the lender has an attorney...you should too!)
Servicer - This is the entity that sends you your monthly mortgage statements and it is who you send your payments to. The servicer is not necessarily the entity that owns your loan.
Investor / Secured Party - This is the entity that owns your loan. The investor/secured party is not necessarily the entity that services your loan.
Substitute Trustee - These are the individuals that are acting as the foreclosing attorneys on behalf of the investor for your loan. The Substitute Trustees will be the named Plaintiffs on the Order to Docket.
Notice of Intent to Foreclose - This document is merely a notice. It may come from the servicer or from the Substitute Trustee. The Order to Docket can be filed no earlier than 45 days after you receive this notice. You can find the entity that is the investor for your loan under the "Secured Party" section. You are not yet in legal foreclosure.
Order to Docket - This is the compilation of documents and affidavits that are filed with the circuit court (in the county where the property is located) by the Substitute Trustee that officially commences the legal foreclosure action. The first page of the Order to Docket pleading will say "In the Circuit Court for ______ County, Maryland" at the top and your name will be listed as a Defendant (if you are borrower or owner of the property). You are in legal foreclosure now. Note: this is a lawsuit so you should be consulting with a foreclosure defense attorney.
Preliminary Loss Mitigation Affidavit - This document may be filed with the Order to Docket. It provides notice that the borrower is still under review for loss mitigation options. There is no right to mediation at this point.
Final Loss Mitigation Affidavit - This document may be filed in the Order to Docket. If not, it will be sent to you at least a month after the Order to Docket is filed by regular and certified mail. The Final Loss Mitigation Affidavit will provide the reason that you were denied for all loss mitigation options. Very important! Read this document carefully. The Request for Mediation form will be included with this affidavit.
Reinstatement - This is the amount of money (for arrears, late fees, attorney's fees and costs) that you can pay to immediately bring the loan current. Note: it will take the substitute trustee and/or the bank a few days to obtain this figure so do not wait until the day before the foreclosure sale to request it. By law, you are permitted to reinstate the loan up to one (1) business day prior to the foreclosure sale.
Modification - This loss mitigation option changes or "modifies" terms of your mortgage loan. Changes can include interest rate reduction, term extension, capitalization of the arrears (when the arrears are added to the back of the loan) and/or principal reduction or deferment. A modification does not remove any named borrowers from the loan nor does it extinguish a named borrower's responsibility for repaying the loan (even if that borrower has executed a quit claim deed and no longer owns the property).
Forbearance - This loss mitigation option allows you to make a reduced mortgage payment for a short period of time. Once the period expires, you will be required to resume making the regular monthly payment and possibly more. You will still owe the remainder of the monthly payment that is actually due during the forbearance period, so be sure to confirm when and how you will pay that back. A forbearance does not change any term of your loan.
Repayment plan - This loss mitigation option allows you to pay off the arrears over a set period of time (typically one (1) year). The servicer may or may not require an upfront contribution. You will still make your regular mortgage payment during the repayment period so the total amount that you will pay monthly will be higher than what you normally pay. A repayment plan does not change any term of your loan.
Assumption - This option allows someone to "assume" or step into the shoes of the named borrower and take complete responsibility for repaying the loan. Not many investors offer assumptions because it is less risky for them to have more than one (1) person responsible for paying the loan. Assumption is the only option that removes a named borrower from the loan.
Short sale - This liquidation option requires the borrower to list the property for at least 90 days in an attempt to procure a buyer. The property will be listed at an amount that is less than fair market value and/or less that what is owed on the loan so there may be a deficiency issue. Be sure that you are working with a realtor that is a short sale specialist. You will still be required to apply for short sale consideration with your servicer by submitting your listing agreement and your financials. Be sure to have an attorney review the short sale agreement and ask for a deficiency waiver. Your investor will have to approve the purchase price for the property (after a sales contract is executed) in order for the short sale to go through. Note: there is no legal authority requiring an investor to accept any short sale offer. There is no guarantee that the short sale offer will be accepted by your investor. Your property will not be eligible for short sale if there are other liens on the property.
Deed-in-lieu - This liquidation option permits you to "give the property to the bank". You will be required to attempt to short sale the property prior to being considered for a deed-in-lieu. You will also be required to apply for deed-in-lieu consideration by submitting your financials to the servicer. Note: this option is not automatic and is subject to a review process. Be sure to have an attorney review the deed-in-lieu agreement and ask for a deficiency waiver. Your property will not be eligible for short sale if there are other liens on the property.
Deficiency - This is the amount of money that represents the difference between the purchase price for the property and what is still owed on the loan. You are still legally responsible for repaying this amount but you can ask that the investor waive the deficiency. Note: do not let anyone tell you that a deficiency waiver is automatic because it is not! If the deficiency is waived, there may be tax consequences so consult with a tax professional. The servicer will issue you a 1099 form if the deficiency is waived. NOTE: the federal Mortgage Debt Forgiveness Relief Act expired December 31, 2013. Consult a CPA or tax attorney to determine whether you will have to pay income tax on a deficiency balance that has been waived.
Cash for Keys - This post-liquidation option refers to the amount of money that the purchaser (at the foreclosure sale) will offer you as consideration for agreeing to leave the property by a certain date and without destroying the property (it must be left in broom-swept condition). Not every purchaser will offer cash for keys but be sure to ask about it both before and after the foreclosure sale. The more time that is required to move out typically means a reduction in the amount of money offered.
IMPORTANT: IF YOU ARE NOT WORKING WITH A HOUSING COUNSELOR, GET A HOUSING COUNSELOR!
Please see below
for information on finding an approved non-profit housing counselor in your area.
SERVICER SPEAK AND IMPORTANT TIPS
It is very important to understand how servicers/investors view your default and your financial hardship.
In order to demonstrate "hardship", some unanticipated or uncontrollable event must have happened to you that caused your default and prevents you from paying your current mortgage payment. There are many borrowers that have rebounded from their hardship and are now able to make their mortgage payments despite having a temporary hardship. For most servicers/investors, in order to qualify for loss mitigation assistance, you must be unable to make your current monthly mortgage payment. Please note that this is an objective determination, meaning the financial worksheet listing your income and expenses will demonstrate whether or not you have the income to pay your monthly mortgage payment (principal, interest, taxes, insurance, HOA fee). If you have surplus income every month, chances are the servicer will conclude that you are able to make your monthly mortgage payment and do not need assistance. Income surplus / deficit = total net monthly income - total expenses. Servicers do not consider the amount that you owe in arrears in determining whether you have a hardship...they only consider your current monthly income and current monthly expenses. If there is no "hardship", then you will not receive loss mitigation assistance regardless of the fact that you still owe for the arrears.
Everything must be documented! If you do not have a document to substantiate your position, then draft a letter of explanation to explain the situation. Remember to sign and date the letter.
Review your bank statements. When estimating your average expenses, make sure that what you say that you spend is actually what you are spending. The servicer is going to review your bank statements and calculate the total for each expense type listed on your financial worksheet! Only include monthly, not annual, amounts for HOA fees and homeowner's insurance. Do not include expenses that do not actually exist like car repairs and maintenance. Make sure that all pages are present and that you haven't overlooked any double-sided print outs (the back side of the statement will not come through on the fax). If you receive Social Security income, pension income, rental income, etc., be sure to circle these deposits on each bank statement.
Gather your federal tax returns. If you haven't filed your taxes, the servicer will not review you for any work out options. Exception: for the current tax year, you can provide a Form 4868 tax extension form. The filing extension will expire in October and you will be required to provide a tax return for the current tax year after that point.
Pull your credit report
...the servicer will. You need to how your creditors are reporting information about their respective trade lines. If something is incorrect, contact the credit bureau and dispute it. Any accounts that show as delinquent are a big red flag to the servicer that you could be sued and have your wages garnished in the near future. You are entitled to one free credit report from each of the three major credit bureaus per year from the Annual Credit Report
website. Click here
for a sample dispute letter.
Confirm that you do not have any other lawsuits against you.
Run your name through the online judiciary case search
. Do you have any judgments or liens against you? If so, be prepared to provide written documentation that despite the judgment/lien, you have worked out a payment plan with that creditor and that you are current on that payment plan. Note: In Maryland, a circuit court judgment is automatically a lien against any real property owned by you in the county where that judgment was entered even if that judgment was not indexed separately as a lien.
Confirm that there are no liens filed against your property.
Review the land records
for the county where your property is located. If there are homeowners association liens, be prepared to provide written documentation to show that you have worked out a payment plan with the homeowners association and that you are current on the payment plan as well as your current assessments. If you have satisfied the lien, be prepared to show proof of payment. If you have satisfied the lien but a release has not yet been filed, contact the homeowners association attorney noted at the bottom of the lien.
Know the approximate fair market value of your property.
Locate your property on Zillow
and note the value. Note: this will not be a value that is as accurate as what is listed in MLS or if your property had been appraised but it will serve its purpose!
Confirm what your plan rules are if you have retirement accounts. In the event that you wish to withdraw some of your retirement funds to satisfy the default or reinstate the loan, you need to know what your retirement plan rules are. Most plans will allow for a loan or a hardship withdrawal but there typically will be an application process involved. You need to know how much you can access, how quickly you can get the funds in hand and what the consequences of early withdrawal will be. Check with your plan administrator or with your Human Resources Department. Note: if your servicer is pushing you to withdraw funds from retirement and you know that you cannot withdraw any funds, get a letter from your plan administrator or Human Resources Department stating that you cannot withdraw any funds.
Consult with a bankruptcy attorney.
If you feel that bankruptcy may be the best (or only) option for you, don't wait until the last minute to locate and consult with a bankruptcy attorney to know what chapter you might qualify for. Prior to filing, you will need to take an a credit counseling course from an approved counseling agency
and obtain the certificate of completion.
The following information provides a very general timeline regarding when the substitute trustee may proceed with the various stages of the legal foreclosure action. Please note that this does not mean that the substitute trustee must take each step at the date indicated below, but that he/she may proceed. If the substitute trustee (on behalf of the investor) waits a longer period of time to take the next step, then the foreclosure timeline will be a longer one. The substitute trustee may not, however, proceed in a manner that shortens the foreclosure timeline.
Day 0 = Payment is due
Day 1 = First day of missed payment
Day 120 = Earliest that the Order to Docket may be filed. [Note: the Order to Docket cannot be filed until the later of: 1) the borrower is at least 120 days in default; or 2) at least 45 days after the Notice of Intent to Foreclose has been sent to the borrower, whichever is later.]
- If the Order to Docket is filed and contains the Preliminary Loss Mitigation Affidavit, the Final Loss Mitigation Affidavit can be filed no earlier than 28 days later.
- If the Order to Docket is filed and contains the Final Loss Mitigation Affidavit OR the Final Loss Mitigation Affidavit is received later via certified and regular mail, you have 25 days to return the Request for Mediation Form to the Circuit Court.
Day 148 = Final Loss Mitigation Affidavit is filed and sent to the borrower.
Day 173 = Deadline to file the Request for Mediation form with the Court.
- Day 188 = Deadline for substitute trustee for file Motion to Strike Borrower's Request for Mediation (if applicable).
- Day 203 = Deadline to file Opposition to Motion to Strike Borrower's Request for Mediation (if applicable).
Day 248 = Mediation date. If no Motion to Strike Request for Mediation is filed, then the mediation will be scheduled approximately 45-60 days from the date that the Request for Mediation was filed.
Day 263 = Deadline to file Post-Mediation Motion to Stay/Dismiss Foreclosure Sale AND the earliest that the substitute trustee may schedule the foreclosure sale.
Day 293 = Deadline to file Exceptions to Foreclosure Sale (if applicable). If no Exceptions are filed, this is the earliest that the Court can ratify the foreclosure sale.
Day 294 = Earliest date that substitute trustee can send 90 Day Notice to Vacate.
Day 354 - Substitute trustee will file Motion for Judgment Awarding Possession.
- Day 369 = Deadline for borrower or record owner to file an Opposition to Motion for Judgment Awarding Possession.
- Day 384 = Deadline for tenant or other person not entitled to service to file an Opposition to Motion for Judgment Awarding Possession.
Day 385 = Earliest date that the Court can rule on the Motion for Judgment Awarding Possession. This is also the earliest date that the Court can sign the Writ of Possession. [Note: this date will vary.]
Day 386 = Writ of Possession is given to the Sheriff's office for execution. [Note: check with the Sheriff's office in your county to determine how quickly the sheriff will proceed with the eviction date.] Confirm whether the sheriff will provide you with a courtesy notice when they have scheduled the eviction.
families fighting to save their homes from foreclosure. Neighborhood Works provides
comprehensive information about emergency loan assistance, how to locate a
HUD approved housing counselor near you, scam alerts and information about the
Visit Hope Now
for additional homeowner resources, listings of events in your
area, HOPE hotline information and housing counselor information.
For a list of HUD approved non-profit housing counselors, visit the Department of
Maryland. Homeowners that pre-register for these events are guaranteed a free legal consult. Please bring all documents related to your loan origination and foreclosure.
SELLING YOUR PROPERTY
NOTE: As of July 2013, realtors are prohibited from negotiating short sales on behalf of a borrower/seller. Borrowers are advised to obtain their own attorney to handle the negotiations with the servicer. See Maryland Mortgage Assistance Services Relief Act.
Realtors are notorious for giving incorrect legal advice. Realtors should not be giving
legal advice beyond the logistics of actually effectuating the sale of the property.
Always consult with an attorney for issues related to sales contracts, closing documentation, waiver of deficiency, filing bankruptcy or other legal issues.
Always consult with a tax professional for issues related to loan forgiveness or waiver of deficiency.
If you are considering short selling your property, make sure that you are working with a realtor that is a "short sale specialist".
FINDING NEW HOUSING
There are online search vehicles that may assist you in locating new housing. As with any business arrangement, be sure to do your homework and make sure that your prospective landlord is reputable and has a valid rental license.
Beware of scams! Confirm that the property actually exists and is owned by the purported landlord. Confirm that the landlord's agent and/or property manager is validly licensed with the state. Do no sign a lease or transfer funds for deposit or rent until you have visited the property and met with the landlord, agent or property manager in person.
SCAMS / FRAUD
Rule of thumb....if it sounds to good to be true it usually is! No person, not even an
attorney can guarantee that you will receive a loan modification.
In Maryland, it is illegal for any company or individual to charge upfront fees for loan
modification services. This prohibition includes attorneys, unless the attorney is
representing you in your foreclosure defense case.
Signs of a scam offer:
1. A person or company guarantees that he/she/it will get you a loan modification.
2. A person or company promises that he/she/it will get you a loan modification.
3. A person or company charges you upfront fees for apply for a loan modification.
4. A person or company advises you to stop paying your mortgage.
Housing counselors are the best resource to assist you in applying for a loan modification (see "Free Resources" section above).
Do NOT stop paying your mortgage or redirect mortgage payments through any other
person or entity. If your servicer stops accepting your mortgage payments because you are in default, deposit the funds that you would have applied toward your mortgage payment into a separate savings account.
If you paid a company to obtain a loan modification for your, visit the Commissioner
Please be advised that there is a loan modification company called HOPE. This is NOT Maryland HOPE (which is sponsored by the Department of Housing and Community Development).
Development website for additional resources and information.