Changes to Residential Mortgage Foreclosure Regulations and Forms,
Effective February 1, 2015
The purpose of this advisory is to provide guidance on upcoming changes to the mortgage foreclosure regulations provided for in COMAR 09.03.12. These changes take effect on February 1, 2015. These changes will create new forms that should be used by mortgage lenders and mortgage servicers if the loan in question is a federally related mortgage loan. If you are unsure as to whether the loan in question meets the definition of federally related mortgage loan under 12 C.F.R. 1024.2, available here, please consult a private attorney; the Commissioner is not authorized to give legal advice regarding whether a particular loan is a federally related mortgage loan.
The changes align the language in Maryland's foreclosure forms with timelines established by the Consumer Financial Protection Bureau (CFPB) mortgage servicing rules. The CFPB's rules prohibit a servicer from "mak[ing] the first notice or filing required by applicable law . . . for any foreclosure process . . . unless a borrower's mortgage loan obligation is more than 120 days delinquent." In order to give homeowners the most accurate information possible regarding the foreclosure timeline that is applicable to their loan, the new forms discussed above incorporate language that conforms with the new CFPB rule. For those loans that are not federally related, the Notice of Intent to Foreclose forms continue to reflect the timeframe established by Maryland's foreclosure statute.
In addition to the above changes, Appendix H-1 (Final Loss Mitigation Affidavit) to the mortgage foreclosure regulations has been revised to state that the homeowner has 25 days after the mailing date of the final loss mitigation affidavit to request mediation. This change was made to ensure that the form comports with Maryland's foreclosure statute. The regulation also changes certain forms used prior to and during a foreclosure mediation.
Regarding the validity of NOIs issued before the effective date of the changes to the regulations, the Court of Special Appeals (Court) recently issued a reported decision in Granados v. Nadel, et al., No. 242, Sept. Term 2013, 2014 WL 7148922 (Md. Ct. Spec. App., Dec. 16, 2014), which may provide guidance on this issue. The full decision is available here. Although the Court of Special Appeals did not directly address the issue of whether an NOI filed prior to a previous change in the foreclosure regulations was valid, it held that when a lender institutes a foreclosure action, and then dismisses that action, the lender should issue a new NOI. The Court relied, in part, on past advisories issued by the Commissioner, including the Commissioner's interpretation that uncodified language establishing the prospective nature of past NOI changes does not mean that an NOI issued before the effective date of new regulations is perpetually valid.
The new and updated foreclosure forms can be found on the Commissioner's website at http://www.dllr.maryland.gov/finance/finregforms.shtml. (Note that these forms are not effective until February 1, 2015.) The new regulatory language is in the Maryland Register Vol. 41 Issue 19 and Vol. 41 Issue 24, and a clean version of COMAR 09.03.12 will be posted at the above URL after February 1st.
For questions, please contact Meredith Mishaga, Director of Foreclosure Outreach for the Maryland Commissioner of Financial Regulation, at 410-230-6099.