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Welcome to the Civil Justice Blog.  The blog highlights current Maryland and/or federal law dealing with such topics as foreclosures, consumer rights, auto-fraud, and other related public interest issues.

Foreclosures and Deficiency Judgments

Jan 7
Written by: Civil Justice
Tuesday, January 7, 2014
Five years since the collapse of the housing bubble in 2008, Maryland continues to have exceptionally high rates of foreclosure. In November 2013, the Mortgage Bankers Association concluded that Maryland had the fifth highest rate of foreclosures of any state in the country. While overall foreclosure rates have dropped, Maryland homeowners continue to struggle. 
Read a Baltimore Sun article on the high rates of foreclosure in Maryland: 
What many homeowners do not realize is that, in Maryland, after a foreclosure, you can be liable for the difference between the balance due on your mortgage and what your home sold for at foreclosure. This difference is referred to as a “deficiency.”  To obtain a judgment for the amount of the deficiency, the mortgage holder must file either a motion in the foreclosure action or a separate court action. The judgment, once obtained, can be used to garnish your wages or put a lien on any other property you may have.
Read a Washington Post Article on deficiency judgments:
While it is currently rare for servicers to pursue deficiency judgments in Maryland, it is possible that this practice will become increasingly common in the near future.
The Amount of Time Banks have to Pursue a Deficiency Judgment
Former homeowners often ask how much time banks have to pursue a deficiency judgment. The amount of time one has to file a lawsuit before it is no longer allowed is called a statute of limitations. In Maryland, the statute of limitations for pursuing deficiency judgments depends on how the mortgage holder decides to pursue the deficiency judgment. A motion filed in the foreclosure action has to be filed within three years; if a separate lawsuit is filed the mortgage holder can wait as long as 12 years!
Policy Implications
Having two ways to pursue a deficiency judgment is not good public policy, as it confuses homeowners and servicers alike. Throw in the fact that many states do not allow deficiency judgments in the first place, and the fact that many other states give only a limited time to file a deficiency judgment (such as only one year), and it becomes clear that Maryland law on deficiency judgments should be updated.  If you are a homeowner whose home may be going to a foreclosure sale, please consult an attorney. If you come to an agreement with the bank to vacate your home, ask for a "deficiency waiver" which makes clear that the servicer will not pursue a deficiency judgment in the future. 
Avy Mallik covers topics related to housing rights and foreclosures. Topics of concern that Avy addresses include deficiency judgments in Maryland, fraudulent final loss mitigation affidavits, dual tracking by servicers, and home saving scams.

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