New wave of foreclosures on the way

Foreclosure Legal Assistance Project staff attorney Kathleen Skullney

Maryland Legal Aid Foreclosure Legal Assistance Project staff attorney Kathleen Skullney (left) appeared on Fox45 TV News last night in a segment warning that another wave of foreclosures could hit soon. To see the clip, click here.

Homeowners get tools to fight foreclosure

Maryland’s top court has adopted new foreclosure procedure rules that requires lenders to notify homeowners and any guarantors that a foreclosure action has been filed. “For the first time, the door to the courthouse is now open to homeowners in foreclosure,” said Foreclosure Legal Assistance Project attorney Kathleen Skullney. “The thousands of Marylanders caught in the shoddy, negligent, or outright fraudulent mortgage products that have thrown them into default will be able to raise any illegalities in the process or the underlying loan as defenses to the foreclosure.

“Equally important, these homeowners no longer be barred by their inability to post a bond,” Skullney continued. “Furthermore, the homeowner can ask the court to stay the foreclosure if the property is involved in any collateral court proceeding, such as divorce. These are significant changes that go a long way toward balancing the foreclosure procedure, which by definition is ‘equitable’ in nature. These changes bring equity much closer to reality.”

The Court of Appeals voted yesterday to adopt the changes as proposed and made the effective date May 1.

There are several significant changes, including expanded definitions and notification requirements aimed at tenants. The most important and exciting change is the addition of new Rule 14-211 which allows any interested party to raise legal defenses to the foreclosure sale in a motion to stay/dismiss. The legal defenses include challenges to the validity of the loan or right to accelerate, or a collateral proceeding that involves the property. The rule also allows for limited discovery and does away with the onerous bond requirement for posting the entire amount of the debt.

Another small, but important change is the requirement that “occupants” get notices of the proceeding and sale. “This is the first time in Maryland that the plight of innocent tenants in a foreclosed property is procedurally recognized,” Skullney said. “At the very least, tenants will be able to avoid being thrown out of their homes without warning.”

The changes specific to foreclosure are identified as Category 1 in the 160th Rules Committee Report which can be found on the Judiciary website.

Legal Aid lands new housing grants

The John J. Leidy Foundation, Inc. in Towson awarded Maryland Legal Aid $5,000 to continue foreclosure prevention work in Baltimore City. “We thank the foundation for helping to enable the Legal Aid Bureau to respond to the foreclosure and predatory lending crisis by assisting low-income homeowners and their communities with legal services to help them to resolve these situations,” wrote Executive Director Wilhelm Joseph in a letter to the foundation. “Legal Aid wants to be at the forefront of responding to this crisis, but we couldn’t do it without your help.”

In addition, The Fund for Change awarded Legal Aid $20,000 in support of its Saving Affordable Housing for At-Risk Families and Seniors Program. “Our staff will provide outreach and information to tenants in the properties and meet with tenants to determine their interests regarding the housing,” Joseph wrote to the fund’s executive director. “We work with tenants in properties that are deteriorating or at risk of losing subsidies, to help them advocate maintaining subsidized, decent and safe housing. Our program will take place in Baltimore City and address family instability caused by poor housing or homelessness.”