January 25, 2012 Newsletter

The Court of Appeals of Maryland just handed down a decision which will impact hundreds of foreclosures currently in process in Maryland. In Maddox v. Cohen the Court ruled that the fee of $295.00 set forth in the advertisement for the sale was beyond what the Trustee was allowed by the Deed of Trust document and the Maryland Rules for foreclosures. The rationale was that the Trustee was charged with a duty to obtain the highest price for the property at the sale, and any potential buyers seeing the fee of $295.00 would factor that amount into what their maximum bid might be. Since the ruling set forth in the instant case voided the sale and remanded the case back to the lower court to be redone, this case impacts all cases currently in process where the trustee has advertised that a fee would be charged over and above what is allowed by the mortgage document and the statutes.

Current practice by many of the attorneys handling foreclosures is to put such a fee in the advertisement. It is our opinion that those cases may have to be re filed, or at the very least the advertisements re run without the fee. This ruling while probably on sound legal grounds, puts another impediment to getting the properties in foreclosure to completion, and may compel the lenders to look more favorably to working out delinquencies with the borrowers.

If you know of anyone currently in foreclosure or who was recently foreclosed upon, there may be some grounds to delay the process or attempt to negotiate a settlement. If someone wishes to discuss their situation I can be reached at 410 884 1160 x3007 or by email at tee.tillman@colonytitle.com.