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80 MARYLAND Maryland's Fast- Track Foreclosure Process Presents Opportunity, Risk By Kevin Hildebeidel Maryland SB 1033 was just passed May 25, 2017, to provide a fast-track foreclosure process that will become effective October 1, 2017. is note attempts to provide some perspective on the legislation and suggestions as to how it may be handled to maximize the chance of success without undue risk. As with all unique real property, each case should be reviewed on its own particulars and, when in doubt, you should consult with licensed counsel before proceeding. Legislation, which provides a "fast-track" option for the foreclosure of vacant and abandoned properties, is nothing particularly new or revolutionary in the default world. Very populous states such as New York and New Jersey have had such laws in place for a while, and there are similar processes in Maine, Ohio, Illinois, Nevada, and South Carolina. All of these share similar characteristics. ey recite certain allegedly objective criteria, which must be established to show abandonment, and most require the process revert to a more standard proceeding if there are answers or substantive objections filed in the fast-track proceeding. After going through some of the hurdles for the fast track processes, we'll consider the particulars of Maryland's new law. First, many statutes require the property appear vacant, have visible damage, broken doors or windows, or other indicia of abandonment, which, from a creditor's perspective, would expose the collateral to severe damage from the ele- ments. Securing the property and repairing such damage might be allowed by the security interest, preserving the value of the collateral and working to the benefit of all parties, but it actually removes the very evidence needed to support the fast-track. At a minimum, extensive documentation would be required prior to repairs, but what is to stop a borrower from re-entering the newly repaired property or later objecting to the fast- track proceeding so they could effectively enjoy free repairs? Title does not transfer until the end of the process, so there is a risk zone. Second, hearings on evidence of aban- donment tend to be evidentiary, and specific findings are required under the new law. is means creditors must send a witness to that particular proceeding armed with all neces- sary documentation to prove the abandonment at some cost. ere are no well-established mechanisms for pure defaults as to abandoned property. ird, the fast-track statutes generally do not have any limitation or deadline for raising objections as to the abandonment or fast-track process, so borrowers can wait until very late in the process before filing their objection, which may actually reset the process and cause ad- ditional delay. ese tactics will certainly incur carry costs for the duration. Fourth, delaying tactics, whether deliber- ate gaming of the system or for less nefarious reasons, risk running afoul of the statute of limitations. In the Maryland "fast-track" legislation, the first thing that leaps out is the exemption to MD Real Prop. §7-105.1, which is the entire current Notice of Intent (NOI) and mediation process, including all service of process and notices associated with housing counseling and similar items. e NOI itself has a 45-day wait period—demands are generally 30-plus days, and mediation can take months, so this would initially appear to be a benefit. ere is, of course, a caveat: the court can- New Jersey Lisa G Lopez Broker of Record Home Alliance Realty 142 E. Bay Ave Manahawkin, NJ 08050 609-978-9009 (o) 609-384-5109 (c) lglopez@verizon.net www.HomeAllianceRealty.com www.LisaLopezProperties.com Connecticut Planet Realty, LLC Sales@CTREOTEAM.com 203-982-4985 cell www.CTREOTEAM.com Security • Preservation • Disposition Steve Rivkin not make a finding of vacancy if any answer or objection has been filed by a mortgagor or grantor setting forth a defense or objection that, if proven, would preclude entry of a final judgment and decree of foreclosure. Presum- ably, all the borrower must do to defeat the initial petition is indicate that the property is not vacant and they haven't received their NOI; therefore, judgment can't be entered and they win. If this proves to be true, then the vacant property fast-track would be easy to defeat, and word will spread quickly about how to defeat it, rendering it largely ineffective. e second, and perhaps even more sig- nificant, wrinkle in the Maryland law, is when a final determination of vacancy would be made. e language of the legislation strongly suggests that an initial petition to determine vacancy must be filed, and then if it is granted, an Order to Docket or Complaint to Foreclose must still be filed with additional service of process. Creditors are thus filing not one but two court proceedings (even if the second one is only quasi-judicial) with commensurate costs and potential court delays. Even if they file the first one with proper evidence, send a witness to support it, make all of the necessary show- ings, and convince the judge to grant the peti- tion—when they file an Order to Docket, if a "timely challenge is filed" within 20 days after service of the notices of the actual foreclosure proceeding, then the exemption does not apply and the creditor has to go back and comply with §7-105.1. e Order to Docket would need to be dismissed, and an NOI would need to be sent, potentially after many months of delay. Whenever there is a lengthy delay, prudent creditors keep a wary eye on the statute of limitations. In Maryland, this issue is relatively unsettled, because in 2014, the Maryland legislature expressed a strong intent to curtail foreclosure actions after three years. e stat- ute was set to protect defaults which occurred prior to July 2014, but those after July 1, 2014, could be affected. is is not entirely settled law, as the Maryland UCC still gives six years on a note. However, nobody particularly wants their note or portfolio to be the test case for that approach. e safer course is to be sure to bring actions within three years as the legislature wanted. Extensive loss mitiga- tion or unproven "fast-track" approaches that could cause a late-process reset may become problematic given a much shorter statute of limitations, and nobody wants to lose their right to recover the collateral. Despite the preceding concerns, there are some ways in which the process might still be tested or used if reasonable protective

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