Governor Martin O'Malley, along with Maryland's Congressional delegation, requested that all foreclosures in Maryland be halted Tuesday. In a letter to Chief Judge Robert Bell, Maryland Court of Appeals, they requested that courts delay foreclosures for at least 60 days to protect Maryland homeowners.
Their concern is that the lenders have not been handling the foreclosure process properly. They want to ensure that Marylanders are treated fairly and that the lenders follow Maryland law. Some banks have already declared a nationwide moratorium on foreclosures as they examine their paperwork.
An issue is the way in which the lender proceeds with the paperwork once a borrower falls behind on their payments. A good explanation of the process can be found here.
How does this affect you?
If you are currently in the process of foreclosure, there is a very good chance that the lender's actions will be delayed. However, don't expect the lender to 'walk away.' Once the process is completed, the lender will take back the property. You could be liable for all losses the lender incurs. Check with a experienced attorney to find out your options.
If you have a contract to buy a recently foreclosed property, don't expect a quick settlement. Even if the process is handled properly, you may have trouble completing the purchase. Title insurance companies are now refusing to insure certain foreclosures. It may take a long time to get this resolved and each case will have to be reviewed individually.
If you have already purchased a foreclosed property, check with your settlement attorney and pull out your mortgage insurance policy. It may have been your best 'real estate' investment yet!