Maryland Legal Alert for Financial Services

On December 17, 2020, Governor Lawrence Hogan, Jr. issued an executive order (December Order) amending and restating his prior executive order issued October 16, 2020, (October Order) which, among other things, set forth new requirements in connection with the resumption of residential foreclosures in Maryland. The Governor’s original executive order issued in April 2020 had closed the notice of intent to foreclose online registry (NOI Registry), which effectively halted the initiation of new residential foreclosures.

In the October Order, Governor Hogan directed the Maryland Department of Labor’s Commissioner of Financial Regulation (Commissioner) to reopen the NOI Registry on January 4, 2021. The October Order also imposed a new notice requirement, mandating that lenders must provide borrowers with notice of certain forbearance rights before initiating a foreclosure. That is, before a lender could issue a notice of intent to foreclose, the lender must notify the borrower of its forbearance rights under the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (if the borrower’s loan was covered by the CARES Act), or that the borrower could request a similar forbearance as provided under the CARES Act (if the borrower’s loan was not covered by the CARES Act).

On December 18, 2020, the Commissioner published Interpretational Guidance in the form of FAQs to address the December Order and update the Commissioner’s guidance regarding the October Order.

Significant takeaways from the December Order and the Interpretational Guidance include:

• The December Order delays the reopening of the NOI Registry to February 1, 2021. The Commissioner also now has authority to further extend the reopening date. For more information, click here.
   
• The new order clarifies that if a lender obtains an order determining that a property is vacant and abandoned, the order’s forbearance rights notice provisions do not apply.
   
• The new order clarifies that for loans not covered by the CARES Act, the borrower has 90 days from the date of the forbearance rights notice to claim the forbearance. The Commissioner advises that the forbearance rights notice must clearly notify the borrower of any termination date of the offer of forbearance.
   
• The Commissioner’s Interpretational Guidance clarifies that if a lender “offered relief” consistent with the CARES Act or placed a borrower in a forbearance plan consistent with the CARES Act between March 5, 2020, and October 16, 2020, the lender does not need to send a new forbearance rights notice. If the lender offered something less than a CARES Act forbearance, it must send a new notice so that the complete relief package meets the CARES Act’s requirements. The term “offered relief” includes notification to borrowers of their ability to obtain a forbearance via letter, billing statement, email, text message or phone conversation.
   
• The Commissioner also provided the form of the certification of compliance with the executive order that lenders must submit with their filing of a Notice of Foreclosure with the foreclosed property registry.

We are continuing to monitor the order and any guidance from the Governor’s Office and the Commissioner.

Please contact Bryan M. Mull and Christopher R. Rahl with any questions concerning this topic.

Bryan M. Mull
410-576-4227 • bmull@gflraw.com

Christopher R. Rahl
410-576-4222 • crahl@gfrlaw.com

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