Baltimore bankruptcy lawyer reports that as of July 1, 2014, Banks have three years after ratification to pursue homeowners for deficiency judgments. Prior to this change, banks had up to 12 years to file suit. This is an important change in the law that allows homeowners to move and re-establish their lives without the risk of a deficiency following them around for more than a decade. It is a timely change given the increased foreclosure levels precipitated by the mortgage crisis.
At the present time, actual cases filed are still in the low 100s and it is unclear how many are settled out of court before suit is filed. This will be an area to watch as up and until now banks have shied away from filing deficiency judgments in large numbers.
CHAPTER 200. FORECLOSURE OF LIEN INSTRUMENTS
Md. Rule 14-216 (2014)
Rule 14-216. Proceeds of sale
(a) Distribution of surplus. At any time after a sale of property and before final ratification of the auditor’s account, any person claiming an interest in the property or in the proceeds of the sale of the property may file an application for the payment of that person’s claim from the surplus proceeds of the sale. The court shall order distribution of the surplus equitably among the claimants.
(b) Deficiency judgment. At any time within three years after the final ratification of the auditor’s report, a secured party or any appropriate party in interest may file a motion for a deficiency judgment if the proceeds of the sale, after deducting all costs and expenses allowed by the court, are insufficient to satisfy the debt and accrued interest. If the person against whom the judgment is sought is a party to the action, the motion shall be served in accordance with Rule 1-321. Otherwise, the motion shall be served in accordance with Rule 2-121 and shall be accompanied by a notice advising the person that any response to the motion must be filed within 30 days after being served or within any applicable longer time prescribed by Rule 2-321(b) for answering a complaint. A copy of Rule 2-321(b) shall be attached to the notice.