A Maryland lender is holding a traditional mortgage (not a deed of trust) on a residential property where the borrower has defaulted. Which statement best describes the foreclosure process the lender must follow in Maryland?
Correct Answer
B) The lender must file a court action and obtain judicial approval before selling the property
In Maryland, when a loan is secured by a traditional mortgage rather than a deed of trust, foreclosure requires a judicial proceeding. The lender must file a lawsuit, obtain a court judgment, and the property is sold through a court-supervised process. This is because a mortgage only creates a lien on the property — it does not convey title to a trustee — so the court must intervene to authorize the sale and protect the borrower's equity of redemption. This is a key distinction from the non-judicial trustee's sale available under a deed of trust.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
More Financing Questions
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