Foreclosure is the legal process effected through the court system in which a mortgagee (lender—often a bank) terminates a mortgagor’s (borrower’s) interest in the real property in which the mortgagor gave the mortgagee a security interest (a lien) as collateral for the loan used to purchase the property.

Foreclosure generally occurs when a homeowner defaults and fails to make mortgage payments as required by the loan agreement (promissory note).

Foreclosure allows the lender to seize the property, remove the homeowner, and sell the home—all of which are legal remedies the mortgagor and mortgagee agreed to in the mortgage contract.

In Maryland, foreclosure is a judicial process, meaning that the lender must file a lawsuit in court to foreclose on a property. When a homeowner defaults on their mortgage payments, the lender may initiate foreclosure proceedings. Maryland law requires lenders to send a 'Notice of Intent to Foreclose' to the borrower at least 45 days before filing a foreclosure action. Additionally, the lender must wait 90 days from the date of default before filing the foreclosure action. The borrower also has the right to be notified at least 30 days before the foreclosure sale takes place. Maryland has a 'mediation law' that allows homeowners the opportunity to request mediation with the lender, which must be done within 25 days after the 'Order to Docket' or 'Complaint to Foreclose' is filed. During mediation, a neutral third party helps the homeowner and the lender try to reach an agreement to avoid foreclosure. If the foreclosure goes through and the property is sold, the former homeowner may be subject to a deficiency judgment if the sale price does not cover the mortgage debt, although there are certain limitations and conditions under which the lender can pursue this judgment.