The state's foreclosure notification process is constitutional -- even if homeowners never receive the notice, the Maryland Court of Appeals ruled yesterday.
Foreclosure plans must be published in a newspaper and sent to the homeowner via regular and certified mail roughly two weeks before the property is sold, according to Maryland law. If owners don't get the message in that time frame, as was the case for Joyce Griffin of Pasadena, they could still lose their homes to foreclosure.
In a 30-page opinion issued yesterday upholding the law, a sympathetic appeals court bemoaned the escalation and "scope" of the subprime mortgage "problem," but the judges said it was up to the legislature -- not the courts -- to change things.
"Our duty is not to substitute our own judgment of what the law ought to be for what the Legislature declares it should be," the opinion, written by Judge Glenn T. Harrell Jr., states.
Joyce Griffin said she never received the warning letters that trustees sent to her home two years ago.
Her attorney argued before the court last month that more substantial measures -- like personal service -- should have been taken to meet the due process clause of the Constitution.
Griffin learned of her home's foreclosure after it had been sold at auction for $223,000 in May 2006.
She is one of thousands of homeowners nationwide who took on subprime mortgages that they later couldn't afford because of ballooning payments or personal circumstances. The situation has led to a virtual collapse of the subprime industry and a wave of home foreclosures, causing lawmakers across the country to reassess local rules.
Last month, Gov. Martin O'Malley introduced legislation designed to help struggling consumers and to curtail predatory lending practices. Within the next two years, tens of thousands of subprime mortgages are expected to go into foreclosure in Maryland, according to the Joint Economic Committee of Congress.
A footnote in the judges' ruling yesterday said that court "deference to the Legislative and Executive branches is even more critical at this juncture because the scope of the mortgage foreclosure problem most likely requires a comprehensive solution, one outside of this Court's authority or institutional competence to craft in a single case."
Griffin's attorney said that doesn't do much for his client, who has remained in her home while litigating the case.
"For Joyce, it means she's at serious risk now of losing her home," attorney Deepak Gupta said yesterday. Griffin has been working with trustees and the new owner to arrange a payment schedule that would allow her and her 8-year-old daughter to stay. She fell behind on monthly mortgage bills after the Christmas Day death of her fiancee in 2004.
"The courts are the only forum for constitutional questions, so it's a bit puzzling for the court to say that the appropriate forum is the legislature. It's one way of ducking the question really," said Gupta, whose consumer-focused Public Citizen Litigation Group, has been representing Griffin for free.
"We're pretty hopeful the legislature will ultimately fix the problem," Gupta said.
The rules originally included the short time line to protect lenders and help them quickly recoup money owed by delinquent customers. Under O'Malley's plan, which is being evaluated by legislators, the foreclosure process would move from a minimum of 15 days to four months.