EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
*hb0225*
HOUSE BILL 225
N1 3lr1029
HB 1038/22 – JUD
By: Delegates Charles, Fair, Grossman, Harris, Taveras, and Taylor
Introduced and read first time: January 23, 2023
Assigned to: Judiciary
A BILL ENTITLED
AN ACT concerning 1
Foreclosure Proceedings – Residential Mortgagors and Grantors – Access to 2
Counsel 3
FOR the purpose of requiring that certain individuals have access to legal representation 4
in certain foreclosure proceedings; establishing the Access to Counsel in Foreclosure 5
Proceedings Program and requiring the Maryland Legal Services Corporation, under 6
the Program, to provide access to legal representation to certain individuals in 7
foreclosure proceedings under certain circumstances; requiring the Maryland Legal 8
Services Corporation to develop a certain pamphlet and the Commissioner of 9
Financial Regulation to provide individuals in foreclosure proceedings with the 10
pamphlet; requiring the Maryland Legal Services Corporation to designate certain 11
community groups for a certain purpose; establishing the Access to Counsel in 12
Foreclosure Proceedings Special Fund as a special, nonlapsing fund; requiring that 13
the Comptroller collect certain fees on residential property sales and that the fees be 14
paid to the Fund; authorizing a local jurisdiction to adopt certain local laws; and 15
generally relating to the right to counsel in foreclosure proceedings. 16
BY adding to 17
Article – Real Property 18
Section 7–3A–01 through 7–3A–10 to be under the new subtitle “Subtitle 3A. Access 19
to Legal Representation in Foreclosure Proceedings”; and 10–713 20
Annotated Code of Maryland 21
(2015 Replacement Volume and 2022 Supplement) 22
BY repealing and reenacting, without amendments, 23
Article – State Finance and Procurement 24
Section 6–226(a)(2)(i) 25
Annotated Code of Maryland 26
(2021 Replacement Volume and 2022 Supplement) 27
BY repealing and reenacting, with amendments, 28 2 HOUSE BILL 225
Article – State Finance and Procurement 1
Section 6–226(a)(2)(ii)170. and 171. 2
Annotated Code of Maryland 3
(2021 Replacement Volume and 2022 Supplement) 4
BY adding to 5
Article – State Finance and Procurement 6
Section 6–226(a)(2)(ii)172. 7
Annotated Code of Maryland 8
(2021 Replacement Volume and 2022 Supplement) 9
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 10
That the Laws of Maryland read as follows: 11
Article – Real Property 12
SUBTITLE 3A. ACCESS TO LEGAL REPRESENTATION IN FORECLOSURE 13
PROCEEDINGS . 14
7–3A–01. 15
(A) IN THIS SUBTITLE THE FOLLOWING WORDS HAVE THE MEANINGS 16
INDICATED. 17
(B) “COMMUNITY GROUP ” MEANS A NONPROFIT EN TITY WITH THE 18
CAPACITY TO CONDUCT OUTREACH TO MORTGAGO RS AND GRANTORS AND PROVIDE 19
ENGAGEMENT, EDUCATION, AND INFORMATION . 20
(C) “COVERED INDIVIDUAL ” MEANS A MORTGAGOR OR GRANTOR WHO : 21
(1) OWNS AND OCCUPIES A R ESIDENTIAL PROPERTY AS THE 22
MORTGAGOR OR GRANTOR ’S PRINCIPAL RESIDENC E; AND 23
(2) IS A MEMBER OF A HOUS EHOLD WITH AN INCOME THAT IS NOT 24
GREATER THAN 50% OF THE MEDIAN INCOME IN THE STATE AS DETERMINED B Y THE 25
U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES OR ITS SUCCE SSOR. 26
(D) “DESIGNATED ORGANIZATI ON” MEANS A NONPROFIT EN TITY 27
DESIGNATED BY MLSC WITH THE ABILITY TO PROVIDE LEGAL REPRES ENTATION TO 28
COVERED INDIVIDUALS . 29
(E) “FUND” MEANS THE ACCESS TO COUNSEL IN FORECLOSURE 30
PROCEEDINGS SPECIAL FUND. 31
(F) “LEGAL REPRESENTATION ” INCLUDES ALL REPRESE NTATION BY AN 32 HOUSE BILL 225 3
ATTORNEY BEYOND BRIE F LEGAL ADVICE AND I S NOT LIMITED TO THE FORMAL 1
ENTRY OF APPEARANCE IN COURT . 2
(G) “MLSC” MEANS THE MARYLAND LEGAL SERVICES CORPORATION . 3
(H) “POSTFILE MEDIATION ” HAS THE MEANING STAT ED IN § 7–105.1 OF 4
THIS TITLE. 5
(I) “PROGRAM” MEANS THE ACCESS TO COUNSEL IN FORECLOSURE 6
PROCEEDINGS PROGRAM. 7
7–3A–02. 8
A COVERED INDIVIDUAL S HALL HAVE ACCESS TO LEGAL REPRESENTATION AS 9
PROVIDED UNDER THIS SUBTITLE. 10
7–3A–03. 11
(A) THERE IS AN ACCESS TO COUNSEL IN FORECLOSURE PROCEEDINGS 12
PROGRAM ADMINISTERED BY MLSC. 13
(B) THE PURPOSE OF THE PROGRAM IS TO ORGANIZ E AND DIRECT 14
SERVICES AND RESOURC ES IN ORDER TO PROVI DE ALL COVERED INDIV IDUALS IN 15
THE STATE WITH ACCESS TO LEGAL REPRESENTATION AS REQUIRED UNDER TH IS 16
SUBTITLE. 17
7–3A–04. 18
(A) UNDER THE PROGRAM, MLSC SHALL PROVIDE FOR AC CESS TO LEGAL 19
REPRESENTATION BY A COVERED INDIV IDUAL FOR PROCEEDING S UNDER § 7–105.1 20
OF THIS TITLE, INCLUDING THE FIRST APPEAL OF A DECISION IN THE PROCEEDING 21
IF THE DESIGNATED OR GANIZATION DETERMINE S THAT THERE ARE SUF FICIENT 22
LEGAL GROUNDS FOR TH E APPEAL. 23
(B) (1) UNDER THE PROGRAM, A DESIGNATED ORGA NIZATION SHALL 24
ENSURE THAT A COVERE D INDIVIDUAL RECEIVE S ACCESS TO LEGAL 25
REPRESENTATION BY AN ATTORNEY IN A PROCEE DING AS REQUIRED UND ER THIS 26
SUBTITLE AS SOON AS POSSIBLE AFTER A NOTICE OF INTENT T O FORECLOSE IS 27
FILED WITH THE COMMISSIONER OF FINANCIAL REGULATION. 28
(2) THE COMMISSIONER OF FINANCIAL REGULATION SHALL 29
PROVIDE A COP Y OF THE NOTICE OF INTENT DESCRIBED UNDER THIS SUBSECTION 30
TO MLSC. 31 4 HOUSE BILL 225
(C) MLSC MAY CONTRACT WITH A DESIGNATED ORGANIZAT ION TO 1
PROVIDE ALL OR PART OF THE SERVICES REQU IRED UNDER THIS SECTION. 2
7–3A–05. 3
(A) MLSC SHALL DEVELOP AN INF ORMATIONAL PAMPHLET IN BOTH 4
ENGLISH AND OTHER LAN GUAGES MLSC DETERMINES APPROPRIA TE: 5
(1) DESCRIBING THE LEGAL RIGHTS OF MORTGAGORS AND 6
GRANTORS AND THE ACC ESS TO COUNSEL ESTAB LISHED UNDER THIS SU BTITLE; 7
AND 8
(2) PROVIDING INFORMATION ON RESOURCES AVAILAB LE TO 9
MORTGAGORS AND GRANT ORS. 10
(B) THE COMMISSIONER OF FINANCIAL REGULATION SHALL PROV IDE A 11
COPY OF THE PAMPHLET DESCRIBED UNDER SUBS ECTION (A) OF THIS SECTION TO 12
MORTGAGORS AND GRANT ORS. 13
(C) MLSC SHALL POST A LINK TO AN ELECTRONIC VERSIO N OF THE 14
PAMPHLET DESCRIBED U NDER SUBSECTION (A) OF THIS SECTION ON I TS WEBSITE. 15
7–3A–06. 16
MLSC SHALL DESIGNATE AND CONT RACT WITH APPROPRIAT E COMMUNITY 17
GROUPS TO CONDUCT OU TREACH AND PROVIDE E DUCATION TO MORTGAGO RS AND 18
GRANTORS LOCALLY AND THROUGHOUT THE STATE REGARDING THE R IGHTS OF 19
MORTGAGORS AND GRANT ORS AND THE ACCESS T O LEGAL REPRESENTATI ON 20
UNDER THIS SUBTITLE. 21
7–3A–07. 22
ON OR BEFORE AUGUST 31 EACH YEAR, MLSC SHALL REPORT TO THE 23
GOVERNOR AND THE GENERAL ASSEMBLY: 24
(1) THE NUMBER OF COVERED INDIVIDUALS PROVIDED LEGAL 25
REPRESENTATION DURIN G THE PREVIOUS FISCAL YEAR; 26
(2) INFORMATION ON AND ME TRICS EVALUATING CASE OUTC OMES; 27
AND 28
(3) A SUMMARY OF THE ENGAG EMENT AND EDUCATION OF 29 HOUSE BILL 225 5
MORTGAGORS AND GRANT ORS. 1
7–3A–08. 2
(A) THERE IS AN ACCESS TO COUNSEL IN FORECLOSURE PROCEEDINGS 3
SPECIAL FUND. 4
(B) THE PURPOSE OF THE FUND IS TO PROVIDE FU NDING TO FULLY 5
IMPLEMENT ACCESS TO LEGAL REPRESENTATION IN FORECLOSURE PROCE EDINGS 6
IN THE STATE. 7
(C) MLSC SHALL ADMINISTER THE FUND. 8
(D) MLSC SHALL USE THE FUND TO PROVIDE FUNDI NG FOR LEGAL 9
SERVICES UNDER THIS TITLE. 10
(E) (1) THE FUND IS A SPECIAL , NONLAPSING FUND THAT IS NOT 11
SUBJECT TO § 7–302 OF THE STATE FINANCE AND PROCUREMENT ARTICLE. 12
(2) THE STATE TREASURER SHALL HOLD THE FUND SEPARATELY , 13
AND THE COMPTROLLER SHALL ACC OUNT FOR THE FUND. 14
(F) THE FUND CONSISTS OF : 15
(1) FEES PAID TO THE FUND UNDER § 10–713(B) OF THIS ARTICLE; 16
(2) MONEY APPROPRIATED IN THE STATE BUDGET TO THE FUND; 17
(3) INTEREST AND INVESTME NT EARNINGS OF THE FUND; AND 18
(4) ANY OTHER MONEY FROM ANY OTHER SOURCE ACC EPTED FOR 19
THE BENEFIT OF THE FUND. 20
(G) THE FUND MAY BE USED ONLY FOR: 21
(1) SERVICES PROVIDED BY A DESIGNATED ORGANIZ ATION OR 22
ACTIVITY BY A COMMUN ITY GROUP TO IMPLEME NT THE PROGRAM AS PROVIDED I N 23
THIS SUBTITLE , INCLUDING ALL COSTS ASSOCIATED WITH REQU IRED LEGAL 24
REPRESENTATION IN AN Y PROCEEDING AND ANY OUTREACH AND EDUC ATION 25
ACTIVITIES; 26
(2) IF A LOCAL JURISDICTI ON ENACTS A PROGRAM AUTHORIZED 27
UNDER THIS SUBTITLE , SERVICES PROVIDED BY THE LOCAL JURISDICTI ON TO 28 6 HOUSE BILL 225
IMPLEMENT ACCESS TO COUNSEL IN FORECLOSU RE PROCEEDINGS AS PR OVIDED 1
FOR IN THIS SUBTITLE , INCLUDING ALL COSTS ASSOCIATED WITH REQUIR ED LEGAL 2
REPRESENTATION IN AN Y PROCEEDING AND ANY OUTREACH AND EDUCATI ON 3
ACTIVITIES; 4
(3) ADMINISTRATIVE EXPENS ES OF MLSC; AND 5
(4) EXPENSES RELATED TO T HE STUDY AND EVALUAT ION OF: 6
(I) SERVICES AND ACTIVITI ES PROVIDED UNDER TH IS 7
SUBTITLE; 8
(II) ADDITIONAL LEGAL SERV ICES THAT MAY BE PRO VIDED TO 9
COVERED INDIVIDUALS FACING FORECLOSURE P ROCEEDINGS ; AND 10
(III) FUNDING AMOUNTS AND S OURCES NECESSARY TO FULLY 11
EFFECTUATE ACCESS TO COUNSEL IN FORECLOSURE PROCE EDINGS. 12
(H) (1) THE STATE TREASURER SHALL INVES T THE MONEY OF THE FUND 13
IN THE SAME MANNER A S OTHER STATE MONEY MAY BE IN VESTED. 14
(2) ANY INTEREST EARNINGS OF THE FUND SHALL BE CREDITE D TO 15
THE FUND. 16
(I) EXPENDITURES FROM THE FUND MAY BE MADE ONLY IN A CCORDANCE 17
WITH THE STATE BUDGET . 18
(J) MONEY EXPENDED FROM T HE FUND IS SUPPLEMENTAL TO AND IS NOT 19
INTENDED TO TAKE THE PLACE OF FUNDING THA T OTHERWISE WOULD BE 20
APPROPRIATED FOR CIV IL LEGAL SERVICES FR OM ANY OTHER SOURCE . 21
7–3A–09. 22
(A) LEGAL REPRESENTATION AS REQUIRED UNDER TH IS SUBTITLE SHALL 23
BE PHASED IN OVER TI ME IN A MANNER THAT MLSC DETERMINES APPROPRIA TE 24
WITH THE GOAL OF FUL L IMPLEMENTATION BEF ORE OCTOBER 1, 2027. 25
(B) PRIORITY IN FUNDING D URING THE PHASE –IN PERIOD WILL BE GI VEN 26
TO MORTGAGORS AND GR ANTORS IN A LOCAL JU RISDICTION THAT PROV IDES OR 27
AGREES TO PROVIDE SI GNIFICANT ADDITIONAL LOCAL FUNDING TO EFF ECTUATE 28
ACCESS TO COUNSEL IN FORECLOSURE PROCEEDI NGS IN THE LOCAL JUR ISDICTION. 29
(C) ACCESS TO LEGAL REPRE SENTATION UNDER THIS SUBTITLE IS 30 HOUSE BILL 225 7
SUBJECT TO THE AVAIL ABILITY OF FUNDING . 1
7–3A–10. 2
(A) A LOCAL JURISDICTION M AY ENACT A LOCAL LAW PROVIDING FOR 3
LEGAL REPRESENTATION IN FORECLOSURE PROCE EDINGS FILED IN THE LOCAL 4
JURISDICTION. 5
(B) IF A LOCAL JURISDICTI ON ENACTS A LOCAL LAW UNDER SUBSECTION 6
(A) OF THIS SECTION PROV IDING FOR LEGAL REPR ESENTATION IN FORECL OSURE 7
PROCEEDINGS SUBSTANT IALLY SIMILAR TO THA T DESCRIBED IN THIS SUBTITLE, 8
MLSC SHALL DIRECT FUNDING THAT WOULD HAVE BEEN ALLOCATED UNDER THIS 9
SUBTITLE FOR THE BEN EFIT OF COVERED INDIVIDUALS IN THE LOCAL 10
JURISDICTION TO THE LOCAL PROGRAM . 11
10–713. 12
(A) THE COMPTROLLER SHALL COLLECT A FEE ON EACH RESIDENTIAL 13
PROPERTY SALE AS FOLLOWS: 14
(1) $25 ON A SALE OF LESS THAN $200,000; 15
(2) $50 ON A SALE OF AT LEAST $200,000 BUT LESS THAN $350,000; 16
(3) $100 ON A SALE OF AT LEAST $350,000 BUT LESS THAN $500,000; 17
AND 18
(4) $250 ON A SALE OF $500,000 OR MORE. 19
(B) FEES COLLECTED UNDER THIS SECTION SHALL B E PAID TO THE ACCESS 20
TO COUNSEL IN FORECLOSURE PROCEEDINGS SPECIAL FUND ESTABLISHED 21
UNDER § 7–3A–08 OF THIS ARTICLE. 22
Article – State Finance and Procurement 23
6–226. 24
(a) (2) (i) Notwithstanding any other provision of law, and unless 25
inconsistent with a federal law, grant agreement, or other federal requirement or with the 26
terms of a gift or settlement agreement, net interest on all State money allocated by the 27
State Treasurer under this section to special funds or accounts, and otherwise entitled to 28
receive interest earnings, as accounted for by the Comptroller, shall accrue to the General 29
Fund of the State. 30
8 HOUSE BILL 225
(ii) The provisions of subparagraph (i) of this paragraph do not apply 1
to the following funds: 2
170. the Cannabis Public Health Fund; [and] 3
171. the Community Reinvestment and Repair Fund; AND 4
172. THE ACCESS TO COUNSEL IN FORECLOSURE 5
PROCEEDINGS SPECIAL FUND. 6
SECTION 2. AND BE IT FURTHER ENACTED, That, if any provision of this Act or 7
the application thereof to any person or circumstance is held invalid for any reason in a 8
court of competent jurisdiction, the invalidity does not affect other provisions or any other 9
application of this Act that can be given effect without the invalid provision or application, 10
and for this purpose the provisions of this Act are declared severable. 11
SECTION 3. AND BE IT FURTHER ENACTED, That this Act shall take effect 12
October 1, 2023. 13