Maryland PHIFA: What Home Sellers Need to Know Before Signing Anything

If you're selling your Maryland home — especially if you're facing foreclosure or financial hardship — you should know about PHIFA. The Protection of Homeowners in Foreclosure Act is a Maryland law designed to protect vulnerable homeowners from predatory practices. Here's what it means for you.

What Is PHIFA?

PHIFA (Maryland Real Property Code § 7-301 through § 7-325) is a state law that regulates "foreclosure consulting" and "foreclosure rescue transactions." It was enacted to protect homeowners from scam artists who prey on people facing foreclosure.

The law applies primarily to homeowners who are in default on their mortgage or who have received a notice of foreclosure. It sets strict rules for anyone offering foreclosure-related services or seeking to purchase property from distressed homeowners.

Key Protections Under PHIFA

PHIFA provides several important protections for Maryland homeowners:

• Right to Cancel: In certain foreclosure rescue transactions, you have the right to cancel the contract within 5 business days of signing — no questions asked.
• Written Contracts Required: Any foreclosure consulting contract must be in writing, clearly stating all terms, fees, and services to be provided.
• Prohibited Practices: Foreclosure consultants cannot charge excessive fees, make false promises, or engage in deceptive practices.
• Equity Protection:The law restricts equity stripping schemes where bad actors try to steal your home's value through unfair transactions.
• Clear Disclosures: Buyers must provide specific disclosures about the transaction and your rights.

How Maryland House Pros Handles These Sales

Maryland House Pros uses written disclosures and transaction procedures designed to address applicable Maryland requirements, including PHIFA when it applies. Here's how our process works:

• Transparent offers: We clearly explain how we calculate our offer and what you'll receive at closing.
• No pressure: You have time to review any contract with your own attorney or advisor before signing.
• Written disclosures: The terms are in writing. When PHIFA applies, its notices are due before you sign, so ask for them and have your own attorney review them.
• Clear title transfer: The sale happens at a licensed title company with proper documentation.
• You keep your equity: After paying off your mortgage, any remaining proceeds go directly to you.

Red Flags to Watch For

PHIFA exists because some bad actors have taken advantage of distressed homeowners. Watch out for these warning signs:

• Anyone who pressures you to sign documents immediately
• Promises that seem too good to be true
• Requests for upfront fees before any service is provided
• Suggestions to transfer title to them while you continue living there
• Lack of clear written contracts
• Refusal to let you have documents reviewed by an attorney

Your Rights When Selling to an Investor

Whether or not you're in foreclosure, you have rights when selling your home:

• The right to take time to consider any offer
• The right to have contracts reviewed by an attorney
• The right to understand all terms before signing
• The right to receive clear disclosures about the transaction
• The right to cancel certain transactions within the legally specified period

Questions? We're Here to Help

Kerry Woods, our founder, has been buying homes in Maryland for 25 years. We've built our business on integrity and transparency. If you have questions about selling your home — whether you're in foreclosure or not — we're happy to explain the process and your options with no obligation.

Call us at (240) 389-4319 or use our calculator to get a free estimate of what your home is worth.