Update: The foreclosure moratorium discussed in this article was set to expire on August 18, 2020, but Massachusetts Governor Charlie Baker extended it for another 60 days, until October 17, 2020.
With the coronavirus (COVID-19) pandemic sending thousands of homeowners into financial distress, many states, along with the federal government, have passed laws and issued orders that impose a foreclosure moratorium for specific types of loans and in many places. This kind of moratorium, depending on the order or law, usually prohibits the initiation or continuation of foreclosures until the public health emergency due to coronavirus ends.
On April 17, 2020, the Massachusetts legislature approved and sent to the governor a bill (H. 4647) to protect homeowners from foreclosure during the coronavirus outbreak. The legislation also provides mortgage borrowers in Massachusetts with the right to get a forbearance. The governor signed the bill into law on April 20, 2020.
The new law prohibits all foreclosures and non-essential evictions, including those resulting from a Massachusetts residential foreclosure, for at least 120 days after the effective date of the law or 45 days after the COVID-19 emergency declaration has been lifted, whichever is sooner. (The eviction prohibition also applies to some smaller businesses under certain circumstances.) The governor may choose to extend the moratorium.
Under the law, the lender or servicer may not:
The foreclosure moratorium applies to residential properties of four or fewer units, which are borrower-occupied as a principal residence, and that aren't vacant or abandoned.
While the law explicitly states that homeowners aren't relieved from making their mortgage payments, it does provide borrowers with the right to get a forbearance for up to 180 days.
During a forbearance period, the servicer can't charge fees, penalties, or interest beyond the amounts scheduled and calculated as if the mortgagor made all contractual payments on time and in full under the terms of the mortgage contract.
Generally, at the end of a forbearance, the borrower has to pay the skipped amounts:
Under this new Massachusetts law, the servicer has to add any payments subject to the forbearance plan to the end of the loan term, unless the borrower agrees to an alternative repayment option.
Also, the lender can't report any payments that the borrower misses during a forbearance period as delinquent to the consumer reporting agencies.
Getting a forbearance plan isn't automatic. So, if you're struggling to make your mortgage payments, don't just stop paying them. Contact your loan servicer and ask for a forbearance.
You'll have to affirm you've experienced a financial hardship due to COVID-19, but you shouldn't have to provide any additional documentation.
Effective date: April 20, 2020