Also, most people who take out a loan to buy a residential property in Massachusetts sign a promissory note and a mortgage. These documents give homeowners specific contractual rights after a borrower defaults.
So, don't get caught off guard if you're a Massachusetts homeowner behind in mortgage payments. Learn about the Massachusetts foreclosure process and laws, from missing your first payment to a foreclosure sale.
In a Massachusetts foreclosure, you’ll most likely get the right to:
Once you understand the process and these rights, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.
The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.
During this time, the servicer can charge you various fees, including late and inspection fees, and, in most cases, must let you know how to avoid foreclosure, and send you a breach letter (a preforeclosure notice).
Under federal law, the servicer usually can’t officially begin a foreclosure until you're more than 120 days past due on payments, subject to a couple of exceptions. (12 C.F.R. § 1024.41). This 120-day period is a good time to submit a loss mitigation application to the servicer.
If you default on your mortgage payments in Massachusetts, the lender may foreclose using a judicial or nonjudicial method.
A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender will automatically win the case if you don’t respond with a written answer. But if you choose to defend the foreclosure lawsuit, the court will review the evidence and determine the winner. If the lender wins, the judge will enter a judgment and order your home sold.
If the lender chooses a nonjudicial foreclosure, it must complete the out-of-court procedures described in the state statutes. After completing the required steps, the lender can sell the home at a foreclosure sale. Most lenders go with the nonjudicial process because it’s quicker and cheaper than litigating the matter in court.
Again, most residential foreclosures in Massachusetts are nonjudicial, although a court might have some minimal involvement. Here’s how the process works.
If your home is a borrower-occupied, principal residence with four or fewer units (investment properties and second homes don’t qualify), the foreclosing lender must personally deliver or mail a notice to you (the borrower) giving 90 days to bring the loan current, called “curing the default.”. (In 2010, the cure period was increased to 150 days except under limited circumstances, but this time frame reverted back to 90 days in 2016.) (Mass. Gen. Laws ch. 244, § 35A).
You get the right to cure the default once during any five-year period. (Mass. Gen. Laws ch. 244, § 35A).
If your loan has certain high-cost, predatory, or unfair features, the lender must also send a notice explaining the right to pursue a loan modification. (Mass. Gen. Laws ch. 244 § 35B(c)).
Who’s eligible for a mortgage modification? The mortgage loan must have one or more features that are characteristic of a subprime loan like:
Eligible borrowers get a right to request a loan modification once during any three-year period, regardless of who owns the mortgage.
How to request a mortgage modification if you receive this kind of notice. If you want to request a loan modification or other foreclosure alternative option, you have to complete and return the form included with the notice, along with any supporting information, no later than 30 days from the date the notice was sent.
Not more than 30 days after receiving the borrower's loan modification request and a completed loan modification application, the foreclosing party (the creditor) has to then provide you with a written assessment of your ability to make an affordable monthly payment, including:
Protections for people with other kinds of loans. Keep in mind that even if you don’t get the right to request a modification and the associated protections under this state law because you don’t have a subprime mortgage loan, you may still apply for a loan modification or other loss mitigation (foreclosure avoidance) option from your servicer.
If you submit a complete loss mitigation application more than 37 days before a foreclosure sale, federal mortgage servicing laws usually protect you from a foreclosure, at least until the servicer reviews your application and denies your request (and any appeal is exhausted), you reject all loss mitigation offers, or you fail to comply with the terms of a loss mitigation agreement.
Call your loan servicer to find out how to apply for a loan modification or other foreclosure alternative.
The lender has to mail the borrower a “Notice of Intent to Foreclose and of Deficiency After Foreclosure of Mortgage” at least 21 days before the sale date if it wants to get a deficiency judgment (see below). (Mass. Gen. Laws ch. 244 § 17B).
In a Massachusetts nonjudicial foreclosure, the lender will likely file a lawsuit, often called a "servicemember’s case," in the Superior Court Department or the Land Court Department of the Trial Court for a determination as to whether the homeowner is entitled to protections under the federal Servicemembers Civil Relief Act (SCRA). The SCRA provides military servicemembers with protections against a foreclosure while on active duty.
Even though a servicemember’s case isn’t a required part of the Massachusetts foreclosure process, lenders often will file this suit so the borrower can’t later claim that the foreclosure was invalid because the lender failed to comply with the SCRA.
The lender then publishes a notice of sale once a week for three weeks and mails the notice to the homeowner at least 14 days before the sale. (Mass. Gen. Laws ch. 244 § 14).
At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Massachusetts, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower, subject to some limitations (see below).
The property becomes REO if the lender is the highest bidder. But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds, you're entitled to the surplus money left over after all liens are paid off.
A few potential ways to stop a foreclosure and keep your home include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. Working out a loss mitigation option, like a loan modification, will also stop a foreclosure.
Or you might be able to work out a short sale or deed in lieu of foreclosure and avoid foreclosure. But you'll have to give up your home.
As discussed earlier, borrowers usually get 90 days to cure the default and reinstate the loan before the foreclosure officially starts. Again, under Massachusetts law, you can exercise this right to cure only once during any five-year period. (Mass. Gen. Laws ch. 244, § 35A).
Also, the mortgage terms might give you additional time to reinstate. Check your contract to see if you get the right to complete a reinstatement and the deadline for doing so. If not, the lender might agree to let you reinstate the loan.
One way to stop a foreclosure is by “redeeming” the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.
Some states also provide foreclosed borrowers a redemption period after the foreclosure sale, during which they can buy back the home. Massachusetts law, however, doesn’t provide a post-sale redemption period when it comes to nonjudicial foreclosures. (Mass. Gen. Laws ch. 244 § 18).
If you're facing a foreclosure, filing for bankruptcy might help. If a foreclosure sale is scheduled to occur very soon, filing for bankruptcy is the best way to stop the sale immediately. After you file for bankruptcy, an "automatic stay" goes into effect. The stay acts as an injunction, prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.
In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out the options available, speak with a local bankruptcy attorney.
In a foreclosure, the borrower’s total mortgage debt sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a “deficiency.” For example, say the total debt owed is $500,000, but the home sells for $450,000 at the foreclosure sale. The deficiency is $50,000.
In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.
In Massachusetts, the lender may get a deficiency judgment after a nonjudicial foreclosure if it:
For more information on federal mortgage servicing laws and foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.
If you have questions about Massachusetts’s foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney. It’s also a good idea to talk to a HUD-approved housing counselor about different loss mitigation options.
]]>However, in most cases, you’ll get some time after the sale or taking to get current on the overdue amounts before losing ownership of the property.
People who own real property have to pay property taxes. The government uses the money that these taxes generate to pay for schools, public services, libraries, roads, parks, and the like. Typically, the tax amount is based on a property’s assessed value.
If you have a mortgage on your home, the loan servicer might collect money from you as part of the monthly mortgage payment to later pay the property taxes. The servicer pays the taxes on the homeowner's behalf through an escrow account. But if the taxes aren't collected and paid through this kind of account, the homeowner must pay them directly.
When homeowners don’t pay their property taxes, the overdue amount becomes a lien on the property. A lien is a claim against your property to ensure you’ll pay the debt. It effectively makes the property act as collateral for the debt.
All states have laws that allow the local government to sell a home through a tax sale process to collect delinquent taxes.
Getting behind in paying your real property taxes in Massachusetts can lead to a tax sale, where the collector will sell your home at auction. (Mass. Gen. Laws ch. 60, § 43). But in some circumstances, the city or town may “take” the property rather than holding a sale. (Mass. Gen. Laws ch. 60, § 53).
Before a tax sale, the collector must publish notice of the sale in a newspaper. (Mass. Gen. Laws ch. 60, § 40). The collector must also post the notice in two or more public places 14 days before the sale. (Mass. Gen. Laws ch. 60, § 42).
At the sale, the property (or the smallest undivided part of the land which a purchaser is willing to take for the amount of taxes, interest, and charges due) is sold for the owed amount of taxes, interest, and charges. (Mass. Gen. Laws ch. 60, § 43).
After the sale, the purchaser gets a deed to the property, subject to the right of redemption (see below). (Mass. Gen. Laws ch. 60, § 45, Mass. Gen. Laws ch. 60, § 64).
Before a taking, the collector must give you a 14-day advance notice by serving it on you or publishing it and must post the notice in two or more public places. (Mass. Gen. Laws ch. 60, § 53). The city or town then gets title to the property, subject to your right of redemption. (Mass. Gen. Laws ch. 60, § 64).
To get free and clear ownership of your home, the buyer who purchased it at the tax sale (or the city or town, if it got your home through a taking) must foreclose your right of redemption. (Mass. Gen. Laws ch. 60, § 64).
Many states allow delinquent taxpayers to pay off the amounts owed and keep the home. This process is called “redeeming” the property.
In many states, the homeowner can redeem the home after a tax sale by paying the buyer from the tax sale the amount paid (or by paying the taxes owed), plus interest, within a limited amount of time. Exactly how long the redemption period lasts varies from state to state, but usually, the homeowner gets at least a year from the sale to redeem the property.
In other states, though, the redemption period happens before the sale.
In Massachusetts, most people get a six-month redemption period after the sale or the taking to pay off the tax debt and keep the home. (Mass. Gen. Laws ch. 60, § 65).
After the redemption period expires, the purchaser (or city or town) can file a petition with the land court to foreclose the right to redeem. Once the foreclosure is complete, the purchaser gets ownership of the property.
In some cases, the foreclosure process can begin sooner. A city or town may begin foreclosure proceedings immediately if:
Also, a petition for the foreclosure of all rights of redemption may be filed at any time following the consent in writing of the record owner. (Mass. Gen. Laws ch. 60, § 65).
Under the Massachusetts statutes, you can redeem your home up until:
If you miss the deadline to file an answer to the petition, the court might let you redeem up until it enters a judgment foreclosing your right of redemption. If you want to redeem your home after the foreclosure starts, your best bet is to get an attorney's help.
To redeem the property, you generally must pay the original amount due, plus interest at 16% and all charges. (Mass. Gen. Laws ch. 60, § 62). But if the foreclosure has already started and the court permits you to redeem, you must also pay court costs and attorneys' fees. (Mass. Gen. Laws ch. 60, § 68).
You can file a petition asking the court to vacate its judgment within one year (or 90 days if the property was abandoned or the redemption amount exceeded the parcel's assessed value). (Mass. Gen. Laws ch. 60, § 69A). But judgments are rarely vacated, and few arguments exist for vacating a judgment. If you want information about vacating a judgment, talk to an attorney.
Because a property tax lien has priority, mortgages (and deeds of trust) get wiped out if you lose your home through a tax sale process. So, If your loan isn't escrowed and you fail to pay the property taxes like you're supposed to, the loan servicer will usually advance money to pay delinquent property taxes to prevent a tax sale from happening.
Most mortgages have a clause allowing the lender to add the amount it paid to bring the taxes current to your loan balance. You'll then have to make repayment arrangements with the servicer or potentially face a foreclosure.
If you’re already facing a property tax sale or taking in Massachusetts and have questions (or need help redeeming your property), consider talking to a foreclosure, tax, or real estate lawyer.
]]>My wife and I live in Massachusetts, and our house is in foreclosure. The sale is coming up soon. I’d like to know if we can get the house back if the foreclosure goes through. I heard from a friend that the homeowner gets the right to repurchase or “redeem” the house after a foreclosure in some states.
In some Massachusetts foreclosure cases, the homeowner gets the right to redeem the home after the foreclosure sale. But if your foreclosure is like most in Massachusetts, you won’t be able to get the home back afterward.
You do, however, have up until the foreclosure sale occurs to pay off the full amount of the unpaid loan, which will stop the foreclosure. Paying off the debt before the sale is also called “redeeming” the home.
The majority of foreclosures in Massachusetts are nonjudicial. In Massachusetts, you don’t have a right to redeem after a nonjudicial foreclosure. (Mass. Gen. Laws ch. 244, § 18; ch. 183, § 21). On the other hand, you do get what's called an "equitable right of redemption" before the sale happens. So, you can redeem the home before the sale by paying off the full amount of the loan.
If the foreclosure is nonjudicial—remember, most are—and you don’t redeem the home or take some other action to stop the foreclosure before the sale, you won’t get another opportunity to save the house.
If your foreclosure is judicial or by possession, which is a rarely used foreclosure process in Massachusetts, then you would get the right to redeem the property after the sale. (Mass. Gen. Laws ch. 244, § 18).
To redeem, you’d have to pay the total amount owed on the mortgage, including interest, attorneys' fees, and costs. (Mass. Gen. Laws ch. 244, § 19).
If you can’t afford to redeem the home before the sale (or after the foreclosure, if you get the right to redeem), other potential loss mitigation options include:
Look into alternatives to foreclosure as soon as possible.
To find the statutes that discuss the right to redeem in Massachusetts, go to Part II, Chapter 183, and Part III, Chapter 244 of the Massachusetts General Laws. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you’re facing a foreclosure.
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