Dealing with a foreclosure can be extremely stressful. When you sign the documents to become a homeowner, you never think about the foreclosure process. You must understand the Massachusetts foreclosure process if you’re struggling financially and can’t make your mortgage payments.
This article will familiarize you with the legalities of the Massachusetts foreclosure process. Both federal and state laws give property owners rights and protections throughout the process. If you need answers, you’re in the right place.
Phase 1: Late Payment
Mortgage payments are typically due on the first of the month. If you’re late on a payment, your bank or lender will extend a 15-day grace period. Expect to receive calls and letters from the bank reminding you to take care of payment. During this period, the bank won’t charge any late fees, and the delay cannot result in default or cancellation of the loan or contract.
Let’s backtrack to when you got a loan to buy residential property. In Massachusetts, you’ll sign two documents:
1. Promissory Note: Outlines the specific terms and conditions of the loan you obtain to purchase the property. The borrower signs the note as a promise to repay the loan according to the agreed-upon terms. The lender holds the promissory note as evidence of the borrower’s debt. The promissory note is a separate contract from the mortgage.
2. Mortgage: Also known as a deed of trust, the mortgage is a legal document that ties or “secures” a piece of real estate to an obligation to repay money.
Within the mortgage is the power of sale.
The “power of sale clause” in a mortgage note states that the lender can sell the property in the case of a homeowner’s default. In other words, if you fail to pay your mortgage, the bank can sell your home and use the proceeds to pay your outstanding balance.
Phase 2: Default
After 30 days without making a payment, your lender will consider the loan to be in default. Once a mortgage loan defaults, your bank or lender’s aggressiveness and effort to receive payment will increase. They can also begin the foreclosure process when they see fit by sending a right-to-cure notice.
Phase 3: Right To Cure Notice
The first step in the foreclosure process is the bank sending the property owner a Right-to-cure Notice. The “Right To Cure” refers to a loanee’s right to make all of their delinquent payments before the full default of their loan. The Right To Cure Notice says that the bank can begin foreclosure if you don’t get caught up on your payments.
Federal law says the foreclosure can’t start during the first 120 days after you’re behind on your mortgage. In Massachusetts, you’ll get either a 150-day or 90-day notice.
Do I Get 90 or 150 Days?
150-Day Right to Cure Notice: A mortgage must send a 150-Day Right to Cure Notice that strictly conforms to the “(150 Day) Right to Cure Your Mortgage Default” form under 209 CMR 56.04
- If your loan has a high-cost, predatory, or unfair term, the lender must send a notice explaining the right to pursue a loan modification.
90-Day Right to Cure Notice: By M.G.L c. 244 § 35A (b), a mortgagee may send a 90 Day Right to Cure Notice that strictly conforms to the “(90 Day) Right to Cure Your Mortgage Default” form.
- If the borrower fails to respond to the foreclosing entity, the bank can reduce the timeframe to 90 days.
- The lender can also send a 90-day notice if it can certify that it engaged in a good faith effort to negotiate a reasonable alternative to foreclosure.
Phase 4: Acceleration Notice
If a homeowner cannot cure their debt, their bank will trigger the home mortgage acceleration clause and send an acceleration notice. This notice states the bank’s intent to foreclose on the property if the entire mortgage balance (including interest and penalties) isn’t paid.
Loan acceleration means the borrower can no longer pay off the outstanding balance in installments. This will be the bank’s last attempt to collect the unpaid mortgage value, not just the missed payments.
Phase 5: File Complaint
Under Massachusetts law, the foreclosing entity will file a complaint with the Massachusetts Land Court. They do this to seek a judicial determination that you’re not currently in active military service. This protection falls under the Servicemembers’ Civil Relief Act (SCRA), which postpones or suspends certain civil obligations to enable service members to devote their full attention to duty and relieve stress on their families.
Massachusetts is a non-judicial foreclosure state. A non-judicial foreclosure is completed without a judge’s court order as described in the state statutes. This means borrowers do not get their day in court to dispute the foreclosure.
Phase 6: Notice Of Trustee’s Sale
After the Land Court issues a judgment, the lender’s attorney or trustee will schedule a sale date of the property. To legally hold a sale, the bank must publish notice of the sale in the newspaper for three consecutive weeks. They must also send the homeowner notice of the sale date at least 14 days ahead. The time from the notice to the auction date varies but is usually between 1 and 3 months.
Note: The borrower can still make payment arrangements or pay the amount due between receiving the notice and the auction.
Phase 7: Auction
The foreclosure sale occurs at the property at the time and date indicated by the foreclosing entity. In Massachusetts, acting as an auctioneer without being licensed is illegal, so a licensed auctioneer will conduct the auction. The notice of trustee’s sale will state the minimum opening bid for the property. The opening bid is calculated based on the property value, outstanding loans, liens, unpaid taxes, and costs associated with the sale.
The bank will sell the property to the highest bidder, who must record a foreclosure deed and file at the Registry of Deeds.
Phase 8: Eviction
Eviction is the last step in the Massachusetts foreclosure process. After the foreclosure sale, the new owner must bring an action in the housing court to evict the occupant lawfully.
Understand The Massachusetts Foreclosure Process
As you can see, the lender will make many attempts to help the borrower get caught up on the loan and avoid foreclosure. You should always communicate with your lender so they can present you with options.
Many foreclosures are initiated but not consummated. Most consummated foreclosures tend to be on properties with little equity. When there is equity, the homeowner is motivated to capture it by selling the house, filing for bankruptcy, or refinancing their mortgage. If you need to sell your home to avoid foreclosure, the fastest way to do that is by working with a reputable real estate investor like New England Home Buyers.
