Massachusetts Foreclosure Process: Timeline, Laws & Procedures

by | Sep 16, 2023

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.

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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 foreclosure 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.

In Massachusetts, you can sell your home anytime during the foreclosure process until the foreclosure auction is completed

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. Contact us today if you live in Boston and are currently behind on your payments.

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.

Pro Tip: Attend the inspection to ensure the inspector does a thorough job. It should last 2-3 hours. Tell the inspector your plans for the property (move-in ready vs. fixer-upper) and read the full report. 

Massachusetts-Specific Home Requirements

  • Title 5 Inspection: Massachusetts requires a Title 5 inspection for properties with private septic systems. This inspection ensures the septic system meets state environmental standards and must be done before selling a property, expanding its footprint, or building additional bedrooms.
  • Lead Paint Law: Massachusetts requires homes built before 1978 to be inspected for lead paint. If lead is found, it must be disclosed, and landlords must remove or cover lead paint hazards if a child under six resides in the property.
  • Smoke & Carbon Monoxide Detector: Before a property can be sold, it must pass an inspection to ensure compliance with Massachusetts’ smoke and carbon monoxide detector regulations. Certificates from local fire departments are required at closing.
  • Transfer Tax (Stamp Tax): Massachusetts imposes a real estate transfer tax on property sales, commonly known as a stamp tax. The tax rate is $2.28 per $500 of the purchase price, paid by the seller at closing.

Step 8: Homeowners Insurance

Homeowners insurance is mandatory if you have a mortgage and must be in place before closing. This insurance covers various risks, including damage from fire, theft, and natural disasters, as well as liability for accidents on your property.

Standard policies often include dwelling coverage, personal property coverage, liability protection, and additional living expenses if your home becomes uninhabitable.

There are different levels of coverage, such as:

  • HO-1: Basic policy covering specific perils.
  • HO-2: Broad policy covering more perils than HO-1.
  • HO-3: Special policy that covers all perils except those explicitly excluded.
  • HO-5: Comprehensive policy offering the most extensive coverage.
  • HO-6: Condo insurance.
  • HO-7: Mobile home insurance.
  • HO-8: Older home insurance.

By comparing different policies and providers, you can ensure you get the best protection for your new home.

Step 9: Closing And Walkthrough

The final walk-through typically occurs on the closing day to ensure the property is in the agreed-upon condition. During this inspection, confirm that all personal items have been removed unless specified otherwise in the contract, and check for any new damages. Conduct the walk-through during daylight hours for better visibility. 

Be thorough:

  • Flip all switches
  • Turn on faucets to check for leaks
  • Run all appliances
  • Test the garage door opener
  • Open and close all doors
  • Flush toilets
  • Run the garbage disposal and exhaust fans
  • Inspect ceilings, walls, and floors.
  • Test the heating and air conditioning systems.

At The Closing Table

You will review your Closing Disclosure form at closing, which you should receive three business days before closing. Compare it with your Loan Estimate to check for major changes or inconsistencies. Some fees are legally restricted from increasing by more than 10%.

Consider having a real estate attorney review these documents if desired.

On closing day, meet at the title company. Being on time is crucial, as appointments are often scheduled back-to-back. Bring your photo ID, a cashier’s check (if required), Closing Disclosure, and any other requested documents. 

During the closing, you will sign several key documents:

  • Closing Disclosure: Details all the costs and fees associated with your mortgage, received at least three business days before closing for review and comparison with your Loan Estimate.
  • Promissory Note: A legal document where you agree to repay the loan amount over a specified period, including the interest rate and payment schedule; your promise to pay back the loan.
  • Mortgage (or Deed of Trust): Secures the promissory note and gives the lender a claim against your home if you default on the loan; outlines the mortgage terms, including the loan amount, interest rate, and repayment terms.
  • Deed: Transfers property ownership from the seller to you; includes a property description and is signed by the seller.
  • Settlement Statement (HUD-1 or ALTA): Provides a detailed list of all costs associated with the home’s sale, including buyer and seller costs; reviewed and signed by both parties.
  • Affidavits: Various affidavits may be required, such as confirming your identity, stating the property will be your primary residence, or ensuring no undisclosed liens or judgments.
  • Title Documents: Ensure you receive clear title to the property; may include documents related to title insurance, which protects you and the lender against potential legal issues with the property’s title.
  • Initial Escrow Disclosure: This document outlines the escrow account details, including the amount you need to deposit and what it will cover (e.g., property taxes and insurance).
  • Loan Application: Review and sign a final version of your loan application to confirm that all information is accurate and up to date.
  • IRS Form W-9: Used to provide your taxpayer identification number to the lender for reporting interest paid on the mortgage.
  • Homeowners Insurance Verification: Proof that you have secured homeowners insurance for the property, typically required by the lender.

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Contact us below or call (978) 228-1068 to speak with us about selling your home fast.

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Elie Deglaoui - Author

Author

Elie Deglaoui

Elie is our office admin who handles all our day-to-day tasks and makes sure we always stay on track. He brings his love of music and sports into the office everyday to always liven up the environment. His outgoing personality makes it easy and fun for him to talk to homeowners, homebuyers, and everyone in between.

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