Massachusetts Short Sales and Foreclosures: What You Need to Know
Owning a home is a lifelong dream for some people, and a mission for others. Unfortunate things can happen though and for many reasons the mortgage payments may fall behind. This can trigger a series of events that can lead to foreclosure or short sale. If you are in this situation you should know the process. When you are informed and educated you will be able to make the best decision for your personal situation.
What Involves Being Foreclosed?
The Massachusetts Alliance Against Predatory Lending (MAAPL) outlines the steps that constitute the procedure of being foreclosed. Massachusetts is a non-judicial foreclosure state, which means that homeowners do not get to see a judge before a foreclosure is executed. Lenders allow homeowners to get three months behind in their payments; then the lender waits for the “right to cure” period to begin the formal process.
1. Homeowner receives collection notices from lender.
2. Lender sends right to cure notice to homeowners giving them 150 days to make their mortgage current. During such time the lender cannot amass excessive fees and penalties.
3. If debt is not paid in full, the lender sends an acceleration notice informing the property owner that the entire loan is due. The notice is sent by registered or certified mail at least 21 days before the sale. Notice of intent to sue for the difference between the sale price and amount due on the mortgage is also sent at least 21 days before.
4. The lender files a complaint under the Service Members Civil Relief Act in Land Court or Superior Court stating Lender's intent to foreclose. Homeowner is then served with a copy of the complaint and has 20 days to file an answer. The only possible defense to the complaint is that the homeowner is in military service.
5. Lender publishes notice of sale in the newspaper, including identification of mortgage, date, and place, time of sale and description of property. The notice is published once a week for 3 consecutive weeks prior to the sale, beginning at least 21 days before.
6. Lender sends notice of foreclosure sale via certified or registered mail at least 14 days before the sale.
7. Actual sale takes place on the date, time and place specified in the notice. The sale is conducted by a licensed auctioneer, and the highest bidder wins. Parties execute a foreclosure deed, which is recorded at the Registry of Deeds.
8. Any additional proceeds from the sale are paid to the homeowner. If it did not pay off the entire mortgage, Lender may pursue Homeowner for a deficiency judgment. The homeowner is not required to move at the time of the sale and may be able to negotiate with the new owner for time and relocation costs, although they cannot legally demand it. The new owner can bring an eviction action in Court against the homeowner; but the new owner cannot evict without a Court Order. Finally, the homeowner always has the right to ask the Court for more time to remain in the property.
Are There Any Alternatives?
A short sale is the sale of a property at a price lower than the amount the homeowner owes on the mortgage. A lender might accept it for less than the balance of the mortgage if the homeowner cannot maintain the monthly loan payments or does not have enough money to repay the entire balance of the loan and therefore needs to move out. This is precisely when homeowners would pursue such a transaction because it allows them to avoid having to foreclose. In some circumstances, a short sale might not have too great an impact on the homeowner's credit record.
The mortgage lender’s approval is necessary to sale for less because the lender will be receiving less than the amount the homeowner owes. The lender needs to verify that the homeowner cannot continue to pay the mortgage and determine if a short sale is better than foreclosing on the property.
Foreclosure and short sales processes in Massachusetts can be overwhelming. Eagle Home Buyers, LLC can help you through the decision making process. We will give you all the facts and let you know if we can help you, or put you in touch with someone who can.