Foreclosure Process Overview
Although Massachusetts allows for both judicial and non-judicial foreclosure, the majority of foreclosure proceedings are done judicially. A law passed in 2008 requires lenders send a 90-day demand letter to the borrower in default prior to initating foreclosure proceedings, after which time the foreclosure process can take from 4-6 months, including the Land Court Soldiers’ and Sailors’ judgment.
While Massachusetts provides for a non-judicial foreclosure, prior to sale, an action must be filed with the Land Court to obtain a judgment that the owners of the subject property are not protected under the Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended. A complaint is filed with the Land Court and the court provides an Order of Notice which must be served, published and recorded prior to judgment entering.
The non-judicial process of foreclosure is used when a mortgage contains a Statutory Power of Sale clause. A “power of sale” clause authorizes the sale of property to pay off the balance on a loan in the event of default. In mortgages where a power of sale clause exists, the power given to the lender to sell the property may be executed by the lender.
Power of Sale Foreclosure Guidelines
If the mortgage contains a power of sale clause, the Lender follows the statutory requirements and conducts a foreclosure sale.
A notice of sale must contain the place, time and date of the foreclosure sale, the date the mortgage was recorded, the borrower(s) name and the terms of the sale. The sale must be conducted at public auction on the date, time and place specified in the notice of sale. The property will be sold to the highest bidder.
The notice must be sent by certified and regular mail to the borrower at their last known address. The notice must also be sent to any party with a recorded interest in the property within 30 days of the scheduled foreclosure sale. The notice must be published once a week for 3 weeks with the first publication being at least 21 days before the sale in a newspaper of general circulation within the county where the property is located.
The borrower has no rights of redemption.
Information provided by the law firm of Marinosci Ceritto & Shapiro, P.C. (www.mcs-lawfirm.com).
Legal and Legislative Updates
State Attorney General Martha Coakley announced in May a $1 million grant program aimed at rehabilitating bank-owned properties (REOs). The program is funded with monies from the state’s portion of the national foreclosure settlement. The program is a joint effort between Coakley’s office and the Registry of Deeds.
On November 1, 2012, a new Massachusetts law went into effect that gives judges in the Bay State the power to determine whether a bank can foreclose on a home or must modify the mortgage. The new law, entitled Act Preventing Unlawful and Unnecessary Foreclosures, creates a series of new hoops for banks and other mortgage creditors to jump through in order to foreclose on borrowers who aren’t making their payments.
Under the new law, lenders will have to demonstrate to a Massachusetts court that they made “a good faith effort” to work with delinquent borrowers, and that they took “reasonable steps” to avoid foreclosing. Such “steps” would include considering whether the borrower could make a lower, “affordable monthly payment” relative to their current delinquent loan.
The new law also mandates that lenders prove loan ownership prior to taking foreclosure action. The law includes new protections that prohibit lenders from misrepresentation, unfair costs and imposition of fees for services not performed.
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