Understanding the foreclosure process in MA is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in MA
What is foreclosure anyway?
Foreclosure is the legal process through which lenders reclaim property securing a loan, typically when the borrower ceases making payments.
While facing foreclosure can be challenging, it’s essential to remember that there are ways to manage the situation.
Understanding the specific procedures of foreclosure in MA equips you with the necessary information to navigate the process effectively and strive for a positive outcome.
The Basic Stages of A Foreclosure
Understanding the foreclosure process is crucial as it involves several key stages.
Foreclosure procedures vary from state to state across the United States.
States typically utilize either a judicial sale or a power of sale to foreclose on a property. Though Massachusetts is a non-judicial (power of sale) foreclosure state, which means the lender can schedule and conduct the foreclosure of your home without judicial permission or oversight.
To learn about the specific foreclosure process in Boston, MA, reach out to us at (781) 258-6976 or visit our contact page for personalized guidance.
In most cases, foreclosure proceedings are not initiated in court until 3-6 months of missed payments. The lender will issue several notices regarding the overdue payments, including a notice of default and a notice of sale.
Borrower Rights and Protections
Massachusetts law and federal regulations provide various protections for borrowers. For instance, borrowers have the right to reinstate the loan by catching up on missed payments and can redeem the property before the foreclosure sale by paying off the full loan amount.
Avoiding Foreclosure:
There are several ways to avoid foreclosure:
- Loan Modification: Adjusting the terms of your loan to make payments more affordable.
- Refinancing: Taking out a new loan to pay off the existing mortgage.
- Forbearance: Temporarily reducing or pausing mortgage payments.
- Selling the Property: Selling your home before foreclosure to pay off the mortgage.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender at a public auction (notice must be given).
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors, municipalities, or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Practical Tips for Homeowners Facing Foreclosure:
- Keep Detailed Records: Maintain all communication with your lender.
- Seek Legal Counsel: Consult with an attorney specializing in foreclosure defense.
- Explore Assistance Programs: Look into government and state programs that may offer circumstantial financial assistance.
Generally, it’s best to avoid a foreclosure auction. Instead, call the bank, or work with a reputable real estate firm like us at Gaeta Properties to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe.
If you need to sell a property near Boston, we can help you.
We buy houses in Boston MA like yours from people who need to sell fast.
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Another Foreclosure Resource For Boston MA HomeOwners: