If you miss mortgage payments, the lending institution that lent you cash might offer your house to collect the cash you owe. This is foreclosure.
When you secured your loan, you got in into 2 contracts with the bank.
- One agreement is the "note." The note states you to pay back the cash you borrowed.
- The other agreement is the mortgage. The mortgage states you understand that the bank can take your house to pay the financial obligation if you do not pay back the cash you owe.
The bank should follow foreclosure laws before they can take your house. They need to inform you about the auction and announce it in the newspaper before they foreclose. There are laws that offer you time to find a method to capture up on your missed out on payments or find another way to avoid foreclosure. If the bank does not follow the guidelines, they can not foreclose. It is important to understand:
- What the bank needs to do,
- When it has to do these things, and
- How to understand if the bank is following the rules.
Mortgage Holder
Mortgage Holder
The mortgage holder has the right to foreclose on your house if you do not make your payments. The mortgage holder can be a bank, a company, a trust, or an individual that owns the mortgage.
Noteholder
The "noteholder" is the company that owns the right to collect your payments.
Servicer
The business that sends you notifications and expenses is generally the "Servicer" for the mortgage holder. The mortgage holder works with a servicer to collect payments, manage escrow payments, procedure loan adjustments, and communicate with you about the loan.
Sometimes the mortgage holder, noteholder and servicer are all the exact same business. Sometimes they are three different companies. In Massachusetts, a company that wishes to foreclose should be both the mortgage holder, and either the noteholder, or an authorized agent of the noteholder.
When you signed your mortgage, you concurred to make all your payments on time. If you miss out on payments you remain in "default," or you "default on your mortgage." Paragraph 22 of many mortgages (or paragraph 26 for mortgages signed after 2021) is the location that states you offer the bank the right to foreclose if you default on your mortgage. Take a look at paragraph 22 of your mortgage to see if it states you concur the bank can foreclose if you default or miss payments.
In Massachusetts, the bank does not have to go to court to foreclose on your home. The bank, or mortgage holder, can hold an auction to foreclose on your home. The bank announces that it is selling your house on a particular date. The bank can sell your home to the individual who offers the most cash.
When banks foreclose on a residential or commercial property without litigating, this is called the exercise of the "power of sale" licensed by the mortgage. But to utilize the power of sale, banks must follow all the terms of the mortgage and comply with state foreclosure laws.
If you fall behind on your mortgage payments, the bank can only foreclose if they give you the ideal notices, tape the notifications and publish the auction in the newspaper. They must:
Give you a Right to Cure Notice that states you have a number of days to capture up on your payments. If you overtake the overdue mortgage payments, they will not foreclose.
Give you a Right to Modify Notice. Sometimes the bank should inform you that you have a right to ask the bank to alter the method you pay back your loan. Changing the way you pay back your loan is an adjustment. If you have the right to request a modification and your earnings is low enough, the bank may have to offer you an adjustment.
Give you an Acceleration Notice that tells you the total of your loan is due and if you do not pay it, the bank will foreclose.
Give you a Servicemembers Civil Relief Act Complaint. Banks must give this notification to everyone they are starting to foreclose on. If you remain in active military task, you can stop a foreclosure by addressing this grievance.
Record 2 affidavits at the Registry of Deeds. One affidavit states the bank owns, or manages the note and the mortgage. The other affidavit says the bank followed the law under G.L. 244, s. 35B and gave you the Right to Modify Notice.
Publish the auction in the newspaper. For 3 weeks in a row, the bank must release the date and time of the auction in the newspaper.
Give you a Foreclosure notice that informs you the date of the foreclosure auction.
Once the bank has actually followed all the actions after you miss your payments, they can hold an auction and offer your home to the purchaser who provides the most money.
The bank will auction your home on the date and time in the notifications in the newspaper and the letter they sent to you. If the auction was held off by pronouncement the auction will take location on the date it was revealed.
If there is a foreclosure auction set up within the next 7 days, the Massachusetts Division of Banks may have the ability to assist you get a 60 day postponement.
The auctioneer and an agent of the bank will concern your residential or commercial property. The auction does not need to occur on your residential or commercial property. It can be near your residential or commercial property.
For both of these foreclosures, the individual who runs the auction should be a licensed auctioneer. The greatest bidder wins the auction. The bank is allowed to bid at the auction. The bank frequently wins the residential or commercial property.
The buyer normally has thirty days to pay the total that they bid, and sign the documentation. Once all the documents is signed, the bank indications the deed and offers it to the new owner.
If the highest bidder does not pay the total within the 30 days, they lose their deposit. The second greatest bidder can take the residential or commercial property.
On the day of the auction, you might see a person who is representing the bank step onto your residential or commercial property. They do this to make sure that if something goes wrong with the foreclosure by auction they can still take your home a various way. This type of foreclosure is "foreclosure by entry." The bank representative does not need to enter your home. They can just step onto your land, anywhere.
Within thirty days after the sale, the bank that sold your residential or commercial property should record a copy of:
- the notification of sale, and
- an affidavit that the foreclosure sale was carried out properly.
The Registry of Deeds makes this details offered online.
After the foreclosure, the new owner ought to send you a notice that informs you who won the auction. The winner of the auction is the new owner of your residential or commercial property.
You might not get the notice right away. It could take a couple of weeks.
If a bank is the new owner, they will have a residential or commercial property manager. You will get a notification that informs you the name of the residential or commercial property supervisor. Contact the residential or commercial property manager if there are issues with your house.
You can also learn who the new owner of your residential or commercial property is by looking at the deed. See the Registry of Deeds for the town where the residential or commercial property is located.
If the sale of the home did not generate enough to cover the total quantity you owe the bank, you still owe the bank money. The money you owe is a "shortage."
The bank can sue you for the deficiency. But they should have offered you the right notice before the auction. The notice should have said they prepared to "seek a shortage" after the sale.
If you can not manage your mortgage you may have to give up your home. But you might be able to have more control over how you offer it up and avoid foreclosure.
Or, you might be able to keep your home:
- Contact the bank and ask if you can work out a plan to keep your home.
- Get in touch with A HUD-approved housing therapy agency to discover what you can do.
- Contact the Massachusetts Attorney general of the United States's Consumer Advocacy and Response Division to find out more about your rights.
- Try to get legal aid.
Bankruptcy might be alternative for stopping a foreclosure sale. A Chapter 7 bankruptcy might only postpone foreclosure. However, if you can make continuous payments once again, a Chapter 13 personal bankruptcy can allow you up to 5 years to repay an arrearage. Talk to a lawyer.
Foreclosures are complicated. Try to get legal aid.
You may be able to secure free legal assistance from your regional legal help program.
If you do not get approved for legal aid, attempt a lawyer referral service. If your income is low enough, you might receive their reduced charge referral.
