Massachusetts Appeals Court Says Mortgage Servicers May Send Default Notices
After the time expires, the bank can proceed with the remainder of the foreclosure process. This period usually gives homeowners a chance to avoid foreclosure with a loan modification or to pursue claims against their bank. The statute governing this “right to cure” notices is Chapter 244, Section 35A, of the Massachusetts General Laws.
There are typically two banks involved in a mortgage: the investor who owns the loan, and the servicer who collects payments and sends statements. Homeowners don’t usually hear from the investor, and often don’t even know who it is.
The statute says the “mortgagee” must send the notice. The mortgagee is usually interpreted to be the investor.
This is problematic, however, because mortgage servicers often send these notices, rather than investors.
A recent decision from the Massachusetts Appeals Court addressed exactly this issue, whether the investor or servicer should send the notice.
In a blow to homeowners and their advocates, the Appeals Court decided that either the investor or the servicer may send the notice. The reason the court provided was that as long as the notice is sent and provides the other mandatory disclosures, it will satisfy the legislative purpose of giving notice to homeowners, since it is the servicer, not the investor, who usually provides options like loan modifications.
Nevertheless, “right to cure” notices must be carefully inspected by homeowners. There are numerous disclosures that must be accurately made, or else the foreclosure process has to restart. Homeowners have the right to file an affirmative lawsuit if they wish to challenge a “right to cure” notice. Moreover, there is a right to request a loan modification for many loans, provided under Chapter 244, Section 35B of the Massachusetts General Laws.
The decision is available here: Haskins v. Deutsche Bank
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