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Massachusetts Appellate Court Holds Second Mortgages Can Collect for Six Years After Foreclosure


A bank can file a lawsuit to collect a deficiency within two years of the date of the foreclosure under Massachusetts General Laws chapter 244, section 17A. This two-year statute of limitations is significantly shorter than the normal statute of limitations for a written loan, which is six years.

But a new decision from the Massachusetts Appellate Division clarifies what happens with a second mortgage after a foreclosure.

In the case of Old Republic Insurance Company v. Prostran, a homeowner’s house was foreclosed. The homeowner had both a first and a second mortgage. The bank that held the second mortgage then sued the homeowner more than two years after the foreclosure. The homeowner argued that the statute of limitations for a deficiency should apply — two years.

But the court rejected that argument, holding that the two-year statute of limitations only applies to first mortgages. Second mortgages, however, still have six years.

The lesson from this case is that even after a foreclosure, a second mortgage can still pursue a homeowner for the amounts owed. This can make it difficult to start over after what has already been a difficult situation.

There are numerous defenses that can be raised, however, and which our office has raised in collection lawsuits brought on second mortgages. For instance, the collector may not be licensed to collect debts, or a homeowner may have claims against the bank or collector based on negligent servicing of the loan. If you are sued on a second mortgage, it is extremely important to find a lawyer immediately because in most cases you only have 20 days to respond to a collection lawsuit.

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Culik Law is a Massachusetts Law Firm. The posts on Culik Law’s blog are not intended as legal advice. If you have questions about your particular situation, CONTACT CULIK LAW for a Free Consultation.