Massachusetts foreclosure law: An easy-to-understand explanation
A foreclosure can be accomplished by either judicial or non-judicial action, depending on the law of the state in which the foreclosure is to be accomplished. In non-judicial foreclosure states, the foreclosing party (i.e., the bank or mortgage servicer, which I will call the “mortgage company” for convenience) is not required to go to court. In judicial foreclosure states, the foreclosing party must sue the homeowner in court to obtain the court’s permission to foreclose on the house.
In Massachusetts, although judicial foreclosure is permitted, most foreclosures are done by non-judicial action. This is because it is quicker and cheaper for the mortgage company to not have to take you, the homeowner, to court.
How is this done? Why can the mortgage company sell your house out from under you without having to go to court? Because your mortgage contains something called a “power of sale” clause. When you signed all those documents at your closing, the most important two documents were the mortgage and the note.
The note was a contract stating that you are borrowing money and you promise to pay it back. The mortgage is a contract for the lender’s security stating that if you don’t make the payments due under the note, the lender can sell your house to satisfy the loan. The mortgage secures the obligation to pay the note.
The obligation is secured by the “power of sale” clause, under which you agree to give the lender the power to sell your home to satisfy the debt if you stop making payments. (Yes, you agreed to that when you signed the mortgage.) But if you’ve defaulted on (stopped paying) your house note, the mortgage company can’t just take your home right away.
In Massachusetts, after you default, you have what’s called the 90-day right to cure. This is a recent addition to Massachusetts law intended to give homeowners a chance to catch up on their payments before their house is foreclosed. The mortgage company will send you a letter stating that as of a certain date you are in default, and that if you do not catch up on your payments in 90 days, they will be allowed to foreclose.
Don’t ignore this notice! If you get one of these and you are able to make the payments to catch up, do so immediately or else you’ll incur needless late fees and penalties. If you are unable to make your payments, make sure that you call a lawyer or get help from a qualified professional.
If you do nothing during the 90-day period, the mortgage company will schedule a foreclosure sale some time after the 90-day period ends.
Because the mortgage company is going to sell your house, they have to try to get a good price for it. To get a good price for your house, they have to hold an auction. And to have an auction, they have to post notice of the auction in the newspaper. This notice must be posted in a local newspaper for three weeks, with the first publication being at least 21 days before the auction. And you must be mailed notice of the auction at least 14 days beforehand. These notices are required by law in Massachusetts.
There is only one more requirement that the mortgage company must comply with in order to foreclose. There is a law called the Servicemembers Civil Relief Act (it used to be called the Soldiers and Sailors Act) that protects members of the armed forces from foreclosure while they’re on active duty. The mortgage company must get a judgment from a Massachusetts court stating that you, the homeowner, are not on active duty. Don’t be confused by this — it has nothing to do with whether you owe the debt or whether the mortgage company has done anything wrong. It is for one purpose only: to determine whether you’re in the military on active duty. That’s all. After the mortgage company gets a judgment stating that you’re not, they can move forward with the foreclosure.
In some cases, if the mortgage company wants to be aggressive, they can obtain the judgment under the Servicemembers Civil Relief Act and publicize the auction during the 90-day period, scheduling the auction for the day after the 90-day period is up. This is rare, and is even rarer now that most foreclosure law firms are backlogged with foreclosures. But it can happen, so you need to make sure that you act quickly and aggressively to do everything you can — such as contacting your lender and getting a lawyer.
For more information, the law on foreclosure in Massachusetts is located in Chapter 244 of the Massachusetts General Laws.