Suppose you’re facing foreclosure or are afraid that your home might be at risk of foreclosure in Massachusetts. In that case, you must know what happens in the foreclosure process and mostly what the notice of default entails.
The foreclosure process in Massachusetts starts when a homeowner falls behind with their mortgage payments. After repeated months of non-payment, the lending company or bank will begin calling or issue collection letters, giving notice that they have not received payments.
Banks or lenders have the right to cure a default, which grants a homeowner around 150 days to resolve their mortgage debt. If the homeowner can’t settle the debt, the bank will send an acceleration notice, also known as a notice of default, meaning the entire loan’s balance is due.
Notice of Default – What is it?
A notice of default is a public notice that gets filed with a court. The notice of default declares the mortgage borrower is in default on their loan. The lender files a notice of default when the mortgage payments get behind by the borrower.
A notice of default is typically the first step towards foreclosure. It will contain information, such as:
- The borrower’s personal information (name and address)
- The lender’s name and address
- The property’s legal address
- The nature of the default
- The action needed to cure the default
- The deadline and lender’s intentions if the deadline gets passed without a cure
- The day on which the default must be cured
- A statement that says the lender will sell the mortgaged property if the default is not cured by the intended deadline
How Does a Notice of Default Work?
A notice of default is a significant action that a lender has undertaken. The borrower gets notified that they have breached their mortgage loan contract because of missed payments, and the lender intends to on the property if you don’t pay your balance that’s past due. The notice of default gets filed through the county, and the lender will send it to you via certified mail to your place of residence.
Although the notice of default leads to foreclosure, the lender follows protocol and will be prepared to work with the borrower to get the outstanding account up to date. A grace period can also get negotiated before any action gets taken.
Notice of Sale
Once the lender has filed the notice of default, you get 90 days to bring your payments up to date. If you fail to get your payments caught up, the lender will file a notice of sale with the clerk. The notice of sale displays the following information:
- Location of the sale
- Date of the sale
- Time of the sale
- Trustee’s name and contact information
The notice of sale is then posted on the property, gets published in the newspaper, filed with the county, and then sent via certified mail to your residence.
The auction, or trustee’s sale, occurs three weeks after the notice of sale has gotten issued. The foreclosure sale will take place on the borrower’s property and gets conducted by a licensed auctioneer.
The opening bid is usually the amount you owe on the note, as well as the foreclosure fees. The lender is usually the first person to bid for the total amount. After the auction, the new owner will get a trustee’s deed to the property, and the borrower will no longer be the property owner.
If the borrower remains on the property after the foreclosure auction sale, the new owner must begin eviction proceedings under G.L.c.239 to force the borrower to leave the premises.
Be wary that some real estate companies have tried scaring homeowners to leave the property immediately after the auction. It’s illegal for them to make you leave after the auction without any eviction proceedings getting filed. You can report these real estate agents, and they can face civil and/or criminal liability.
The borrower maintains the right to bring an action for three years after the auction and can challenge that the auction was wrongful.
If the amount to repay the mortgage debt, including fees and costs, can’t get recovered through an auction, there will be a deficiency balance. A deficiency balance is the difference between the total debt and the sale price. Several states will allow the bank to get a deficiency judgment for this balance.
In Massachusetts, the bank has to no less than 21 days prior to the sale, mail you a notice. A lawsuit must then get filed separately, where a deficiency judgment is looked for within two years of the foreclosure sale.
How to Stop Foreclosure
There are many opportunities to save your property, even though a notice of default has gotten filed. To bring the account up to date, you will be given 90 days after the notice of default. Under Massachusetts law, you will have the right to cure, but this can only happen once during any five-year period.
Once the notice of sale gets filed by the lender, you get until five days before the auction to pay the account to save your property. Your house will go up for auction once the five days pass. Check your contract to see if you can complete a reinstatement and what the deadline will be for it. If not, you might get to reinstate the loan if the bank agrees to it.
Where to Get Help
To get assistance free of charge to save your property, you can contact a HUD-approved housing counselor (United States Department of Housing and Urban Development). The counselor will discuss the various options with you and negotiate on your behalf with the lender to arrange a payment plan. They can also assist in a loan modification to keep you on the property. Regardless of your hardships or income level, HUD counselors are always available. You can find a list of approved HUD counselors in your state on the Housing and Development website.
Alternatively, you can seek assistance from a Massachusetts Foreclosure Lawyer. The laws around foreclosure are complicated, and lenders can make mistakes or violate state or federal foreclosure laws. If this is the case, you have a defense that could potentially force a restart to the foreclosure, or you could have the upper hand to have an alternative worked out.
What to Take Note of
The notice of sale and notice of default are both open public records. Be careful of scammers or disreputable companies who look for homeowners that are facing foreclosure. They will claim to negotiate with your lender in exchange for a fee upfront. There are even some who will trick you into signing over your property to avoid foreclosure.
Remember that it’s illegal to charge any upfront fees for negotiating a mortgage foreclosure. These scammers are there to take your money and not save your home.
If you face foreclosure and receive a notice of default and require additional resources, check out our comprehensive guide to stopping foreclosure.
We can help sell your home quickly to stop the auction! We can help provide you with the best solution suited to your situation and will do our best to help you as much as we can.
You can get in touch with us via email or call us on 781-309-7085, and we will be there for you with everything you need.