If money’s tight and you’re trying to figure out how you’re going to meet all your financial obligations, know that you’re not alone. With record-high levels of inflation and a high cost of living for us all, more people than ever are struggling to cover the essentials.
If you’re trying to weigh up whether you should focus on feeding your family, putting gas in your car, or paying the mortgage, things are tough. If you’ve lost your source of income through job loss or a medical emergency, things are even tougher. If you’re considering missing a mortgage payment or two, or think you may be forced to, you’re in the right place. Today, we’re going to explain everything you need to know about missing mortgage payments, as well as your options.
Federal law states that a mortgage company cannot officially begin foreclosure until the borrower is more than 120 days behind on payment. That gives you 3-4 months. As a mortgage borrower in Massachusetts, you have rights. Commonly, you will:
- Receive notice that a foreclosure is being considered by the lender
- Be told you are in default and given the chance to rectify the situation
- Be given the chance to apply for loss mitigation
- Have protection if you are part of the military family
- Pay off the mortgage to prevent the sale
- Get an advanced warning of the foreclosure sale
- The opportunity to apply for bankruptcy
As a Massachusetts resident, if you are vulnerable to foreclosure, understand the process and give yourself the best chance to limit the damage. You may be able to save your home or at least minimize the stress and mental anguish caused by the foreclosure.
Pre-foreclosure is the period between you failing to make a payment and the start of the actual foreclosure process, though it may also include the time up to the sale of the home. This period will often involve charges by the mortgage loan company for things like late payments, though your mortgage company will also explain ways you can avoid the enforced sale.
Often, a late payment charge is made if you are 10 to 15 days late and you will be charged each subsequent month. The lender may also want to make property inspections to ensure the property is still lived in and in good repair. The cost of these inspections is also charged to the borrower, though the charge is minimal.
Usually, mortgage lenders in Massachusetts are obligated to send you a breach letter telling you that you have missed a payment and are therefore in breach of your agreement. They have to do this before they accelerate the loan and push for foreclosure. It gives you (the borrower) the chance to get back on track before foreclosure is properly initiated.
There are two methods open to a mortgage lender to begin foreclosure proceedings:
- Judicial foreclosure
The lender can file a lawsuit against you asking for the court to allow a foreclosure sale. They automatically win the case if you fail to respond with a written answer. If you choose to fight the action then the court will consider the evidence from both sides and reach a decision. If the lender is judged to be in the right, the court will order the sale of your home.
- Nonjudicial foreclosure
Nonjudicial foreclosure is the most common option used by lenders in Massachusetts as it is faster and less expensive than using the tools of litigation.
With nonjudicial foreclosure, the mortgage lender follows the procedures set down in state law and can sell your home at the end of the process.
This will start with a notice of default and a right to cure. Broadly, this notifies you of your nonpayment and gives you 90 days to “cure the default” – i.e. make up the missed payment(s). You get this chance just once every five years.
If you do not rectify the situation, they send you a notice of intent to foreclose and of deficiency after foreclosure of the mortgage at least 21 days before the sale date. The lender has to publish a notice of sale once a week for three weeks and mails the borrower the notice at least 14 days before the foreclosure sale date.
At the sale, the mortgage lender will usually make a credit bid up to and including the amount outstanding on the mortgage, plus any penalties, fees, and costs. If a third party outbids the lender and there is a surplus above the liens on your home, you are entitled to the profit.
If you are serving in the military, it may be that you are entitled to protection from foreclosure under the Servicemembers’ Civil Relief Act. You can find out more about this act here.
You aren’t out of options if you miss a payment or two. If you’re in financial hardship, make sure you notify your mortgage company as soon as possible. Here are your options:
- Reach out to your mortgage company as soon as you believe you may be unable to pay your mortgage. It may be that they will have mechanisms in place to help those in your position such as reduced payments or a payment holiday.
- Pay your mortgage even if it means defaulting on other payments. You don’t want to fall behind with any payments but it is only your mortgage that puts the roof over your head at risk (unless you have other secured loans on the property). It’s much better to default on an unsecured loan or even fall behind on your utility bills, as the former cannot often pursue your assets, and you can usually find government help for the latter.
Here are some resources that will help you with other aspects of your life that may help you to continue paying your mortgage:
- Get Help Paying Your Utilities – State Help
- Keep Your Utilities On – Federal Help
- Sell your home yourself if you don’t believe things will change in the next 4 months, so you can keep control of your situation and your future.
No one wants to lose their home, but economic reality can sometimes bite. If you fall behind on your payments you should be honest about it and inform the mortgage lender of your difficulties, but they may not be sympathetic, especially if the situation doesn’t improve.
Faced with foreclosure, you may decide that it is better to cut your losses and sell the property yourself. At least that way you can begin again with a clean slate.
While it is possible to sell your house yourself you may want to get a sale as quickly as possible and at the same time save yourself the stress and anxiety involved. We have the answer. Pavel Buys Houses will offer you cash for your home, whatever its condition – no commissions, fees, or fixing up required.
Simply fill in the form on our website and we’ll get right back to you. After we ask for a few more details about the property, we will make a fair offer based on market analysis. There is no obligation to take our offer, but if you do, you could have the cash within weeks. Click here to get your cash home offer.