How to Stop Foreclosure in Massachusetts
Facing foreclosure is an overwhelming experience. If you’re a Massachusetts homeowner in this situation, we understand how you feel: you’re stressed and looking for your next steps so you can start feeling secure again.
The good news is that you’re in the right place. We’ve put together this guide for people in the exact situation you’ve found yourself in, so you can understand what may happen and how you can take action and take back control of your situation.
Below, you’ll learn exactly what foreclosure means, how the foreclosure process progresses, and the options you can take to prevent it.
Take a deep breath, grab a notebook if you need one, and let’s get started.
Foreclosure is a legal process initiated by a mortgage lender when a homeowner is unable to keep up with their mortgage payments. This process allows the lender to force the sale of the home and recoup the money the homeowner still owes them.
For example, if someone bought a home for $300,000, borrowing $250,000, and got into financial trouble after paying off $50,000 of the mortgage, the bank would force the sale of the home to get the remaining $200,000 the homeowner owes them.
Foreclosure happens when the mortgage goes unpaid. This can be due to:
- Death of the/an owner
- Relationship breakdown between joint owners
- Income loss
- Unexpected unavoidable expenses that take precedence
- Financial instability
Does foreclosure have any impact on you besides losing your home?
Foreclosure can have various impacts on individuals beyond the immediate loss of their home. Here are a few potential consequences associated with foreclosure:
- Negative Credit Impact: Foreclosure typically has a significant negative impact on an individual’s credit history and credit score. This can make it challenging to obtain future loans, credit cards, or favorable interest rates. It may also affect your ability to rent a new home or secure certain jobs that require a good credit standing.
- Financial Consequences: Foreclosure may leave individuals with a remaining mortgage debt if the sale of the home does not cover the outstanding loan balance. This is known as a deficiency balance, and the lender may pursue collection efforts to recover it. In some cases, individuals may also face tax implications related to canceled debt or deficiency judgments.
- Emotional and Psychological Effects: Losing one’s home through foreclosure can be emotionally distressing and can lead to feelings of shame, guilt, or failure. The stress and uncertainty of the foreclosure process can also have a negative impact on mental well-being and relationships.
- Disruption of Stability: Foreclosure can disrupt an individual’s stability and uproot their living situation. Finding alternative housing options, particularly if facing financial difficulties, may be challenging. Relocating, especially if it involves children or other dependents, can impact their education, social connections, and overall quality of life.
- Potential Legal Consequences: Foreclosure proceedings can involve legal complexities. Individuals may need to navigate legal processes, respond to court filings, and understand their rights and obligations. Failing to address legal requirements appropriately can result in additional legal complications and potential repercussions.
As a homeowner facing foreclosure in Massachusetts, you have certain rights and protections under state law. Here are some key rights and resources available to homeowners in Massachusetts:
- Right to Cure: In Massachusetts, you have the right to cure the default on your mortgage by bringing the payments up to date, including any late fees or penalties, within a specified period. The right to cure typically expires 150 days after the notice of the right to cure is mailed or published.
- Right to Mediation: Massachusetts law provides homeowners with the opportunity to request mediation with the mortgage lender or servicer. Mediation can help facilitate negotiations and explore alternatives to foreclosure. You must request mediation within 30 days after receiving a notice of foreclosure.
- Right to Foreclosure Counseling: You have the right to receive foreclosure counseling from a HUD-approved housing counseling agency. These agencies can provide guidance, assistance, and information on foreclosure prevention options.
- Notice of Intent to Foreclose: Before initiating foreclosure, the lender or servicer must send you a Notice of Intent to Foreclose by certified mail at least 30 days before the foreclosure sale. This notice must include specific information about your rights and options.
- Right to Challenge Foreclosure: If you believe there are legal or procedural issues with the foreclosure, you have the right to challenge it in court. You may file a lawsuit to contest the foreclosure, seek an injunction, or assert any applicable defenses.
- Right to Redemption: In certain cases, you may have the right to redeem your property after foreclosure by paying the full amount owed, including costs and fees. The right to redemption period is typically three years in Massachusetts.
- Massachusetts Homeownership Hotline: The Massachusetts Homeownership Hotline provides free counseling and information to homeowners facing foreclosure. You can call 1-877-MAHOUSE (1-877-624-6873) to speak with a housing counselor.
In Massachusetts, most foreclosures are non-judicial, meaning they don’t go through the court system. Instead, they follow the procedure outlined in the mortgage contract. The process typically starts when the homeowner misses a mortgage payment (1-3, typically) and the lender sends a notice of missed payment. This is followed by a default notice.
If the homeowner does not catch up on their payments within a designated period, or make contact with them to make alternative arrangements, the lender initiates foreclosure.
For a complete guide to foreclosure, see our article Foreclosure Eviction Timeline: What to Expect.
Once you’ve been given a notice of default, Massachusetts law gives you a 150-day “right to cure” period. During this time, you can halt the foreclosure process by catching up on your missed payments, plus any fees.
If the lender offers you a loan modification during your “right to cure”, this period can be shortened to 90 days, since it is “easier” to get back on track.
You can appeal foreclosure after the fact if you believe the foreclosure was carried out unlawfully, incorrectly, or unfairly. You’ll need to consult an attorney to do this and find out what’s possible for you.
To prevent foreclosure in Massachusetts, there are several steps you can take. Here are some strategies and options to consider:
- Communicate with Your Lender: Contact your lender as soon as you anticipate or experience difficulty in making your mortgage payments. Open communication is crucial, as it allows you to explore potential alternatives and options that may be available to you.
- Loan Modification: Request a loan modification from your lender. This involves negotiating a change to the terms of your mortgage, such as reducing the interest rate, extending the repayment period, or adding missed payments to the end of the loan. Loan modifications aim to make your monthly payments more affordable and sustainable.
- Forbearance: If you’re facing a temporary financial hardship, you can request a forbearance agreement with your lender. This allows you to temporarily suspend or reduce your mortgage payments for a specific period while you work to improve your financial situation.
- Repayment Plan: Work with your lender to establish a repayment plan that allows you to catch up on missed payments over time. This involves paying a portion of the past-due amount along with your regular monthly payments until the arrears are fully resolved.
- State Assistance Programs: Massachusetts offers several assistance programs to homeowners facing foreclosure. The Home Affordable Modification Program (HAMP) and the Massachusetts Hardest Hit Fund (HHF) provide resources and financial assistance to eligible homeowners.
- Foreclosure Mediation: Request foreclosure mediation, which allows you to meet with your lender and a neutral third party to negotiate a resolution. Mediation can help explore options like loan modifications, repayment plans, or other alternatives to foreclosure.
- Seek Legal and Counseling Services: Consult with a foreclosure attorney or a HUD-approved housing counselor. They can provide legal advice, guidance, and support throughout the foreclosure process, helping you understand your rights, negotiate with your lender, and explore available options.
- Sell the Property: If keeping the property is no longer feasible, you may consider selling it voluntarily. This can help you avoid the negative consequences of foreclosure and potentially pay off your mortgage debt.
Yes, and you should. Foreclosure isn’t often something they want to go through with unless they feel it’s the only way forward – it’s a long and often costly process for them. They may offer you a loan modification, refinancing, or a repayment plan (often referred to as “forbearance”) so you can pay what you owe on top of your mortgage payments. You’ll need to be honest about your financial situation, but provided you can prove you can get back on track, they’ll help you do so.
The good news is that requesting a loan modification will also stop foreclosure proceedings for the time being. Lenders cannot “dual track” the mortgage, meaning they have to stop the foreclosure process in order to qualify you for a loan modification.
If the lender agrees to a loan modification, refinancing, or forbearance, it will stop the foreclosure process.
Massachusetts has a couple of programs to help homeowners facing foreclosure, they are:
- Home Affordable Modification Program (helps homeowners get loan modifications)
- Home Affordable Refinance Program (helps homeowners refinance their mortgages to get lower and more affordable interest rates)
While it may sound counterintuitive, filing for bankruptcy can sometimes be a strategic tool to help you avoid foreclosure. There are two types of personal bankruptcy you can file: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy can temporarily halt the foreclosure process because it puts an “automatic stay” on most collections activities by creditors. This is often just a temporary measure, so this is usually only a good option if you know you can get back on your feet soon. Consult a bankruptcy attorney to see if this option is right for you.
Chapter 13 bankruptcy can be a more effective way to save your home from foreclosure. Under Chapter 13, you’re allowed to pay off your late unpaid payments over the length of a repayment plan that you propose – typically 3-5 years. As long as you make these payments and stay current on your ongoing payments (you’ll need to pay both), you’ll avoid foreclosure.
Bankruptcy is a significant decision that will affect your creditworthiness long term – it stays on your report for 7-10 years typically. You’ll need to consider your future plans and your goals when deciding whether or not bankruptcy is the best way to keep your home. Again, consult a bankruptcy attorney to discuss your options in more detail.
Selling your home is the best way to avoid foreclosure if you know your financial situation isn’t going to be back on track soon enough. When you sell your home, you’re able to avoid foreclosure and bankruptcy – meaning only the missed mortgage payments will damage your credit report.
If you have positive equity in your home, meaning the home is worth more than the money owed to the mortgage company, you can sell your home through any traditional means – be that through a realtor, auction house, or private sale.
If you have negative equity in your home, meaning the amount you owe the mortgage company is more than the value of the home, things are more complicated. In this circumstance, you’ll need to get the lender to agree to a “short sale.” This is where they agree to dismiss your surplus debt and recoup what they can from the sale of the home. For example, if you owe $150,000 but the home will only sell for $130,000, they’ll agree to ignore the remaining $20,000 and let you move on with your life. To learn more about short sales, click here.
A quick sale is the best way to get out of foreclosure if you are willing to let go of the home. Selling your home will release you from the burden of a mortgage you can’t afford and prevent further damage to your credit. You’ll also find that your lender will give you more time once you tell them you are going to sell the property, and will take the pressure off even further when you have a sale agreement in place. This will allow you to relax and prepare for the next chapter of your life without feeling like you’re under threat.
We buy homes for cash in as-is condition throughout Massachusetts. We’ll offer you a no-obligation cash offer for your property and if you accept, we can close in just a matter of weeks.
This option allows you to take total control of your situation once more – you can then take the time you need to prepare to leave the property and get out from under the immense stress of foreclosure.
Our goal is to make the process seamless and as stress-free as possible – and that’s exactly what we’ve done for other people in your situation. You won’t need to worry about costly repairs and preparing your house for sale, about realtor fees, or about how long it will take for you to find a buyer.
If this sounds like an option you’d like to explore further, click here to contact us and we’ll be more than happy to help talk you through your options – there will be no pressure to sell to us, we’ll just give you the best information we can so you can make an informed decision.
Not sure what route to take? We’re happy to talk it through with you (just give us a call), but here are some other resources you can explore to help you make an informed decision:
- Massachusetts Foreclosure Law
- IRS Tax Implications of Foreclosure
- Foreclosure Counseling Services in Massachusetts
Yes, foreclosure can potentially be stopped even after it has started. However, the options available to stop foreclosure depend on various factors, including the specific stage of the foreclosure process and the applicable laws in your jurisdiction.
If you believe that your lender has not followed the necessary steps for foreclosure, you may have grounds to challenge the foreclosure process. Here are some steps you can take if you believe there are legal or procedural issues:
- Review the Foreclosure Documents: Carefully review all the documents related to the foreclosure, including the notice of foreclosure, any correspondence, and the loan agreement. Pay attention to the timeline, disclosure requirements, and any discrepancies or irregularities that may be relevant to your case.
- Consult with a Foreclosure Attorney: Seek the advice of a foreclosure attorney who specializes in real estate law. They can review your situation, evaluate the foreclosure documents, and provide guidance on potential legal grounds for challenging the foreclosure.
- Document and Gather Evidence: Collect and document any evidence that supports your claim. This may include communication records, payment receipts, loan statements, or any other relevant documentation that shows errors, violations, or irregularities committed by the lender.
- Communicate with the Lender: Notify your lender in writing of your concerns and objections regarding the foreclosure process. Request documentation and clarification on any issues you have identified. Keep copies of all correspondence for your records.
- File a Lawsuit: If you and your attorney believe you have a strong case, you may consider filing a lawsuit to challenge the foreclosure. Your attorney will guide you through the legal process, including preparing the necessary documents, presenting your case, and advocating for your rights in court.
- Seek Mediation or Arbitration: Some jurisdictions offer foreclosure mediation or arbitration programs where you can attempt to resolve disputes with your lender outside of court. This can provide an opportunity to negotiate a resolution or address any violations.
In Massachusetts, if the bank forecloses on your home, it does not automatically lead to immediate eviction. The eviction process in Massachusetts is a separate legal process that follows the foreclosure. Here’s an overview of how the eviction process works:
- Foreclosure Sale: After the foreclosure sale, where the property is sold to a new owner, the ownership of the property transfers to the successful bidder or the mortgage holder (typically the bank) if there are no other buyers.
- Notice to Quit: The new owner must provide you with a “Notice to Quit” before initiating the eviction process. The notice typically gives you a specified period, usually 14 days, to vacate the property voluntarily.
- Summary Process Eviction: If you don’t leave the property within the timeframe specified in the Notice to Quit, the new owner can file a legal action known as a “Summary Process” in the appropriate Massachusetts Housing Court. This initiates the eviction process.
- Court Proceedings: You will receive a summons and have the opportunity to respond and present your case in court. The court will schedule a hearing to determine whether you should be evicted.
- Judgment of Possession: If the court rules in favor of the new owner, a “Judgment of Possession” will be issued, granting them the right to regain possession of the property.
- Execution of Eviction: If you do not voluntarily vacate the property after the Judgment of Possession, the new owner can request a “Writ of Execution” from the court, which allows a sheriff or constable to carry out the eviction.
In Massachusetts, a bank can foreclose on a property even if it is in probate. Probate is the legal process that takes place after someone passes away to administer their estate and distribute assets according to their will or the state’s intestacy laws. See our article here for more information.
If you have inherited a property that is in foreclosure, it is crucial to take immediate action to protect your interests. Start by gathering all relevant documents and contacting the lender to inform them of the change in ownership. Engage in open communication to understand the outstanding debt and explore possible alternatives. Assess the property’s value to make informed decisions. Options may include assuming the loan, negotiating a modification or repayment plan, pursuing a short sale or deed in lieu of foreclosure, or selling the property. Seek legal and financial advice from professionals experienced in foreclosure and real estate law to guide you through the process and evaluate the financial implications.
Navigating an inherited property in foreclosure can be complex, so prompt action is vital. Consult with professionals, including an attorney and financial advisor, to understand your rights, explore options, and make informed decisions. Time is of the essence in addressing the foreclosure and seeking resolutions that best protect your interests and financial well-being.
There can be, but they will rarely–if ever–be a good idea. Only consider options like these (typically called a “foreclosure bailout loan”) if you know your financial situation will improve imminently and you have sufficient equity in the home to make this possible.
Yes. To avoid this, you’ll need to pay your owed taxes or make an arrangement with your local government for you to satisfy the debt in a timely manner.
Yes, in some cases, a homeowners association (HOA) or a condominium owners association (COA) can foreclose on your home if you are behind on payments. HOAs and COAs have the authority to enforce the rules and regulations of the community and collect assessments or dues from homeowners to cover common expenses and maintenance.
The specific foreclosure process and requirements can vary depending on state laws and the governing documents of the HOA or COA.
You can learn more about this and what to do next in our article here.
Facing foreclosure in Massachusetts can be a stressful and overwhelming experience. But remember, it’s not an insurmountable challenge. By understanding the foreclosure process, being proactive, and exploring various strategies—like negotiating with your lender, loan modifications, government programs, and even bankruptcy—you can protect your home and your financial future.
If the situation calls for it, a quick sale of your home is also a viable option. We’re here to assist you, offering no-obligation cash offers for homes, even those facing foreclosure. We understand the urgency and strive to close deals within just weeks, giving you control over the situation and the chance to start anew.
In the face of foreclosure, it’s essential not to lose hope. With the right information, professional advice, and prompt action, you can navigate this challenging time and reclaim your future. Click here to get an offer for your home now.
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Check Out More Foreclosure Resources
FDIC Foreclosure Prevention – Facing foreclosure in Massachusetts? The FDIC is a government entity and developed a great resource and a prevention toolkit.
Massachusetts Foreclosure Law – A wealth of Massachusetts specific resources on foreclosure law with links to many helpful resources.
What Happens When a Bank Forecloses – Have you missed a mortgage payment? This article discusses how a bank starts the foreclosure process in Massachusetts.
Foreclosure Timeline – What does a foreclosure timeline look like when a bank starts the process against the homeowner?
IRS Tax Consequences of Foreclosure – Discusses the tax implications from the IRS website related to foreclosure and debt collection.
How to Survive Foreclosure – How to keep your house or simply walk away with cash in your pocket
Foreclosure Counseling Services in Massachusetts – If you need conseling assistance, be sure to check this resource from NCLC.