Foreclosure in Massachusetts

How a Massachusetts foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. If the home is your main home, the lender can't speed up the loan or enforce the mortgage until at least 90 days after it gives you a written notice. The notice must tell you that you may be able to get help from the Massachusetts Housing Finance Agency and the Division of Banks.
3. For certain loans, the lender must also send a notice of your right to seek a loan modification, at the same time as a right to cure notice.
4. Before a sale, the lender must first get a judgment from the Land Court finding that the owners aren't entitled to relief under the Servicemembers Civil Relief Act. Under that federal law, a sale during military service or within one year after it isn't valid without a court order or a qualifying agreement.
5. The lender can't publish a notice of sale if it knows or should know that the mortgage holder neither holds the note nor acts for the note holder. For those certain loans, it must also sign a sworn statement that it followed the modification rules.
6. The notice of sale is published in a local newspaper once a week for 3 weeks in a row, starting at least 21 days before the sale. It's also sent to the owner by registered mail at least 14 days before the sale. To keep the right to sue you for any shortfall, the lender must mail you a warning by registered mail at least 21 days before the sale.
7. The home is sold at a public auction.
8. After the sale, the seller records a copy of the notice and a sworn statement of what it did at the registry of deeds. After a foreclosure sale, the new owner can use the state's summary process law to recover possession of the home.

Your 90-day right to cure

Massachusetts gives you a 90-day right to cure on your main home: you can catch up by paying all past-due amounts, without the whole balance coming due. You get this right only once in any 5-year period, even if the loan changes hands.

To cure, you don't have to pay any charge, fee or penalty for using this right. And you aren't on the hook for the lender's attorneys' fees for your default from before or during the notice period.

The notice must also tell you that you can sell the home before the foreclosure sale and use the money to pay off the mortgage, and that you can redeem the home by paying the total amount due before the sale.

Modification rules for certain loans

A stricter rule covers home loans with certain features, such as interest-only payments, payment options below full principal and interest, or no full proof of income or assets. For those loans, the lender can't publish a notice of sale until it has taken reasonable steps and made a good faith effort to avoid foreclosure.

That means looking at whether you can make an affordable monthly payment, and comparing what a modified loan would bring the lender with what it expects to recover from a foreclosure. Deciding whether to offer you a modification can take no longer than 150 days.

If you don't answer the lender's modification notice within 30 days, you're treated as giving up that cure period, and a 90-day right to cure applies instead. If the lender won't offer a modification, it must tell you so and give you a written summary of its analysis.

If you get one of these notices, a housing counselor can help you answer it.

The notice of sale and the auction

The sale notice must run in a newspaper published in the city or town where the home is, once a week for 3 weeks in a row, with the first ad at least 21 days before the sale. If the mortgage was assigned to the lender, the notice isn't valid unless the assignment, or chain of assignments, was recorded at the registry of deeds before the notice was mailed.

The home is then sold at a public auction to foreclose the mortgage. Under federal rules, if your servicer gets your complete application for help more than 37 days before a sale, it must evaluate it.

If your sale is set for the next 7 days, MassHousing says to contact the Division of Banks to ask for help.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Massachusetts, that's 9 months, and HUD lists filing a complaint as the first legal action.

Under state law, the lender must wait at least 90 days after the right to cure notice on your main home, then publish the sale notice for 3 weeks in a row, starting at least 21 days before the sale, and mail it to you at least 14 days before the sale. For those certain loans, the modification review can take up to 150 days.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

Shortfall, extra money and redemption

If the sale brings in less than you owe, the lender can sue you for the shortfall, called a deficiency, only if it mailed you the written warning at least 21 days before the sale. A deficiency suit after a power of sale foreclosure generally has to be filed within two years after the sale.

If the sale brings in more, the lender keeps what the mortgage secures, including its costs, and the extra goes to you, unless the mortgage says otherwise. Within 60 days after it gets the money, the lender must send you an itemized accounting of the sale price, fees, costs and any surplus due to you.

You can redeem after a default, but not once the home has been sold under the power of sale in the mortgage. You have the right to stay in your home during the entire foreclosure process.

Protections when you sell, lease or get offers

• The Attorney General's office adopted regulations that barred "foreclosure rescue transactions," to protect homeowners from losing their homes in these scams.
• The Attorney General warns that scammers may push a scheme where you sign over your deed and buy the home back later. Its advice: never pay upfront fees for mortgage help, and never sign over your deed to a rescue scheme.
• The Attorney General has also told homeowners looking for help to avoid any business that encourages you to lease your home so you can buy it back over time, or offers to buy your house for cash at a fixed price that isn't set by fair market value at the time of sale.
• MassHousing warns about anyone who pressures you to sign over your deed or sign papers you haven't read and don't fully understand. It says scammers have stolen millions from homeowners by promising quick relief from foreclosure or charging for counseling.
• Federal law bans mortgage relief companies from asking for or taking a fee before you've signed a written agreement with your lender or servicer.
• You can sell before the foreclosure sale and use the money to pay off the mortgage. The modification law also lets your lender accept a short sale or a deed in lieu of foreclosure if you ask for one.

Several of these touch how I buy. The rescue rules and the lease-back warnings touch a lease option, and any deal where you'd stay in the house after you sell. The deed warnings touch taking over payments, because you'd sign over the deed while the loan stays in your name. The fair-price warning touches a cash offer, so compare any price with what the home would bring on the open market. Have a lawyer read any deal before you sign, including mine, and don't stop talking to your lender.

Free help in Massachusetts

• MassHousing: foreclosure prevention. The state-funded RAFT program has become available to low-income homeowners at risk of foreclosure.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in Massachusetts.