Facing Foreclosure in Massachusetts? You Still Have Options

Massachusetts is a non-judicial foreclosure state. That means the lender does not have to sue you in court to foreclose; if your mortgage contains a power of sale, which nearly all do, the lender can auction the house after following a set of notice requirements laid out in state law. The one court proceeding involved is a Land Court filing to confirm you are not on active military duty, and it is not a chance to argue your case.

The process is slow at first and fast at the end. Months can pass between the first missed payment and any formal notice. Then the required notices go out, the auction is advertised, and the sale happens on the front lawn or at a lawyer's office. Once the auction is done, you have very little leverage left.

The most important thing to understand is that you can sell the house right up until the auction. A sale that pays the lender in full stops the foreclosure. If you have equity, selling is often the difference between walking away with money and walking away with nothing plus a foreclosure on your credit report for seven years.

The Massachusetts foreclosure timeline, plainly

Every lender's paperwork looks different, but the legal steps are the same.

• Missed payments. Late fees start after the grace period. Most lenders will not begin formal steps until you are several months behind.
• 90-day right to cure notice (M.G.L. c.244 §35A). The lender must send you a written notice giving you at least 90 days to bring the loan current before it can start foreclosure. Older articles still cite 150 days; that temporary period expired at the end of 2015.
• Loss mitigation review (§35B). For many loans the lender must evaluate alternatives to foreclosure before proceeding, and certify that it did.
• Ownership certification (§35C). The lender must certify that it actually holds the note and mortgage before foreclosing.
• Servicemembers case in Land Court. A short proceeding to confirm you are not protected by the federal Servicemembers Civil Relief Act.
• Notice of sale. Published in a local newspaper once a week for three weeks, the first at least 21 days before the auction, and mailed to you at least 14 days before.
• The auction. Usually held at the property. The high bidder, often the lender itself, takes title.

What you can still do before the auction

There are more paths than the lender's letters suggest, and some of them are free.

Reinstate by paying everything past due plus fees. Modify the loan through the lender's loss mitigation process; you have a legal right to be reviewed. Refinance, if your credit and equity allow it, though that is hard once payments have been missed. Sell the house for enough to pay the loan off. Short sale if you owe more than the house is worth, which requires the lender's approval and takes months. And Chapter 13 bankruptcy stops a foreclosure immediately and lets you catch up over time, though that is a decision to make with a bankruptcy attorney, not a home buyer.

Free, legitimate help exists. HUD-approved housing counselors in Massachusetts and the Attorney General's office will review your situation at no cost. Be careful of anyone who asks for a fee up front to save your house, or who asks you to sign the deed over to them while you keep living there.

Selling for cash to stop a foreclosure

When you have equity but not time, a cash sale is often the cleanest answer. Because there is no buyer financing, the closing does not depend on an appraisal or a bank's underwriting schedule, and we can typically close in about a week once the payoff figure is in hand.

Here is how it goes. We look at the house and give you a written offer. The Massachusetts closing attorney orders a payoff statement from your lender, which includes the balance, the arrears, and the lender's legal fees to date. At closing the attorney pays the lender directly from our funds, records the deed, and wires the remaining equity to you. The foreclosure is over because the loan is gone.

If an auction is already scheduled, the attorney contacts the lender's foreclosure counsel with the signed purchase agreement and the closing date. Lenders frequently postpone an auction when a real closing is imminent, though they are not required to, so the earlier you start the better.

What happens if the auction goes ahead

It helps to know what you are trying to avoid. After a foreclosure sale in Massachusetts, you no longer own the house, but you do not have to leave the same day; the new owner has to go through a summary process eviction, which takes weeks to months. If the sale brings more than you owe, the surplus is yours, though foreclosure auctions rarely bring full market value. If it brings less, the lender may pursue you for the deficiency, provided it sent the required notice under c.244 §17B before the sale. And the foreclosure stays on your credit for seven years, which affects renting as well as borrowing.

That is the comparison. A sale before the auction, even at an as-is price, usually beats a sale at the auction on every one of those points.

Be honest with yourself about the numbers

A cash offer is not always the best move. If you have a lot of equity and still have three or four months before any auction can legally happen, listing with an agent may net you more, and a HUD counselor can help you figure out how much runway you really have. If you have little or no equity, the answer is probably a loan modification or a short sale, not a cash sale, because there is nothing for a sale to save. Our foreclosure timeline guide goes through each stage in more detail.