Massachusetts Foreclosure Process
Massachusetts foreclosures are usually performed by using two (2) methods at the same time: (1) Entry and Possession and (2) exercising the Power of Sale given in the mortgage document. The reason that both methods are used is to protect the bank and its representatives from any procedural defect in the Power of Sale foreclosure. By using the Entry and Possession method, the right of redemption will still be foreclosed upon after three years after entry is made.
In order to meet the conveyancing standards in Massachusetts, the lender needs to file a petition to foreclose either in the Superior Court or the Land Court. This court procedure is necessary under the Federal Soldiers and Sailors Relief Act which was originally passed to protect the possible interest of servicemen in property during World War II.
NOTICE OF INTENTION TO FORECLOSE (breach letter)
If the lender wants to chase the homeowner for any loss suffered as a result of the auctioning of the property at less than the amount owed on the mortgage, it must send the breach letter described in the previous chapter. This notice must be sent together with a warning of liability for the deficiency in a form similar to what is given in General Law chapter 244 section 17B. The notice must be sent not less than twenty-one days before the date of the sale. Then the bank must complete an affidavit sworn to, within thirty days after the foreclosure sale, indicating the sales price.
FILING A COMPLAINT TO FORECLOSE
A majority of the complaints to foreclose a mortgage in Massachusetts are filed in the Massachusetts Land Court. The other courts that have jurisdiction in Massachusetts are the Supreme Court and the Massachusetts Superior Courts. The petition should recite the facts of the mortgage, referring to the book and page of the registry record and the fact that the mortgage has been breached. The only issue that the Massachusetts courts are to decide is whether the borrower is entitled to the benefits of the Sailors and Soldiers Relief Act. The form of the complaint is given to the attorney by the Land Court. Upon filing of the complaint, the court will assign the lender an order of notice which the lender is required to publish in a specific newspaper in the county that the property is located. The order of notice must identify the name of the borrowers, the name of the lender, the date, book and page number of the mortgage and the return date.
ORDER OF NOTICE
Massachusetts requires that the order of notice must be published once not less than twenty-one days before the return day in a newspaper designated by the court. The order of notice must also be mailed to all interested persons not less than fourteen days before the return date. Finally, the order of notice must be recorded in the registry of deeds where the property lies prior to the return date or a time further allowed by the court. The time from the order of notice to the return date is six (6) weeks. When the attorney mails back his order of notice he will also forward a military affidavit and a motion to have the bill confessed.
The motion and the affidavit are formalities that are required for the lender to have a proper judgment.
If the work was performed properly the court will grant an interlocutory decree approving a sale the day after the return date. There is then a seven-day wait for the judgment to become final. This judgment is then mailed to the attorney and there is a thirty day appeal period in which the lender can move forward with its sale of the property. The lender should hold the sale within six months of the date of the judgment.
PROCEDURE FOR THE FORECLOSURE SALE
The lender or its representative will hire an auctioneer, set the sale date, time and place, and publicize the auction. The lender is required under Massachusetts's law to publish the sale once a week for three consecutive weeks with the first date of publication being at least twenty-one days before the sale date. This notice will be found in the legal notices of most newspapers in Massachusetts.
LENDER'S DUTY AT THE FORECLOSURE SALE
Massachusetts requires that the lender act in good faith and with reasonable diligence. There have been many cases that have been argued and decided in Massachusetts, which have attempted to define the lender's duty. The courts have held time and again that the inadequacy of the price at the foreclosure sale is not enough to set aside a foreclosure. In essence, the lenders had a duty to exercise good faith and diligence when holding a foreclosure sale. The lender must protect the rights of the borrower under the foreclosure sale.
This means that the lender must advertise the sale and attempt to get the highest possible bid at the sale. The failure to advertise the sale will not cause the investor any problems but will have a substantial result on the pocket book of the bank.
If all of the documents are filed correctly, an auction will be held and the property will be sold to the highest bidder.