Before the Bankruptcy Petition – Foreclosure Basics
If you’ve missed mortgage payments on your home, a bank or other mortgage lender may choose to initiate foreclosure on your home. A Massachusetts based mortgage lender may start the foreclosure process because missing mortgage payments place the mortgage in default. Such defaults are typically addressed in paragraph 22 of your mortgage. Look at paragraph 22 to see language which might indicate that a failure to pay or failure to make mortgage payments timely allows the lender to begin foreclosure on your home.
What Are the Next Steps Taken by the Bank Prior to Foreclosure in Massachusetts?
In Massachusetts, a lender evaluating foreclosure on your home must follow specific steps and take specific actions to initiate foreclosure in accordance with Massachusetts law. To successfully carry out the foreclosure process a lender must provide notices to you directly, record them and publish them in a newspaper. The order of these notices and necessity of any specific notice may vary slightly, but here is a list of foreclosure related documents you will likely receive:
1. Right to Cure Notice – this would be a letter informing you that you have overdue payments on your mortgage, detailing the number of days you are allowed to take to catch up on these overdue payments, and an acknowledgment by the lender that it will not foreclose if you successfully complete the terms indicated in this letter.
2. Right to Modify Notice – sometimes, but not in every case, a lender will notify you of your right to seek a loan modification. Note: if your income is low enough, a bank may be required to provide a loan modification for you. Loan modifications, when possible, allow the mortgagor (you) to modify some of the terms of repayment of the mortgage to your lender.
3. Acceleration Notice – this is a document informing you of the intention of the lender to foreclose on your home if you do not pay the full amount due under the loan; the document, as implied in this explanation, will also state the exact amount that you must pay to avoid foreclosure.
4. Servicemember’s Civil Relief Act Complaint – although all individuals must receive this document by a lender seeking to initiate foreclosure, it actually applies only to active service members who are able to stop foreclosure in Massachusetts by answering the complaint.
5. The lender must also record 2 affidavits with the Registry of Deeds. One of these affidavits describes the lender’s ownership of the note and the mortgage, and the other demonstrates that a Right to Modify Notice was received by you.
6. Foreclosure Notice – this letter will inform you of the date that the foreclosure will be conducted by the lender.
Please understand that this is a barebones look at the notification schedule that lender’s follow during the foreclosure process on a home or other mortgaged property in Massachusetts. It is possible that these documents may not be received by you or that they may appear to you in an order that is different from that listed in this article. It is helpful to contact an attorney who can assist you in determining if a document which ought to have been given to you was not timely provided, or not provided to you at all.
How Filing for Bankruptcy in Massachusetts May Stop Foreclosure
The foreclosure process may be stopped upon filing bankruptcy in Massachusetts, depending upon your specific circumstances, because a valid bankruptcy petition filed in a Massachusetts bankruptcy court starts the automatic stay. The automatic stay can stop foreclosure because, under 11 U.S. Code § 362(a)(3), this provision in bankruptcy law prevents “any act to obtain possession of property of the estate…or to exercise control over property of the estate.” Practically, this means that a bank or other mortgage lender may not proceed with foreclosure of the home on which the mortgage exists.
Keep in mind that until the automatic stay is implicated by the filing of a bankruptcy petition in a Massachusetts bankruptcy court, a lender may choose to proceed with foreclosure on property for which it has been granted a mortgage. As previously touched on in this article, a lender has a contractual right to pursue the foreclosure process in Massachusetts for a failure to pay according to the mortgage agreement. Also, as previously described, the lender will usually follow the statutorily defined process to initiate and proceed with foreclosure.
During this foreclosure process, a homeowner may receive or even initiate themselves, a request for a loan modification. While loan modifications may be a solution for the homeowner, keep in mind that until the lender has approved the loan modification in writing and has agreed to stop foreclosure proceedings, the lender may do both simultaneously. That is, the lender may on the one hand entertain a loan modification while continuing with a planned foreclosure on the other. The only sure way to know foreclosure is not going forward in most cases, absent the lender’s agreement to approve both the loan modification and an agreement with the lender to stop foreclosure, is to file for bankruptcy will automatically start the automatic stay.
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See a revised version of this article here.
