Understanding the foreclosure process in MA is an important part of navigating your own home foreclosure.
Before we dive in…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments. Foreclosure is not a positive situation but it doesn’t have to be completely detrimental either. When you know how foreclosure in MA works, you are armed with the knowledge needed to make sure you navigate it well and come out of the situation as positively as possible.
The Basic Stages of A Foreclosure
There’s a few stages that are important to any foreclosure process. Foreclosure works differently in different states around the country. The two ways different states use to foreclose upon a property are: judicial sale or power of sale. In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you overdue or behind in your payment.
Connect with us by calling (617) 752-1768 or through our contact page to have us walk you through the specific foreclosure process in Boston.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You’ll get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure. Sometimes this can be extended.
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process may be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property for the lender at a public auction. Notice must be given.
Anyone who has an interest in the property must be notified during either type of foreclosure, including any contractors or banks with liens against the property. These parties are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds. If the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower. A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale. Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full loan amount to be assessed against the borrower. Here’s a great resource that lists the state by state deficiency judgement laws.
Generally, it’s best to avoid a foreclosure auction. Instead, call the bank or work with a reputable real estate firm like Boston Wholesale Property to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure. Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale; sometimes even eliminating it.
If you need to sell a property near Boston, we can help you.
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Other Foreclosure Resources For Boston MA Home Owners: