Massachusetts Foreclosure Laws

Answers

How are mortgage liens treated in Massachusetts?

Massachusetts is generally known as a title theory state where the property title remains “in trust” until payment in full occurs for the underlying loan. The document that secures the title is usually called a mortgage and in Massachusetts the mortgage serves the same purpose and generally contains the same terms as a deed of trust and serves the same function in a non-judicial foreclosure.

How are Massachusetts mortgages foreclosed?

The primary method of foreclosure in Massachusetts involves what is known as non-judicial foreclosure.  This type of foreclosure does not involve court action but requires notice commonly called foreclosure by sale. When the mortgage is initially signed it will usually contain a provision called a power of sale clause which upon default allows the lender to foreclose on the property in order to satisfy the underlying defaulted loan which is sometimes referred to as a bond. An attorney usually acts as a representative of the lender to effectuate the sale which typically occurs in the form of an auction. Auctions are conducted by an auctioneer. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method. Judicial foreclosure is often referred to a foreclosure by entry or action.

Power of Sale Notice Requirements:

1. Prior to initiating a foreclosure the lender must record a notice of foreclosure sale in the county in which the property is located.
2. Notice of the foreclosure sale as described above must be served on borrower by registered or certified mail at least fourteen (14) days before the foreclosure sale date. The notice must be published once a week for three (3) weeks prior to the foreclosure sale. The first publication is required to be at least twenty-one (21) days before the sale, and the publication must be in a newspaper in general circulation in the county in which the property to be foreclosed is located.
3. The property is sold at a public auction based on the notice and the time date, and place specified therein. The property is sold to the highest bidder, with a private auctioneer usually conducting the sale.

In Massachusetts, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. This process is called foreclosure by entry or action. The property is then sold as part of a publicly noticed sale by the sheriff. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish a Massachusetts mortgage?

The documents are known as the mortgage or in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement.  A mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in Massachusetts?

Depending on the timing of the various required notices, it usually takes approximately 75-90 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy.

Is there a right of redemption in Massachusetts?

No. A deficiency judgment may not be generally obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures unless certain notice requirements are met. An attempt to collect a deficiency will potentially open the door to a redemption action in a judicial foreclosure.

Are deficiency judgments permitted in Massachusetts?

No. A deficiency judgment may not be generally obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures unless certain notice requirements are met. An attempt to collect a deficiency will potentially open the door to a redemption action in a judicial foreclosure.

What statutes govern Massachusetts foreclosures?

The laws that govern Massachusetts non-judicial foreclosures are found in Chapter 244 of the General Laws of Massachusetts. Both judicial and non-judicial foreclosures are covered under this statute.