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What happens when the bank forecloses?

 

When you signed your mortgage, you agreed to make all your payments on time. If you miss payments you are in “default,” or you “default on your mortgage.” Paragraph 22 of most mortgages is the place that says you give the bank* the right to foreclose if you default on your mortgage. Look at paragraph 22 of your mortgage to see if it says you agree the bank can foreclose if you default or miss payments.

In Massachusetts, the bank does not have to go to court to foreclose on your house. The bank, or mortgage holder, can hold an auction to foreclose on your home. The bank announces that it is selling your house on a certain date. The bank can sell your home to the person who offers the most money.

When banks foreclose on a property without going to court is using the "power of sale." But to use the power of sale, banks must follow all the terms of the mortgage and obey state foreclosure laws.

What to expect if you miss mortgage payments

If you fall behind on your mortgage payments, the bank can only foreclose if they give you the right notices, record the notices and publish the auction in the newspaper. They must:

  1. Give you a Right to Cure Notice that says you have a number of days to catch up on your payments. If you catch up with the overdue mortgage payments, they will not foreclose.
  2. Give you a Right to Modify Notice. Sometimes the bank must notify you that you have a right to ask the bank to change the way you pay back your loan. Changing the way you pay back your loan is a modification. If you have the right ask for a modification and your income is low enough, the bank may have to give you a modification.
  3. Give you an Acceleration Notice that tells you the full amount of your loan is due and if you do not pay it, the bank will foreclose.
  4. Give you a Servicemembers Civil Relief Act Complaint. Banks must give this notice to everyone they are starting to foreclose on. If you are in active military duty, you can stop a foreclosure by answering this complaint.
  5. Record 2 affidavits at the Registry of Deeds. One affidavit says the bank owns, or controls the note and the mortgage. The other affidavit says the bank followed the law under G.L. 244, s. 35B and gave you the Right to Modify Notice.
  6. Publish the auction in the newspaper. For three weeks in a row, the bank must publish the date and time of the auction in the newspaper.
  7. Give you a Foreclosure notice that tells you the date of the foreclosure auction.

Once the bank has followed all the steps after you miss your payments, they can hold an auction and sell your home to the buyer who offers the most money.

Endnotes

* When we use the word 'bank' we mean your lender. This could be a mortgage company a trust or even a person.


Produced by Massachusetts Law Reform Institute
Created July 2013


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