How foreclosure works

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Mariah Jennings-Rampsi
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In most cases, foreclosures happen when a property owner does not make the required mortgage payments. The owner’s bank, or other lender, sells the property to get its money back.

The bank must give the owner several notices. This gives the owner a chance to make up the missed payments.

If the owner is in the military, the bank must usually wait at least 9 months until after the owner’s military service ends before it forecloses on a mortgage the owner got before she joined the military. Banks usually show they have obeyed this rule by filing a court case.

If the judge decides that no one is in the military, the judge will make a judgment. The judgment will say the bank is not breaking the law if it forecloses. The bank must file the judgment at the Registry of Deeds, in the county where the property is located.

When the bank forecloses, it can hold an auction to sell the property. In Massachusetts, the bank does not have to ask a judge in order to hold the auction.

The bank will:

  • Set a date for the auction. 
  • Advertise the auction in a local newspaper.
  • Mail a notice to the property owners and people who owe the mortgage by certified mail.
  • Hire an auctioneer to stand outside the house to sell the property.
  • Hold the auction on the property that is being foreclosed.
  • Sell the property to the bidder who offers the most money. 
  • Often the bank buys the house at the auction and becomes the new owner.
  • As a tenant, you have rights when your landlord gets foreclosed, but you need to take action to protect those rights. The new owner may try to evict you, shut off your utilities, keep your security deposit or last month’s rent, or say you do not have legal rights after the foreclosure.

Start to protect your rights as soon as you learn your landlord might lose the property to foreclosure.

If you are a former owner of a foreclosed property, your legal rights are not the same as tenants. See Homeowners Facing Foreclosure.

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Endnotes

4 . G.L. c. 186A, §1.

5 . G.L. c. 186A, §3.

6 . G.L. c. 186A, §5.

7 . Mortgages are often bought and sold, so the holder of the mortgage at the time of the foreclosure sale may not be the same company that gave your landlord her original loan. Many mortgages have been packaged into "investment vehicles" and sold to groups of investors. These investors often form a trust and hire a bank as the trustee of the trust. The trustee usually works with one or more "servicers," companies that collect payments and manage the foreclosure process. It may be hard for you to identify the servicer who is managing the apartment you rent, even though the servicer is often the company that is making decisions about what will happen to the building and the people who live in it. The lenders also usually work with real estate agents who list and sell the property after foreclosure.

8 . G.L. c. 186A, §3; 105 C.M.R. §410.481.

9 . G.L. c. 244, §15A.

10 . G.L. c. 186A, §3.

11 . www.masslandrecords.com

12 . G.L. c. 244, §15A.

13 . For Boston, at www.cityofboston.gov/assessing/search/; for Springfield, at www3.springfield-ma.gov/finance/assessors/; for Worcester, at www.worcesterma.gov/e-services/search-public-records/property-values.

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