Property Mortgage Laws in Massachusetts

Massachusetts usually follows the title theory process wherein the said property remains as guarantee till the said loan is paid off in full. A mortgage is a document through which the title on the property is secured and usually works just like a deed of trust. It usually contains information that a deed of trust would hold and can be used to the same effect in a non-judicial foreclosure.

The State of Massachusetts primarily follows the non-judicial foreclosure process to foreclose on properties. No court-action is required in this process but a foreclosure by sale notice is required. At the original signing of the mortgage, a power of sale clause is generally inserted in the document, through which a property can be foreclosed upon by the lender if the borrower defaults on the loan, thereby allowing the lender to take care of the unpaid loan; this, at times, is called a bond.

Auctions, which an auctioneer conducts, are the predominant way for the property to be sold and a lender generally has an attorney acting as its representative to bring about the sale. This being a non-judicial process, some very strict requirements for notices are in place, and a power of sale clause has to be present in the legal loan documents for this process to be followed.

The judicial foreclosure process is generally called a foreclosure by entry or action.

REQUIREMENTS FOR POWER OF SALE NOTICE

Before a foreclosure can be initialized, a notice for the sale of foreclosure has to be recorded by the lender within the county where the property is situated.

The sale of the foreclosure has to be notified as previously explained, and the borrower needs to be served with the notice by either certified or registered mail no later than fourteen days prior to the sale of the foreclosure. The publication of this notice is needed to be made in the three preceding weeks of the sale, once every week; the first of which needs to be made no later than twenty one prior to the sale. A generally circulated newspaper has to be used to publish the notice within the county where the property is situated.

In accordance with the place, date and time mentioned in the notice, the property sells during a public foreclosure auction. The buyer with the highest bid can then lay claim on the property.

A foreclosure by entry or action is where a lender in Massachusetts can choose to follow a judicial foreclosure process through a court, wherein the court issues the final ruling. A sheriff then conducts a publicly notified sale to sell the property. The court requires the filing of a complaint in conjunction with a lis pendens (a document that is recorded to provide notice to the public about the foreclosure on the property).

LEGAL INSTRUMENTS

In commercial transactions, the document is referred to as a security agreement, and it is otherwise referred to as a mortgage. At times, they are both merged together. The filing of a mortgage is required to verify the debt in question and its payment terms which are part of the note.

TIME PERIOD

It generally takes around 75 to 90 days to bring into effect a foreclosure that is not contested; this does depend on the time the various notices require. If the process is contested by the borrower, and if a delay or an adjournment of the sale is sought; or if the borrower files for bankruptcy, the process can be stalled.

DEFICIENCY JUDGMENT

If some requirements of notices are not met, and the amount on the loan in question is more than what the property sells for at the public sale then a deficiency judgment can normally not be obtained. If an attempt is made to obtain a deficiency through the judicial process, it could result in a redemption process being initiated.

STATUTES

Non-judicial and judicial foreclosures in Massachusetts are governed by laws that are part of the Chapter 244 of the General Laws of Massachusetts.