Many times as a real estate agent who does Massachusetts Short Sales, I am called by upside down homeowners who are in a panic because they have received their foreclosure notice and don’t know what to do.
If you are a Massachusetts homeowner, that has missed a mortgage payment or know you will be missing mortgage payments, you should react quickly and learn what your options to foreclosure may be. Some options may allow you to keep your home and others may allow you to move from your home without the foreclosure taking place. Quite honestly if you have received your foreclosure notice you have had probably had 5-8 months of missing your mortgage and you have wasted valuable time. Not that we can’t stop an auction in the last couple of weeks, but it does make it much harder.
The Massachusetts Foreclosure Process
Procedures can vary slightly from bank to bank but typically what will happen is:
- You will receive a letter from the bank after about 90 days of missed payments informing you you are late and they will give you about 30 days to bring your mortgage current sometimes you will not recieve this letter and they will go right to a notice to cure.
- If you don’t bring your mortgage current you will than receive a “notice to cure”. You will be given 150 days to bring your mortgage current. Massachusetts law has given homeowners 150 days to cure the mortgage.
- After the notice to cure you will receive the Service Members Relief Act to give you thirty days to dispute the foreclosure if you are a member of the armed forces.
- Once the 30 days is up they can foreclose on your property in under 30 days.
This is just a quick synopsis of what I see and remember it can be highly variable from situation to situation.
Alternatives to a Foreclosure
You have about 5 options to a foreclosure and each one should be looked at if you would like to avoid a Massachusetts foreclosure.
- Loan Forebearance- Basically if your situation is or was short term the bank will forgive your mortgage payment for a small period of time. All fees, accrued intrest and payments will be tacked on to the end of the loan.
- Loan Modification- Your lien holder will look at the loan and potentially lower the payments through intrest rate reduction or lengthening the loan term or a combination of both. You must qualify and there is a rhyme and reason to eligibility and how low they will go. In most cases we see a reduction of $100 to $800 depending on the loan amount and other variable. Make sure your modification is permanent and not temporary. Also read my article, Chasing the Loan Modification to get more insight into loan modifications.
- Bankruptcy- Bankruptcy is a possibility to clear other debts to now afford your home. Only consider bankruptcy if you have to do a bankruptcy anyways(because of other mounting debt) or if a bankruptcy will allow you to stay in your home.
- Short Sale- A short sale is where you market your home and get permission to sell your home for less money than the home is mortgaged for. In many cases the short sale will allow you to get out from burdensome payments and move on with your life without a foreclosure on your credit report and in many cases allow you to sell the home with no further recourse from the bank.
- Deed in Lieu of Foreclosure- This is your last line of defense if the home cannot sell in a short sale. You basically sign over the deed to the bank preventing a foreclosure sale. Many banks do not do these and if they do many times they want you to try and sell as a short sale first. Also a deed in lieu of foreclosure can only be dont if you have only one lien against the property.
No situation is ideal and in most cases your credit will be impacted some less and some more. Even in a loan modifcation if you have missed payments your credit score will be impacted.
The one big piece of advice I can give you is be realistic about your situation. Again if your really want a loan modifcation be pragmatic about what you can afford and what you think the bank will come back with. Will your situation improve in the near term or not? If you are not working because of a lay off you will not qualify for a loan modification but be tied up for 4 months to a year just to get denied. Meanwhile all that time goes by and fees and interest is accruing on top off your mortgage balance.
Many times I have talked to home owners who are trying to do a modification and they have completely forgotten that there is a second mortgage that they have not paid on in over a year!! Don’t get caught up in the emotion of losing your home. Stay practical, focused and objective so you may make the best decision for your family.
Secondly sometimes these options are band aids for a short period of time. Some loan modifications are for only 3 or 5 years than you are back to the original terms. Are you just delaying the inevitable?
Lastly, say you owe $400,000 on a house that is worth $260,000. Do you really want to continue paying on an asset that is worth over 30% less of what you paid for it? At a steady 3% appreciation it would take you almost 15 years to break even on your home again. What happens in the meantime if you have a job transfer, expanding family or your planning on retiring during that time.
To wrap up this post if your are facing an inevitable foreclosure, react promptly to the situation, do your homework, stay objective and remove all emotion from your decision. A good Real Estate Agent specializing in Short Sales or an attorney that deals with short sales or loan modifications will help you sort through all of your options.
This post, Considering a Massachusetts Short Sale, was provided by Kevin Vitali of EXIT Group One Real Estate In Tewksbury MA. If you are facing foreclosure, have missed mortgage payments or recieved your notice to cure you can contact Kevin by email at firstname.lastname@example.org or call 978-360-0422. Call a Short Sale Realtor that can help. Don’t wait.
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