FAQ: I Have Been Foreclosed. Do I Need to Leave My Home Right Away?

Question:  I have been foreclosed.  Do I need to leave my home right away?

Answer:  No.  Massachusetts is a “non-judicial foreclosure state.” This means that the lender can perform a foreclosure without going to court.  However, once the foreclosure is complete, the lender needs to obtain possession of the property, which can only be done through a formal eviction (“summary process”).  This usually begins several months after the foreclosure sale occurred.  A former homeowner can only be evicted from a property if the lender obtains an execution for possession following a successful eviction. Homeowners who have been foreclosed should seek an attorney if faced with an eviction summons; even if the homeowner does not plan to stay in the home, an attorney can help the homeowner leave the home on the best terms possible.

 

Self Help: No !!!

I’m willing to bet that among the frequently asked questions on landlord/tenant law, the following is at the top of the list:  “If my tenant is not paying his or her rent, can I change the locks of the apartment?  Can I turn off the utilities?”  The answer, in one word: No!

These actions of trying to evict a tenant without going to court, often called “self-help,” are against the law.  Not only will this result in civil liabilities, which could include huge monetary damages, a landlord can end up in jail for doing any form of “self help.”  Simply put, a formal eviction is the sole means of dealing with a tenant that a landlord wants to get rid of.  This doesn’t mean that a landlord cannot try to settle a case with a tenant outside of court, but any interference with a tenant’s living situation is a huge problem.

No doubt, landlord/tenant cases can be frustrating, but landlords are much better off speaking with an experienced attorney instead of trying to take matters into their own hands.  The risks just aren’t worth it.

Practice Pointers: Use Mediation to Resolve Landlord/Tenant Disputes

Mediation is an excellent option for anyone involved in a landlord/tenant dispute.  This form of alternative dispute resolution can help parties in these cases save enormous time and money.

Mediation is an opportunity for the parties in a case to meet with a trained facilitator for the purpose of working out a resolution to the problem.  More and more, trial courts have staff mediators available to assist the parties, with some courts (such as Northern Housing Court) requiring parties to meet with a mediator before seeing the judge.  In a mediation, parties are encouraged to freely discuss their case and attempt to come up with a mutually agreeable resolution.

Mediation is a great option in landlord/tenant matters because trial courts are overflowing with cases, especially on summary process day.  It is not unusual for a judge to have a caseload of up to fifty landlord/tenant cases in a single session (Boston Housing Court reportedly has 150 new cases filed each week!).  Through mediation, many of these disputes can be resolved without the need for a lengthy hearing or trial.

Best of all, mediation is confidential and risk free; parties can still go before the judge if they cannot workout the problem.  With this in mind, mediation should be the first step in trying to resolve a landlord/tenant dispute.

Summary Process 101

Evictions in Massachusetts are known as “summary process.”  The goal of summary process is found in Rule 1 of the Uniform Rules of Summary Process: “the just, speedy, and inexpensive determination of every summary process action.”  In other words, summary process cases are intended to move at a much faster pace than a typical civil action.  While it can often take years for a civil lawsuit to go to trial, summary process cases are intended to be tried only weeks after the filing date.

To begin a summary process case, the landlord must serve the tenant(s) with a notice to quit, which explains the reason why the tenant is being evicted (more on this later).  This notice of quit must provide a date by which the tenancy is terminated.  After this date, if the tenant has not left the premises, the landlord can begin the case.

The start of a summary process case is opposite that of a typical civil lawsuit.  In a typical lawsuit, the plaintiff first files the lawsuit and then serves it on the defendants.  In summary process, the plaintiff/landlord begins the case by serving the defendant/tenant with a summary process summons, which must be obtained from the court.  On this summons, the plaintiff/landlord selects the date that he will file the lawsuit; called the entry date.  After the summons is served on the defendant/tenant, the landlord can file the lawsuit, which must be done at least seven days (but no more than thirty) from the date the summons was served (click here for a useful timeline of a summary process case).  From there, the case begins.

Confused?  You aren’t the only one; summary process can be a complicated.  Given the stress and heartache these cases can cause, I recommend seeking legal assistance if you are involved in one of these cases.  Contact me for a consultation.

Jury Trials in Foreclosure Defense Cases

 

Jury

I’m happy to write that I won a post-foreclosure eviction case several weeks ago using a new defense that I had been working on for the past year.  One of the critical reasons for this victory, I believe, was my client’s decision to pursue a bench trial instead of a jury trial—a topic I want to discuss in this blog post.

The right to a jury trial depends on both the type of case and the court that the parties are in.  In Massachusetts, the particular cause of action determines whether a jury trial is available. Eviction (“summary process”) cases, for example, entitle parties to a jury trial.  A party needs to claim their right to a jury trial in the beginning of a case, or it is otherwise waived.

A non-jury trial goes before a judge and is called a “bench trial.”  In a bench trial, the judge hears all of the evidence presented by the parties and, like a jury, determines questions of fact.  For example, in a post-foreclosure eviction trial, the judge will decide whether the foreclosing entity complied with all of the foreclosure requirements.

In a bench trial, as opposed to a jury trial, a judge is required to present his or her findings of fact.  In other words, the judge has to explain the decision that he or she made, as opposed to a jury trial, where the jury only needs to give its verdict.

In my experience, I have found jury trials for foreclosure law issues to be extremely difficult.  The information is dense and difficult to explain to six non-lawyers who likely have no familiarity in this area of law.  More than once, I have seen jurors fall asleep during such trials!

The decision on whether a client should waive their right to a jury trial is theirs alone, and a single blog post cannot offer enough information to make this decision.  The point of this post is to encourage those involved in these cases to give serious thought about whether their case should go before a judge or jury. Rarely do “Perry Mason” moments occur in foreclosure defense; these defenses are often based on mountains of paperwork and uneventful testimony.  Because of this, jurors often may not understand the reasons why the foreclosure is void, even if the defect is crystal clear.  On the other hand, a defense based on a foreclosing entity’s blatant disregard of the law may be enough to excite a jury and therefore justify a jury trial.

With this in mind, give serious consideration to the type of trial you request in a foreclosure defense case.  Better yet, speak with an expert before making this decision.

 

Evictions on the Rise in Massachusetts

The New York Times reports that evictions are on the rise across the United States, including Massachusetts, where eviction filings increased 11% between 2010 to 2013.  The rise in these cases poses challenges not only to the parties in these cases, but also to the courts, who have to deal with increased caseloads, filings, and hearings.

The article cites several studies showing that the use of an attorney can make a real difference in these cases, a point I can attest to based on personal experience.  In Massachusetts, the eviction process is not always “user friendly” and I encourage anyone involved in one of these cases to seek legal representation.

Understanding Cash-for-Keys Settlement Offers

In landlord/tenant cases, “cash-for-keys” often comes up as a popular means of settling an eviction case.  In a cash-for-keys settlement, the landlord agrees to pay the tenant(s) a sum of money to leave the premises by a required deadline.  The payment of this money is often conditional upon the Tenant(s) leaving the premises in a clean condition and waiving any claims they might have against the landlord.

Landlords, understandably, are often reluctant to even consider a cash-for-keys settlement.  Often, the tenant(s) owe the Landlord months worth of back rent, and the thought of the landlord paying the Tenant to leave seems absurd.

While I sympathize with these concerns, I strongly urge all of my Landlord clients to give a cash-for-keys settlement strong consideration when trying to eviction a Tenant.  The reason for this is simple economics:  a cash-for-keys offer can save a Landlord thousands of dollars in eviction costs (and time).

Landlords who pursue cash-for-keys settlements should make the payment conditional upon the tenants leaving the premises by a required deadline, and leaving the premises in “broom swept” condition.  Landlords should ask the Tenants to waive any and all claims they may have against the Landlord, and agree that the landlord be allowed to discard any of the tenant’s possessions left behind after the vacate date.  Landlords should also insist that Tenants waive any rights to appeal or stays of the execution (a court order that a tenant can seek for additional time in the premises following an eviction).

Tenants, in turn, should ask the Landlord to waive any claims that the Landlord may have against them, specifically owed rent.  After moving out of the premises, Tenants should also take pictures of the property to prove that it has been cleaned out and, if possible, ask a friend or family member to be present so that a witness is available in case the Tenant’s move-out is ever disputed.

In need of assistance with this type of matter?  Contact me for a consultation.

Practice Pointers: Foreclosure Defense is Not About Getting a Free Home

 

Free

When I started this blog almost a year ago, I wrote that one of the major myths of foreclosure defense is that a borrower can get a free home if they fight their foreclosure.  What was true then remains true today: foreclosure defense is not about getting a free home.

Obtaining a free home in a foreclosure defense case is a completely unrealistic goal.  While lenders and servicers have made a mess out of the foreclosure process–and continue to do so–these mistakes can, and certaintly will, be corrected at some point in time. Faulty notices can be corrected, loan modifications can be re-reviewed properly, and missing promissory notes can still be enforced.  A lender is doing a foreclosure because a great deal of money is at stake: anywhere from $100,000-$500,000 (and sometimes even more).  If a lender has made a mistake in the foreclosure process, it will be corrected: there is too much money involved to do otherwise.  In short, without dealing with the unpaid debt that caused the foreclosure, the ax will eventually fall for the homeowner.

A much more realistic goal for foreclosure defense is affordability: obtaining a mortgage loan that a homeowner can pay.  A well-crafted foreclosure defense can convince a lender that a reasonable loan modification is a better option than spending years in litigation.  But, make no mistake: even the best lawsuit is never going to convince a lender to give up their mortgage on a home.

As a foreclosure defense attorney, I practice what I preach:  I do not accept clients with unrealistic goals in foreclosure defense, nor do I advocate legal arguments that would amount to a court giving my client their home for free.  Attorneys and pro se litigants who do make these arguments cause much more harm than good; not only do they hurt their own cases, they make this area of law harder for everyone else.

Good Read on the Pending Federal Court Lawsuit Challenging Local Ant-Foreclosure Ordinances

I previously wrote about the pending federal court lawsuit brought by several banks challenging local town and city anti-foreclosure ordinances.  The cases raises many interesting questions on law and public policy, and is a rare case of local state banks taking legal action to challenge anti-foreclosure laws.

Yesterday, the Boston Globe published a well written editorial by Paul McMorrow in favor of these anti-foreclosure ordinances. Mr. McMorrow raises some good arguments on this matter and is worth a read.  I’ll be on the lookout for a similar editorial advocating the banks’ position in this matter.

Massachusetts’s Right to Request a Modified Mortgage Loan

LoanMod

In 2012, Massachusetts passed “An Act Preventing Unlawful and Unnecessary Foreclosures,” aimed at helping struggling homeowners
stay in their homes.  One of the key components of this law, the right to request a modified mortgage loan, is an effective tool for foreclosure defense.

This law, found in G.L. c. 244, § 35B, requires lenders to make a “good faith effort” to avoid foreclosure for borrowers with “certain mortgage loans.”  The definition of “certain mortgage loans” is lengthy, but does cover a large share of residential mortgage loans.  Pursuant to the Division of Bank’s regulations, if the lender cannot determine if the loan falls into this list of definitions, it is considered a “certain mortgage loan” and the lender therefore must consider the borrower for a modification.  The right to request a modified mortgage loan only applies to borrowers who have received a right-to-cure notice after November 1, 2012.

The right to request a modified mortgage loan law requires lenders to consider borrowers for a loan modification.  Lenders have several different loan modification models to choose from, but the federal Home Affordable Modification Program (“HAMP”) is likely to be the most widely used option.  For this reason, this law is also known as “State HAMP,” because it makes HAMP a requirement at the state level (HAMP is presently a federal program that only applies to a list of specific lenders).

Borrowers who are entitled to request a modified mortgage loan will receive a notice from their lender informing them of this right, and the documentation needed to process such an application.  The deadline for the borrower to respond to this letter is generally thirty days, so borrowers need to act quickly in preparing an application.  After receipt of the application, the lender is suppose to respond to the applicant’s request with an assessment of their eligibility for a modification.

G.L. c. 244, § 35B is important for foreclosure defense because it makes many Massachusetts residents eligible for a loan modification who previously had not been.  I also like this law because it explicitly requires a lender to perform a “compliant” loan modification analysis.  While it is no secret that lenders routinely mess up loan modification applications, fighting these mistakes are not always easy, as consumer protection laws and common law remedies do not always cover these abuses.  However, G.L. c. 244, § 35B appears to open the door for allowing homeowners to challenge loan modification denials.

If you are in need of assistance in preparing a loan modification application or fighting the denial of your modification, contact me.