How to Stop a Foreclosure in Massachusetts

Foreclosure by Sale

I often get asked how to stop a foreclosure in Massachusetts. Homeowners facing foreclosure need to be aware of the different options for stopping foreclosure and how they apply to different scenarios.  Stopping a foreclosure is priority number one in Massachusetts foreclosure defense; homeowners have a much, much better chance of saving their homes by preventing a foreclosure in the first place.  This isn’t to say that homeowners who have been foreclosed lack options, but pre-foreclosure is always the better place to be.

So, how do you stop a foreclosure in Massachusetts?

Paying Off the Owed Debt

The obvious way of stopping a foreclosure is simply to pay off the owed debt on the mortgage loan.  If this amount isn’t too large, this may be a feasible option for some homeowners.  As I have written before, Massachusetts requires lenders to offer borrower a final opportunity to “cure” their mortgage loan debt before starting foreclosure.  Homeowners should bear in mind, however, that even if they pay off their outstanding debt, the terms of their loan remain in place.  If the homeowner was struggling with the loan because it was unaffordable, the homeowner should give serious throught to applying for the next option for stopping a foreclosure: a loan modification.

Loan Modification

A loan modification application, under new federal regulations, requires a loan servicer to stop foreclosure while the application is pending.  Limits exist on this; repeated applications will not continuously stop a foreclosure.  Because foreclosure defense is not about getting a free home, a loan modification should always be a homeowner’s first attempt at stopping foreclosure.  If a homeowner is applying for a loan modification and the bank or loan servicer still begins foreclosure, the homeowner should consult an attorney right away to discuss options for stopping  the foreclosure sale.

Bankruptcy

Bankruptcy provides a debtor with an automatic stay, which will automatically stop a foreclosure.  Under bankruptcy law, the bank is prohibited from foreclosure, which can provide the homeowner with some time to work out their next course of action.  Bankruptcy is a good option for a homeowner with an impeding deadline for a foreclosure sale and no other viable options.  Long term, however, bankruptcy is not always the best choice for avoiding foreclosure in the long run (speak to a bankruptcy attorney to determine if this is a good option for you).  Click here for a great overview of bankruptcy, provided by the Massachusetts Court System.

Civil Lawsuit

Homeowners also have the option of seeking injunctive relief in a lawsuit against their bank or loan servicer.  An injunction is a court order that prevents (or requires) someone to do something.  For foreclosure defense, a court will not grant an injunction against a foreclosure sale automatically; the homeowner needs to show a likelihood of success against the validity of the foreclosure.  In other words, the homeowner needs to convince the court that the impeding foreclosure is being done wrongfully.  Filing a lawsuit and requesting an injunction can be tricky, and a homeowner in need of such services should seek the help of a foreclosure defense attorney.

How to Get a Loan Modification – Show Me the Money!

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Getting a loan modification isn’t easy.  As I have often written, the loan modification process can be long, complex, and costly.  Banks and loan servicers routinely lose paperwork and make the process a thousand times harder than it needs to be.  Borrowers, however, need to do their part in making it easier to get a loan modification. One important part of this is being able to show reliable, documented income.

For a loan servicer to agree to a loan modification, the servicer needs to be convinced you have income.  In order to do this, the servicer will likely request paystubs or a profit/loss statement if you are self-employed.  Additionally, the servicer will also want to see your bank account statements, showing that you actually received this income.  If you don’t have a record of this, you make it much hard to get a loan modification.  If you plan to apply for a modification, be sure that you deposit your income into a bank account, and keep copies of your monthly statements.  This is especially true if you work for yourself or have rental income: if the servicer can’t see a record of it, they are less likely to consider it as income.

I often get asked about “prospective” income: income from future sources.  For example, some people wish to acquire income from renting rooms in their home or starting a business.  Generally, a servicer won’t consider uncertain income: you need to show consistent income before qualifying for a modification.

If you aren’t showing income and need a loan modification, don’t despair.   It is possible at times to get a “no document” loan modification or work out some other deal with the servicer.  However, to increase your changes of getting the modification, showing documented income is always the best course.

As for any loan modification application, create a paper trail and contact an attorney if you are not getting the results you need.

“Zombie” Foreclosures Low in Massachusetts

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In true Halloween spirit, a recent news article reports that “zombie” foreclosures are down nationwide, especially in Massachusetts.  A “zombie” foreclosure is where a borrower abandons their home prior to a foreclosure occurring.  I suspect that zombie foreclosures do not occur too often in Massachusetts because we are a non-judicial foreclosure state, where the process of removing homeowners from foreclosed properties comes well after the foreclosure has occurred.

I never recommend that a homeowner simply pack up their things and leave a foreclosed home.  Even if the homeowner has no intention of staying in the home, there are many things that can be done to ensure that a homeowner will suffer no liability for leaving their home prior to (and after) a foreclosure.  A foreclosure attorney can often assist a homeowner in receiving a “cash for keys” settlement to assist with moving costs, and ensure that a homeowner will owe nothing to the bank after foreclosure.  If you find yourself in such a scenario, contact me for a consultation.

Happy Halloween!

99 Homes: Fact v. Fiction

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When foreclosure defense comes to the big screen, you know I’m going to see it.  I took a break from work this weekend to watch 99 Homes, a movie about the 2o1o foreclosure crisis in Florida.  Overall, I thought it was a great movie that brought to life many of the issues I confront with foreclosure defense.   The movie tells the story of a father who, after losing his job, is foreclosed.  In need of work, he ends up getting hired by the same realtor who evicted him, and falls into the sleazy work of foreclosing people who were in his same situation.

For this post, I want to discuss the facts v. fiction of the depiction of the foreclosure/eviction process as shown in the movie.  Bear in mind that I am a Massachusetts attorney, which has a different foreclosure process than Florida.  However, many of the issues remain the same regardless of the state where a foreclosure occurs.

FACT

  • Difficulty in Contacting a Loan Servicer/Bank is a Major Reason Why Foreclosures Occur 

99 Homes does a great job of showing how a homeowner’s inability to successfully work with a loan servicer/bank is often the reason for foreclosure.  Too often, I have seen banks willfully ignore loan modification applications for qualifying homeowners and create excuse after excuse for refusing to properly consider homeowners for loss mitigation assistance.  99 Homes shows how the banks’ refusal to properly offer this assistance has forced many homeowners into foreclosure.

  • The Court Process is Not “User Friendly”

99 Homes shows many of the homeowners attempting to represent themselves in court, with disastrous results.  The movie takes place in 2010, when courts were flooded with foreclosure cases, and many judges simply pushed these matters through.  While things are better now, the court process can still be very difficult to understand, especially for a lay person.  For foreclosure defense, a homeowner should strongly consider seeking the assistance of an experienced lawyer with these matters.

  • The Federal Government is a Major Owner of Foreclosed Properties 

The realtor in 99 Homes often discussed how “Fannie/Freddie” were two of his largest clients.  Fannie Mae and Freddie Mac are government-sponsored entities who are the owners of many mortgage loans across the country.  When a foreclosure occurs, these entities often become the owner of these homes.

  • “Cash for Keys” Is a Popular Means of Shortening the Foreclosure/Eviction Process

The movie depicts the use of “cash for keys” for settling post-foreclosure eviction cases: the bank offers the homeowner a cash settlement (usually $3,000-$5,000) to immediately leave the home.  “Cash for keys” isn’t a terrible option for homeowners who wish to leave their homes and need financial assistance in doing so.  A homeowner interested in this deal should still consult an attorney to discuss this option.

FICTION

  • A Homeowner Facing Foreclosure Can Be Out in a Matter of Days

99 Homes seems to suggest that a homeowner can be out of a foreclosed home in a matter of days.  In Massachusetts, the entire foreclosure process can take 2-3 years, which leaves homeowners with the time necessary to try and save their homes.  Sooner is always better than later in fighting a foreclosure, but rarely does a homeowner only have a matter of days to deal with a foreclosure.

  • Homeowners Have Limited Means of Fighting Foreclosure

Many of the homeowners in the movie are depicted as having few, if any, defenses to foreclosure.  In reality, homeowners have many more defenses available, such as a loan servicer’s refusal to properly consider a loan modification and failure to send the required notices required by the mortgage and law.  Not all of these defenses will work for each homeowner, but homeowners often do have means of defending themselves in these cases.

In need of assistance with foreclosure defense?  Contact me for a consultation.

Firm News: Sherwin Law Firm Scheduled to Argue Two Foreclosure Defense Appeals in October

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October promises to be a busy month for me.  In addition to my trial court cases, I’ll be arguing two appeals on foreclosure defense cases this month.  These cases include a “smorgasbord” of foreclosure law issues:  the right of a loan servicer to send notices required for a lender, evidentiary issues regarding what a foreclosing entity must show to prove that it complied with the required foreclosure laws, and the application of recent foreclosure law cases on other pending, related matters.

In an appeal, a party asks the appellate court to review the decisions made by the lower court (the “trial court”).  An appeals court does not take evidence from witnesses or otherwise rehear the case but rather, decides whether the lower court did their job correctly.  An appeals court decides whether the judge properly applied the law, such as whether the judge gave proper instructions to the jury during trial, or properly considered certain matters of evidence.

In one of my appeals, I’m representing the appellant (arguing that the lower court got the decision wrong); in the other, I’m representing the appellee (arguing that the lower court got the decision correct).  Both cases involve tricky questions of law and I plan to work hard on each.

Appeals require an enormous amount of time and resources:  I can easily spend 50-75 hours for an appeal and the final written product can total hundreds of written pages.  The rules for appeals themselves are tricky; I know many excellent lawyers who purposely avoid appeals because of these requirements!  An appeal requires the preparation of a brief (a fifty page legal document explaining the reasons why the lower court was right or wrong) and an oral argument  (a 15-20 minute presentation before the judges).

In general, I have mixed feelings about people doing their own cases at the trial level.  For appeals, my advice is much more clear cut: don’t do an appeal if you are not a lawyer.  Appeals are too much work and too complex for someone without a legal education and training to try on their own.  If you are considering appealing a case, contact me for a consultation.

My Letter to Mayor Curtatone of Somerville on the I-93 Protestors

 

Remember the I-93 protest that happened earlier this year?   I sure do.   I was on the way to court and, thanks to the protesters, came minutes away from missing my hearing.  Thousands of Massachusetts residents were impacted by this outrageous protest, including a man in an ambulance on the way to the hospital.  No one–myself especially–denies the right of others to express their views, but the middle of I-93 is not the place to do this.

That’s why I was shocked and outraged that Mayor Curtatone of Somerville recently advocated that the Middlesex County District Attorney not pursue charges against the protesters.  As a local business owner in Somerville and someone who provides legal services across Massachusetts, I don’t think  Mayor Curtatone really understands how protesting in the middle of I-93 hurts innocent people.  On the day of the protest, I was headed to Wrentham to assist a disabled, single mother facing foreclosure.  This “protest” didn’t raise awareness of any cause; it merely put lives at risk and prevented people like myself from helping others in need. Like a stereotypical politician, Mayor Curtatone is looking for a quick news headline at the expense of common sense and what is really best for his constituents in the long run.

Below is a copy of the letter I sent to Mayor Curtatone regarding his support for the I-93 protesters.  I encourage others who feel similarly to do the same.  And Somerville residents:  make your voices known at the next mayoral election.

Dear Mayor Curtatone:

I recently read your statement encouraging the Middlesex District Attorney to drop charges against the I-93 protestors.  I am a Somerville attorney who has practiced in this area for the last two years.  I wanted to share a story with you about my experience in dealing with the I-93 protestors last year.

On the day of the protest, I was traveling to Wrentham for a court appearance.  I was not headed to represent a major corporation or a rich client that morning; I was traveling to assist a disabled, single mother facing a foreclosure.  Thanks to the protestors, I came minutes from missing the hearing and not being able to assist my client.  I consider myself one of the “lucky” people stuck in traffic that day; I was not the injured man in an ambulance who the protestors delayed getting to the hospital.

With that said, I find your statement in support of the protestors to be deeply insulting.  People have every right to express their political views, but not in a way that disrupts the lives, safety, and welfare of others.  That’s why I am sending you this letter, in lieu of standing in front of your car and preventing you from getting to work.

Your quotation of Dr. Martin Luther King Jr. is similarly disingenuous.  Dr. King advocated peaceful public discourse; he would have never approved a protest that put the public’s safety at risk.  I suggest you take a cue from Calvin Coolidge’s tenure as Governor of Massachusetts when, during the 1919 Boston police strike, stated “there is no right to strike against the public safety by anyone, anywhere, any time.”  Coolidge rejected what might have been popular for what was right:  a lesson you should considering following.

Sincerely,

Adam T. Sherwin, Esq.

Sherwin Law Firm Settles Post-Foreclosure “Ibanez” Case

 

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I’m pleased to announce that I settled a post-foreclosure “Ibanez” case this week.  I represented a former homeowner who had been improperly foreclosed due to the Supreme Judicial Court’s decision in U.S. Bank v. Ibanez, which invalidated thousands of foreclosures across Massachusetts.  My client was a former homeowner, and the entity who foreclosed her home lacked a proper mortgage assignment at the time of foreclosure, making the foreclosure void.  As I have written before, this has happened to thousands of homes across Massachusetts during the recent foreclosure crisis (a reason why the Massachusetts Legislature is presently considering a foreclosure title clearing bill). 

My client had been included in a lawsuit brought by the current owner of the foreclosed home and the lender who had done the void foreclosure.  After a lengthy court case, we reached a settlement with the lender agreeing to pay my client a cash settlement in exchange for her remaining interest in the home.

The settlement did not give my client a free home, nor did it make her rich.  It did, however, provide her with compensation for the lender’s disregard of Massachusetts foreclosure law, something that has become all too common in recent years.

These “Ibanez” problems continue to exist today, and have no easy solution.  If you find yourself in such a situation, contact me to see if I can be of help.

Foreclosure Title Bill Pending in Massachusetts Legislature

A pending bill is before the Massachusetts Legislature that would limit the time for former homeowners to challenge foreclosures against their homes.  This bill, which the Legislature introduced in the previous term, is intended to address the ramifications of U.S. Bank v. Ibanez, a seminal Massachusetts Supreme Judicial Court decision that has invalidated thousands of  foreclosures across Massachusetts.  Many of these homes that have been improperly foreclosed have been sold to third-party buyers who, despite having nothing to do with the underlining foreclosure, have a major title problem with their properties.

The bill would require homeowners to bring challenges to a foreclosure within three years of the foreclosure sale or forever be barred from doing so.  Presently, there really isn’t a deadline for raising such challenges; some suggest that the twenty-year deadline under the law of adverse possession may apply, but to my knowledge, this has never been tried in court.

Third-party owners of improperly foreclosed properties do have options for fixing title problems:  these owners can bring quiet title lawsuits against the former owners and lenders asking the court to fix the problem (or simply ask the former owner to deed over any interest they have remaining in the property).  These solutions, however, can be timely and costly, hence the reason why the title insurance industry continues to lobby for a title clearing bill.

This bill died last year over concerns that the deadline was too short for those homeowners who had been improperly foreclosed.  Governor Patrick sent the bill back with a recommendation that the deadline be increased to ten years, which kept the bill from passing,  This year, with a Republican governor, things could turn out differently.

Fannie Mae’s Standard Loan Modification Program

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Fannie Mae announced last week that it dropped the interest rate for its standard loan modification program.  The new rate is now 4%–competitive with today’s market rates.

Fannie Mae’s standard loan modification program is an alternative to the federal government’s Home Affordable Modification Program (“HAMP”).  The program is available for homeowners whose mortgage loans are owned by Fannie Mae and who are delinquent on their loana.  Similar to a HAMP loan modification, a borrower must have verified income and a hardship (a reason for needing a loan modification).  Fannie Mae loan modifications are an option for borrowers who do not qualify for a HAMP loan modification or were not able to make payments under a prior HAMP loan modification.

Unlike HAMP, Fannie Mae standard loan modifications require considerably less paperwork.  However, these loan modifications often come with a slightly higher interest rate than HAMP modifications and may not allow for as much principle forebearance.

Fannie Mae  standard loan modifications can be a great option for many struggling homeowners trying to avoid foreclosure.  While the interest rates are often higher than HAMP loan modifications, the advantages of obtaining a permanent modification without the burden of an extensive application process make it a great option for many homeowners.

Homeowners interested in this program should consult their loan servicer to see if they apply.  Generally, this program requires homeowners to make trial payment plans (“TPP”), which usually consist of three modified loan payments prior to receiving a permanent modification.  As with all loan modifications, homeowners should create a paper trail  and consult an attorney if they are not getting anywhere with their lender.