Challenging a Foreclosure in Massachusetts

Challenging a Foreclosure

A recent decision by the Massachusetts Land Court discusses the importance of properly challenging a foreclosure in Massachusetts, and the ramifications of failing to do so correctly.  This case, Kenney v. Brown, is to the best of my knowledge the first decision to interpret Massachusetts’s foreclosure title clearing law, a 2015 law that puts a deadline upon the right of homeowners to challenge a foreclosure in Massachusetts. 

Overview of the Deadline for Challenging a Foreclosure in Massachusetts

Massachusetts’s foreclosure title clearing law places a deadline for challenging a foreclosure in Massachusetts.  This law requires a homeowner to raise a challenge to a foreclosure within three years after a foreclosure affidavit is recorded in the land records where the property is located (this affidavit is generally recorded several months after the foreclosure sale).

How to Preserve A Foreclosure Challenge 

Under this law, a homeowner must challenge a foreclosure by either filing a lawsuit or raising a defense or counterclaim in a post-foreclosure eviction case.  Simply put,  challenging a foreclosure under this new law requires a homeowner to pursue their claim in court.

In Kenney, the homeowners attempted to preserve their challenge to the foreclosure against their home by filing an affidavit in the land records, and pursuing this challenge in court later on.  This affidavit was filed pursuant to G.L. c. 183, § 5B:

Subject to section 15 of chapter 184, an affidavit made by a person claiming to have personal knowledge of the facts therein stated and containing a certificate by an attorney at law that the facts stated in the affidavit are relevant to the title to certain land and will be of benefit and assistance in clarifying the chain of title may be filed for record and shall be recorded in the registry of deeds where the land or any part thereof lies.

These affidavits, commonly known as “5B affidavits” can be useful for resolving property matters.  I have used them in opposing a foreclosure by entry or recording judicial decisions regarding the validity of a foreclosure.  Here, these homeowners attempted to preserve their foreclosure challenge by filing one of these affidavits, and listing the reasons why they believed their foreclosure was unlawful.  These homeowners, undisputedly, did not file a lawsuit within the deadline of the title clearing law.  The question for the court was whether such an affidavit was a proper means for challenging a foreclosure in Massachusetts under the title clearing law’s deadline.

The court in Kenney v. Brown rejected the homeowner’s use of 5B affidavits for this purpose, by holding that the law requires an actual court case to preserve a foreclosure challenge, which may not be done by merely filing an affidavit.  Failure to do so will prevent a homeowner from being able to pursue such a claim, even if the underlining foreclosure was unlawful.

Critical Advice for Homeowners Who Want to Challenge a Wrongful Foreclosure 

The lesson from this case is an important one: speak to an experienced foreclosure defense attorney if you have a potential challenge to a wrongful foreclosure.   The failure to comply with the laws applicable for such a claim can cost you “your day in court” on these matters.

 

 

 

Notice of Default

Notice of Default

Foreclosures in Massachusetts generally begin through a notice of default.  A homeowner who is behind on their mortgage loan often receives many letters informing them of their owed balance.  A formal notice of default, however, is required under state law and the terms of most mortgage agreements.

What’s In a Notice of Default? 

A notice of default typically contains a number of required disclosures:

  • Information about the holder of the mortgage, terms of the loan, and the outstanding balance of the owed debt
  • The amount the borrower must pay to cure the loan default
  • Disclosure of the homeowner’s rights in a foreclosure proceeding

A notice of default must generally be sent by both certified and regular mail.  A homeowner who receives a notice of default will not immediately face a foreclosure sale; there are several other requirements that must occur before a foreclosure can begin.  One of these notices, however, is a sign that the mortgage lender will start foreclosure soon.

What To Do About a Notice of Default

The most important thing for a homeowner receiving a notice of default is to not ignore it.  A foreclosure is coming, and a delay in addressing this problem can make a resolution harder to come by.  Speak to a foreclosure defense attorney if you receive one of these notices to learn what can be done to avoid losing your home.

A homeowner receiving a notice of default should also review these letters closely.  Mistakes can (and do) happen and it is a good idea to make sure everything in one of these notices is correct.

Failure to comply with the requirements for a notice of default can be grounds for challenging a foreclosure, both pre-foreclosure and post-foreclosure.  An experienced attorney can discuss whether such a legal challenge is an option for your case.

A homeowner receiving a notice of default can certainly solve the problem of foreclosure by paying off the outstanding amount of the loan (and should do so if they are able).  Homeowners, however, should keep in mind that simply paying off the outstanding amount of the loan will not solve the long term problem for the borrower if they are unable to afford the monthly loan payments.  In such a case, the homeowner should apply for a loan modification and attempt to get a more affordable loan payment.

If you find yourself in need of assistance with one of these matters, contact me for a consultation.

 

Foreclosure Help

Foreclosure Help

Foreclosure help can be essential for homeowners attempting to avoid foreclosure and save their homes.  One of the biggest mistakes homeowners make is waiting too long to get assistance with this stressful process.  When should homeowners seek foreclosure help?

Preparing a Loan Modification Application 

Foreclosure defense is not about getting a free home; foreclosure defense is about getting an affordable loan payment.  A loan modification is the general way to obtain this relief from a mortgage lender.  Applying for a loan modification, however, can be a complex process, requiring enormous paperwork and follow-up phone calls with the loan servicer.

A homeowner does not need a lawyer or other professional to help with this process.  However, if a homeowner does it on their own, they need to keep up with the paperwork requirements and do the application correctly.  If the homeowner does not have the time or interest in preparing an application, they should absolutely get the help of a reputable professional for this process.  The Massachusetts Attorney General’s Office is one good resource for seeking such assistance, and there are other non-profit organizations around the state who similarly help with loan modification applications.

Problems With The Review of a Loan Modification Application

If a homeowner is having trouble with a loan modification application, foreclosure help is a must.  Often, a lender’s repeated failure to properly review one of these applications, by “losing” paperwork and coming up with bogus reasons for denial, can be grounds for legal action.

Imminent Foreclosure Sale Date

A homeowner with a imminent foreclosure sale date should likewise obtain foreclosure help, mainly through an attorney.  An attorney can help a homeowner understand options available for stopping a foreclosure and see if a permanent resolution to the problem can be reached.

After a Foreclosure Sale

In my opinion, foreclosure help is an absolute must for any homeowner who has already been foreclosed.  A foreclosure defense attorney can help a former homeowner determine if there are grounds to rescind or buy back the foreclosed property.  Even if the homeowner has no interest in staying in the home, an attorney can be incredibly helpful in ensuring that the homeowner’s rights are protected, and avoiding an additional liability.

If you find yourself in need of foreclosure help, contact me for a consultation.

What Happens After a Foreclosure Sale?

Homeowners who have gone through a foreclosure often ask me what happens after a foreclosure sale.  More specifically, these homeowners often ask if they need to leave their home right away after a foreclosure auction sale.  The answer is no.  Even after a foreclosure sale, the new owner is required to perform an eviction of the occupants remaining in the foreclosed property.

Overview of a Massachusetts Foreclosure

Massachusetts is a non-judicial foreclosure state.  This means that a bank does not need to go to court to get permission to foreclose (unlike states like New York and Florida).  A Massachusetts foreclosure requires sending a number of required notices, publishing a foreclosure sale notice, and holding a foreclosure auction.  If done correctly, the bank (or third-party buyer) becomes the record owner of the property.  While ownership of the home changes after a foreclosure sale, possession does not.  The new record owner is required to bring an eviction case against the former homeowner(s) residing in the foreclosed home.

Post-Foreclosure Eviction

What happens after a foreclosure sale?  The bank (or third-party buyer) must file an eviction against any persons who remain in the property.  This eviction, known as a summary process action, is generally filed in a District Court or Housing Court.  In these cases, the homeowner has the opportunity to defend against the new owner’s claim to possession by alleging that the foreclosure was not performed correctly.

An important point to note for homeowners in such a case: you do not need to leave the home until the court orders you to do so.  The new owner must obtain a judgment from the court allowing them possession of the home.  Until this is done, the new owner cannot forced you out of the property under any circumstances.

What Should You Do After a Foreclosure Sale?

If you have gone through a foreclosure of your home, contact a foreclosure defense attorney for a consultation, regardless of your intentions for the home.  In other words, even if you plan to leave the home, it is still worth speaking to an attorney.  An attorney can help determine if you have a defense against the foreclosure.  Even if you plan to leave the home, a foreclosure defense attorney can assist you with resolving any liability you may have against the new owner and possibly get you relocation assistance.

SJC Extends Paragraph 22 Defense

The Supreme Judicial Court issued an important ruling last weekend extending the “paragraph 22 defense” to other homeowners facing foreclosure.  In Federal National Mortgage Association v. Marroquin, the Court extended the benefit of the prior Pinti v. Emigrant Mortgage decision to those homeowners who similarly challenged a foreclosure based on non-compliance with paragraph 22 of the standard mortgage (a full copy of the decision is included below).  This is alot of information to take in at once, so read on for a “non-lawyer” explanation!

Paragraph 22 of the standard mortgage is a provision in a typical mortgage agreement that requires a foreclosing entity to provide a default notice to borrowers prior to foreclosure.  This notice requires specific disclosures that need to be given to the borrower.  In the wake of the recent foreclosure crisis, many of these notices have had errors, and have not included all of the required disclosures.  A paragraph 22 defense is a challenge to a foreclosure based on non-compliance with this mortgage requirement.

In Pinti v. Emigrant Mortgage, the Supreme Judicial Court determined that the failure to strictly comply with this mortgage requirement made the foreclosure void.  Pinti, importantly, required “strict compliance” for this part of the mortgage: a borrower does not need to show any harm from such a defect to challenge the foreclosure.  The Court’s decision in Pinti was “prospective”: it would only apply to the homeowners in Pinti and future foreclosure challenges based on non-compliance with paragraph 22.  In Aurora Loan Services v. Murphy, the Appeals Court extended the Pinti ruling to other cases on appeal at the time of the Pinti decision.

In Federal National Mortgage Association v. Marroquin, the Supreme Judicial Court needed to decide whether a paragraph 22 defense could be raised by a homeowner who had a trial court case pending at the time of Pinti.  This would include post-foreclosure eviction cases and Superior and Land Court challenges to foreclosure.  In  Marroquin, the Supreme Judicial Court extended Pinti to these cases as well.  If a homeowner had raised a paragraph 22 defense in one of these cases at the time of Pinti, “strict compliance” would apply.

Marroquin will likely apply to only a small range of cases.  The Supreme Judicial Court did not suggest that the prospective ruling of Pinti has changed.  In other words, a homeowner who did not properly preserve a paragraph 22 defense will not be helped by Marroquin.  As this decision comes over 1.5 years after Pinti, there are likely many homeowners who had such viable defenses, but failed to preserve them, on the belief that Pinti’s  prospective ruling would not let this defense apply to their case.

This is my main complaint with Marroquin and the Supreme Judicial Court’s other decisions on paragraph 22.  The Court in Pinti knew that the issue of the paragraph 22 defense would come before the Court again.  Why the Court could not have addressed this matter in the first place, making these later decisions unnecessary, is beyond me.  Nonetheless,  Marroquin fully resolves the scope of this defense for homeowners with a paragraph 22 defect.

If you find yourself in need of assistance with foreclosure, contact me for a consultation.

Federal National Mortgage Association v. Marroquin

72 Hour Notice to Quit

A 72 hour notice to quit is a unique type of notice that is generally used for post-foreclosure eviction (“summary process”) cases.  Receipt of one of these notices is a sign that an eviction case following a foreclosure sale will begin soon.

A notice to quit is required prior to the start of an eviction case.  For evictions involving landlord/tenants, where the parties previously entered into a rental agreement, there are specific requirements for the notice to quit required prior to eviction.  Terminating a tenancy for non-payment of rent, for example, generally requires a 14 day notice to quit.  The sending of a notice to quit for a landlord/tenant eviction is a mandatory part of the process; a court will throw out an eviction if the proper notice is not sent, or the landlord cannot prove that the landlord received it.

The same is not true for a post-foreclosure eviction case, where the landlord (often the bank or lender who purchased the home at the foreclosure sale) is attempting to evict the former homeowner.  There is no specific requirement as to what type of notice a foreclosing entity needs to provide to a former homeowner.  Many cases on this matter suggest that no notice to quit is required for one of these cases (unlike a landlord/tenant eviction).

Despite the law suggesting that no such notice to quit is required, out of custom, a 72 hour notice to quit is generally used for post-foreclosure eviction cases.  This notice informs the former homeowner that they have 72 hours to leave the property, or an eviction will begin.  A notice to quit is generally served by a sheriff or constable.

Despite the 72 hour “deadline” in one of these notices, a former homeowner does not need to leave their home after receiving one of these notices.  A homeowner only needs to leave the home after a court enters an execution for possession, allowing the owner of the property to physically remove the former homeowner and their possessions from the property.  Before doing so, a former homeowner (like a tenant) is entitled to their “day in court” and allowed to present their reasons why they should not be evicted from the home.  The 72 notice to quit, simply put, is merely the start of the eviction process, and not the end.

A homeowner who receives a 72 hour notice to quit needs to act quickly in defending themselves against the imminent post-foreclosure eviction.  If you find yourself in such a case, contact me for a consultation.  Eviction cases move quickly, and it is important to have an experienced attorney to help you understand your rights.

Foreclosure Judgment

A common inquiry about foreclosures in Massachusetts is regarding a foreclosure judgment.  What does a bank get from a homeowner after it forecloses?

In judicial foreclosure states, where a bank needs to go to court to foreclose, a foreclosure judgement is a court order allowing the bank to do a foreclosure sale.  Massachusetts, in contrast, is a non-judicial foreclosure state, where a bank doesn’t need a court order.  A foreclosure judgment in Massachusetts, therefore, generally refers to what a bank can get after foreclosure: possession of the property and a deficiency judgment.

Even if a bank performs a lawful foreclosure, it must still bring an eviction (“summary process”) case to get possession of the property.  A foreclosure only changes title to the subject property; a eviction is required to get the former homeowners out of the home.  A post-foreclosure eviction case generally occurs several months after the foreclosure sale, and is usually brought in District or Housing Court.  If a bank is successful in one of these cases, it is entitled to an execution for possession, allowing the sheriff or constable to physically remove the occupants and their possessions from the property.  In one of these eviction cases, a bank can also obtain a judgment for use-and-occupancy against the former owners, which amounts to  rent for the time that the former owner resided in the home after the foreclosure sale.  While banks generally request use-and-occupancy in post-foreclosure eviction cases, it is rare for a bank to pursue this claim for money; the bank generally just wants possession of the home.

Another foreclosure judgment in Massachusetts is a claim for any deficiency judgment that exists following the foreclosure sale.  This is the difference between the amount that the homeowner owes on the mortgage loan and the amount obtained at the foreclosure sale.  For example, if the homeowner owes $400,000 on the mortgage loan, and the bank obtains $300,000 at the foreclosure sale, the homeowner is potentially liable for the difference: $100,000.  Claims for deficiency judgments are not frequently pursued.  Generally, most former homeowners do not have sufficient assets to make one of these claims worth pursuing.  Additionally, a bank has a two-year deadline (“statue of limitations”) from the foreclosure sale to bring one of these claims, which many banks fail to do.  A homeowner can also usually file a bankruptcy to get rid of this type of debt.

Each type of foreclosure judgment in Massachusetts is an important consideration for homeowners who are facing foreclosure or who have been foreclosed.  If you find yourself in either situation, contact me for a consultation.

Attorney Sherwin Argues Foreclosure Appeal Before Massachusetts’s Supreme Judicial Court

SJC

I had the honor of arguing before the Massachusetts Supreme Judicial Court (“SJC”) this week on a foreclosure appeal.  The SJC is Massachusetts’s highest court and the final decision maker on Massachusetts law.  The SJC often takes cases where the law in a particular area is uncertain.  In recent years, the SJC has heard an increasing number of foreclosure cases, which shows that this area of law continues to evolve.

My appeal concerned whether G.L. c. 244, § 15A, a law requiring a mortgagee to inform a local municipality about a foreclosure sale thirty days after it happened, is a requirement of the foreclosure process.  Different courts across Massachusetts have taken different positions on this, making this a matter that the SJC needs to resolve.  Click here to watch the oral argument.

My experience before the SJC reminded me of the importance of having an attorney who knows and understands the process of pursuing an appeal.  A appeal is a review of a case that was heard before a trial judge or jury; the appellate judges do not hear the testimony of witnesses or review evidence, and are limited to reviewing the entire record presented in the lower court.  A foreclosure appeal is a particular challenge to bring: foreclosure law constantly changes, and a successful appeal requires knowing and understanding the most recent changes in the law.  My appeal will likely be decided in the next three to four months, stay tuned!

I was deeply humbled by my appearance before the SJC.  With the recent election forcing many Americans to look closely at our form of government, I had a chance to see Massachusetts’s highest court up close.  I many not always agree with the SJC’s decisions, but I can’t doubt the Court’s sincerity and devotion to the “rule of law” in our state.  I’m proud to be a Massachusetts attorney and look forward to continuing my practice in this great state.

If you are in need of an appellate attorney, contact me for a consultation.  The importance of having an experienced appellate attorney on your side can be the difference between winning or losing your case.

Once Foreclosure Begins, Can It Be Stopped?

Foreclosure by Sale

Once foreclosure begins, can it be stopped?  In Massachusetts, the answer is “yes.”

The start of the foreclosure process in Massachusetts begins with a series of notices sent to the homeowner, informing them of the foreclosure sale date.  These notices are also published in a local newspaper.  While this is the official beginning of the foreclosure process, the homeowner has usually been provided notice of the foreclosure well in advance of these notices, through letters from the bank informing them of the loan default and offering them an opportunity to cure the default.  At this point, the sale is scheduled, but has not occurred.  Here, there are several options that homeowners can do to stop a foreclosure.

If the homeowner has not applied for a loan modification, they can speak with the lender and see if the lender is willing to consider reviewing them for this loss mitigation assistance.  If the homeowner applies far enough in advance of a foreclosure sale, the lender may be willing to do so and postpone the foreclosure.  Generally, however, a lender will not postpone a foreclosure sale if a loan modification application is received after a scheduled sale date.

If the lender is unwilling to stop a foreclosure sale, a homeowner may be able to ask a court to stop the foreclosure, if there are grounds for challenging the foreclosure’s validity.  A homeowner can request a temporary restraining order or preliminary injunction to stop a foreclosure.  Obtaining the help of an attorney in doing this is highly, highly recommended.

A homeowner can also consider filing bankruptcy to stop foreclosure.  A bankruptcy creates an automatic stay against all creditors, including a foreclosure sale.  A homeowner, again, should consult with an attorney before taking this action.

After a foreclosure sale occurs, a homeowner still has a right to challenge the foreclosure’s validity.  A homeowner can seek a declaratory judgment or another type of court order requesting that the foreclosure be rescinded.  While it is possible to stop a foreclosure after a sale has occurred, it is much harder than fighting a foreclosure before a sale has happened.  It is, however, not impossible.

If you find yourself facing a foreclosure, contact me for a consultation to see if I can be of help.

Appealing a Foreclosure Case

Courtroom

A recent Massachusetts Supreme Judicial Court decision illustrates the importance of properly appealing a foreclosure case.  The Court’s decision reaffirms that a homeowner has one–and only one–opportunity to appeal an unfavorable court decision.

In Eresian v. Merill Lynch Credit Corporation, the Supreme Judicial Court upheld the denial of a homeowner’s attempt to overturn a decision in a foreclosure case from the 1990s (a copy of the full decision is below). The homeowner attempted to file an appeal of this decision in 2015, years after the 1993 foreclosure case.  The Appeals Court rejected this appeal, and stated that the case was closed.  The homeowner then attempted to petition the Supreme Judicial Court for a subsequent order to review her prior decision.  Here, the Supreme Judicial Court rejected this requested relief, noting that the homeowner had already obtained an appeal of her decision, and there was no reason for the Court to allow her the opportunity for another review of the case.

The Court’s decision in this case reaffirms an important lesson for homeowners fighting foreclosure: there are few, if any, “do overs” in matters of law.  If a homeowner loses their foreclosure case and wishes to appeal, they get one–and only one–chance at appeal. Rarely will a homeowner ever be able to come back later for a second shot.

With this in mind, homeowners should strongly consider consulting an experienced foreclosure defense attorney in appealing a foreclosure case.  The risks of not doing the job right the first time just aren’t worth it.

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