Massachusetts is near the top of list in terms of foreclosure rates in this country at number seventeen, which is why there are many residents hoping to find help to stop foreclosure. There are many options to do so, since the foreclosure process takes between 75 and 90 days if it is uncontested. Massachusetts law allows two forms of foreclosure: judicial and non-judicial. And while there is no statutory right of redemption in this state, under certain circumstances, a borrower may be able to redeem. With the help of an experienced foreclosure attorney, a homeowner may be able to explore those options. The lender does have a right to file for a deficiency judgment, but if they do, it may enable the borrower to redeem.
Government Relief from Foreclosure
Before a lender can even begin the foreclosure process, there are steps a homeowner can take to forestall or avoid it entirely. First, a borrower should explore the government programs to help with financial difficulties. They contain financial incentives for lenders who refinance or adjust loan terms.
- Refinancing and adjusting the terms of variable rate mortgages are encouraged through the Homeowner Affordability and Stability Act.
- Similar programs are available through the Hope for Homeowners Act, although this plan also encourages lenders to lower mortgage principal amounts and to forgo fees for early or late payments.
- Congress has prohibited the IRS from taxing forgiven debt amounts as income through the Mortgage Forgiveness Debt Relief Act of 2007.
HUD (U.S. Department of Housing and Urban Development) counselors can provide free advice and guidance to lenders hoping to qualify for these types of programs.
Lender Relief from Foreclosure
Lenders can provide powerful help for many homeowners who are beginning to face financial difficulties, but the earlier a borrower alerts them to the problems, the more likely they are to find their lender helpful. There are several options a lender may choose:
- They may be willing to modify the terms of a mortgage if they believe the borrower is reliable and will fulfill a loan with lower rates, longer schedules, or different terms.
- They may reinstate a loan if the borrower knows they are coming into some additional funds to make one lump sum payment or several large payments to catch up.
- They may show forbearance for an otherwise reliable homeowner who has run into temporary difficulties. They may allow a few late, partial, or missed payments if the borrower contracts to make them up by a specified date.
Bankruptcy Relief from Foreclosure
For more serious financial difficulties, bankruptcy may provide means to stop foreclosure. The downside is that the homeowner’s credit score will be damaged for several years. But the upside is that the borrower may solve their debt problems and get a fresh start.
- The court opens each bankruptcy petition with an automatic stay, or hold, on collections and foreclosures. Creditors may petition the court to lift that stay, but even that process takes time the borrower can use to find appropriate solutions.
- Filers who qualify for Chapter 7 may be able to discharge much of their consumer debt, but some personal property may be liquidated in the process. In Massachusetts, there is a homestead exemption for up to $500,000 on residential property, generally allowing homeowners to save their property.
- Filers who choose Chapter 13 have the opportunity to reorganize their debts and finances, propose a repayment plan that fits their circumstances, and if they fulfill that plan, probably keep their home.
Home Sale Relief from Foreclosure
For homeowners with a mortgage default that is beyond repair, there are still some alternatives to foreclosure, although they do entail losing their home. The best of these options would be to sell their home for more than the debt owed and realize some income they can use to find other housing and possibly even pay off other debts. If that is impossible in the current market, they may try these alternatives:
- A short sale, which requires that the lender agree to accept the sale price of a home to fulfill a mortgage, even if that sale price is less than the mortgage balance. It is vital that the borrower receive this agreement in writing, however, to avoid a deficiency judgment for the difference.
- A deed in lieu of foreclosure requires that the lender accept the property deed to fulfill the mortgage balance. Again, this agreement should be made in writing to protect the borrower.
Getting Legal Help Stopping Foreclosure in Massachusetts
Massachusetts has some complex forms of foreclosure with a number of exemptions and special conditions. That makes it even more important to have competent and committed legal counsel every step of the way. In addition, there are numerous scams in the marketplace today that can leave a borrower in greater debt than when they started. Only experienced counselors can help homeowners avoid the pitfalls and take advantage of all the benefits available to them to stop foreclosure.
