Rules for Mass. Foreclosure
A foreclosure may occur when the borrower of a mortgage loan is unable to meet the payments as mandated by the mortgage contract. This gives the lending agent the right to reclaim the property for sale to the highest bidder. In Massachusetts, this process takes 75 to 90 days to complete.
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Ownership Theory
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Mortgage and foreclosure laws in Massachusetts are shaped by the title theory of ownership. This states that ownership of the property remains with the lending agent until the terms of the mortgage contract are fulfilled. The trust deed confers ownership to the lender for the duration of the contract.
Judicial Foreclosure
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Massachusetts allows two methods to complete the foreclosure process. In one method, the lending agent must file a lawsuit against the borrower. The court will generally provide a deadline for the borrower to make the necessary payments. If the payments are not made by this deadline, then the court will order the property to be sold at auction to the highest bidder. This is referred to as the judicial foreclosure process.
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Nonjudicial Foreclosure
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In Massachusetts, the lending agent also has the ability to foreclose without obtaining a court order. This process, called a nonjudicial foreclosure, requires the lender to insert a power-of-sale clause in the contract. This clause allows the lending agent to foreclose, without court intervention, once the loan goes into default. The lending agent typically chooses a representative, or trustee, to oversee this process.
Power of Sale
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The power-of-sale clause usually includes all of the necessary details to complete the foreclosure process. If some of this information is missing, then the state of Massachusetts' regulations will apply. The lending agent must file a notice of sale in the county in which the property is located. The borrower must receive a copy of this notice at least 14 days before the auction is held. The notice must also be published in a local newspaper at least once per week for three weeks. The first notice must be published at least 21 days before the sale takes place.
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