Redemption rights on foreclosed properties are the rights that are granted to the homeowner to “reclaim” their property by paying their mortgage in full. In Massachusetts, homeowners are not provided these rights except in very special circumstances. Understanding foreclosure redemption rights in Massachusetts can help protect homeowners who are facing foreclosure.
What are redemption rights?
Redemption rights are granted to homeowners under specific statutes of foreclosure laws. Foreclosure laws are developed by the state and in the Commonwealth of Massachusetts, they are explained in Chapter 244 Part III Title III. Redemption rights mean that the property owner may pay to the lender the full amount of the outstanding mortgage (not just the arrears) plus any costs deemed to have been rightfully incurred and reclaim their property. In Massachusetts, this right is granted to a homeowner only in the event that a lender attempts to file a request for a deficiency judgment.
What is a deficiency judgment?
Deficiencies occur when a lender sells a property during the foreclosure process for less than what is owed to them. Deficiencies cannot occur when a homeowner forfeits their deed to the lender instead of going through the foreclosure process up through and including the sale of the property. The easy explanation for this is is that the borrower owes the lender $200,000 and the property sells at a foreclosure auction at $150,000. In this case, the lender is deemed to have a deficiency in the amount of $50,000.
In spite of the fact that most mortgages generated in the Commonwealth of Massachusetts contain a “power of sale clause” that gives the lender the right to foreclose if the homeowner is in arrears, the homeowner may contest the foreclosure. Homeowners who contest foreclosures are involving the courts and changing the process from a “non-judicial” foreclosure process to a “judicial” foreclosure process. The change in the process does not impact the foreclosure redemption rights in Massachusetts.
Why fight foreclosure?
Interestingly enough, homeowners in the Commonwealth of Massachusetts are protected by some of the best consumer protection laws in the United States. With the increased public outcry regarding illegal robo-signing during the foreclosure process, some homeowners may be able to delay the foreclosure process. This is especially helpful if a homeowner feels that their financial circumstances could change significantly, allowing them to pay the arrears on their mortgage (and associated fees) prior to the lender being able to provide the proper documents to support their right to foreclose.
While there are not foreclosure redemption rights in Massachusetts, a homeowner still has the right to retain their home if they understand the Commonwealth of Massachusetts foreclosure proceedings. Non-judicial foreclosure may take as much as 90 days and homeowners who demand documents through the proper court channels may hold the foreclosure at bay for a period of time sufficient for them to repay their outstanding mortgage payments.