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Massachusetts Foreclosured Listings – MA Bank–Owned Homes & Foreclosures
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The laws governing Massachusetts foreclosures are found in Chapter 244 of the General Laws of Massachusetts. Both judicial and non-judicial foreclosures are covered under this statute. Massachusetts primarily operates as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan.
Massachusetts Government Legislative Laws
In Massachusetts, non-judicial foreclosure is the most common method; judicial foreclosure is rarely used in MA. Lenders usually have a power of sale clause and must abide by stringent notice requirements. The bankruptcy court allows sales to be overturned if the amount of the sale was less than the market value of the property. Therefore, lenders in Massachusetts go out of their way to notify prospective buyers and real estate agents of an upcoming sale.
Power of Sale Notice Requirements:
- Prior to initiating a foreclosure the lender must record a notice of foreclosure sale in the county in which the property is located.
- Notice of the foreclosure sale, as described above, must be served on the borrower via registered or certified mail at least fourteen (14) days prior to the foreclosure sale date. The notice must be published once each week for the three (3) weeks prior to the foreclosure sale date. The first publication is required to be at least twenty-one (21) days before the sale, and the publication must be in a newspaper in general circulation in the county in which the property to be foreclosed is located.
- The property is sold at a public auction based on the notice and the time, date, and place specified therein. The property is sold to the highest bidder, with a private auctioneer usually conducting the sale.
Depending on the timing of the various required notices, it usually takes approximately 75-90 days to effectuate an uncontested non-judicial foreclosure. If the borrower contests the action in court, seeks delays and adjournments of sales, or files for bankruptcy, this process may be delayed.
There is no redemption possible under a non-judicial foreclosure.
The lender may obtain a deficiency judgment. However they give the borrower a one-year right of redemption that they otherwise would not have given.
Always seek the advice of proper legal counsel or an attorney familiar with Massachusetts foreclosure laws. The information provided in this website is not legal advice.
Bank Owned, REO (Real Estate Owned), and foreclosure are terms commonly used to describe properties that are owned by a lender (financial institution; typically a bank), after an unsuccessful sale at a foreclosure auction. The lender will then resell the property by direct sale or market through a Realtor. Buyers often benefit by purchasing these properties as the lender's interest is to dispose the asset quickly and aggressively price them to reflect market conditions.
Purchase at Foreclosure Auction
Investing in foreclosures and distressed properties is only as successful as the information you have available to you. When a property is sold through a foreclosure auction, its owner usually owes more to the lender than the market value of the property itself. This is often a barrier to the sale of the property, and sometimes such foreclosure auctions do not draw any bidders. As a result, not many foreclosure auctions end with the sale of the property. The title reverts back to the financial institution holding the line. These properties are referred to as REO (Real Estate Owned) or Bank Owned properties.
Foreclosure sales begin with a minimum bid that includes the loan balance, any accrued interest, attorney's fees and costs associated with the foreclosure process. There are requirements to bid at a foreclosure auction and the auctioneer publishes that information. If you are a successful bidder, you receive a property in "as is" condition, (the former owner or tenant could be living at the property). There may also be other liens against the property. For most consumers, purchasing at a foreclosure auction is a "risky" undertaking and, in most cases, they will opt to purchase from the lender after the auction.
Bank Owned
After a bank (lender, financial institution) takes possession of a property (after an unsuccessful auction), they mitigate items owed by the prior borrower, such as homeowner association fees. The financial institution also tries to get the IRS to remove any tax liens against the property. The current owners are usually evicted and repairs made to any damage on the property in order and to make it more attractive to potential buyers and maximize the value.
Banks want to sell foreclosed property quickly because they don't want to tie up their money in capital reserves. Additionally, managing a foreclosed property is an expensive process and a "headache". Some banks have experience in managing REOs and foreclosures and often have a department dedicated to them. Most lenders list their properties with local real estate agents who are experienced in marketing and managing these assets.
Banks do not like disclosure statements but understand that they must conform to federal and state laws. They will always state that they have no knowledge of the property and can make no representations as they have never occupied the property. Most banks may or may not provide incentive financing on their REOs but in most cases, this would apply only to property that was in very bad condition. Financial institutions usually sell such properties "as-is"; however buyers still have the opportunity to negotiate home inspections if they find "unknown material defects".
If a buyer discovers issues that they did not anticipate, and which the institution will not repair, they can then cancel the transaction(given that the home inspection contingency was included as part of the offer to purchase contract). Institutions may agree to repairs but prefer to "discount" the property to a potential buyer and close quickly. Time is money to a lender. It is not in a buyer's best interest to attempt to renegotiate a contract over trivial items that were disclosed or obvious prior to negotiation of the contract.
Generally, negotiating with a lender, in most cases, is an easier process than negotiating with a homeowner. Lenders are typically unemotional about the process and are interested in making a "good business" decision for their stockholders.
A bank owned property isn't always the best value for a consumer. It's an old myth that "foreclosures" are a bargain.
Making an Offer
Before making an offer, have your agent contact the listing agent and ask typical questions you would ask of any seller and some additional ones such as:
- Are there any inspection reports?
- What work has the bank agreed to?
- Is there a special "as is" form?
- How long does it take the bank to accept an offer?
- How does your agent deliver the offer?
Offers are usually FAXED to the bank. The listing agent needs your originals. There is no formal presentation. Keep in mind: nothing happens evenings and weekends (banks are closed). The negotiating process can be very frustrating for buyers as the typical timelines do not apply.
Make sure that your offer contains your "credit" approval which demonstrates your qualifications as a buyer. They will be more motivated to negotiate with a qualified buyer. Understand that lenders will sell at "fair" market value and do not expect "fire-sales" that you have seen on television.