Many homeowners in Massachusetts have found themselves in the position of owing more money on their homes they the current fair market value of the property. Additionally, many of these homeowners have suffered from some sort of financial difficulty which has made it nearly impossible to afford their current monthly mortgage payments. As a result, they have simply stopped paying and either sold their home in a short sale, or plan to allow the mortgage company to foreclose and take the property back. When this happens, often the lender will not stop at simply selling the house, but continue to pursue the homeowners for their personal assets, vehicles, and even a potion of their weekly wages. When this happens, what do you do?
The problem becomes even more complex when the original lender either allegedly sold or assigned their rights in the mortgage to another lender. When this happens, the homeowner has the right in Massachusetts to challenge a foreclosure, but due to the legal fees required to fight this, and the desire to let the home go, they simply ignore that option.
When such a situation arises, there are a number of issues to consider and possible options to help the homeowner. The first is who is the real the holder is in due course. In simple English this means, even if a lender wants to foreclose who has the right to do this? With all of the transfers, you may be able to challenge a lenders right to bring any action against you if they do not have the proper paperwork, and can prove all of the transfers were conducted pursuant to Massachusetts law. Even after the foreclosure, a claim for a deficiency judgment still needs to be supported with standing by the Plaintiff (Lender). If the proper lender does move against you, they have the right to foreclose. Additionally, in Massachusetts even if you do a short sale, depending upon the specific language of the short sale and acceptance by the lender, they may still have the right to come after you for the deficiency.
In most situations, the bank will then transfer its right to sue you to some third party collector. If a debt collector does come after you for the difference in price between what the lender gets and what it is owed, they have the right to come after 15% of your weekly wages, and some personal property. However, they must first send you a letter, and give you 30 days to dispute the debt. Moreover, they must tell you in this letter that you have a right to demand proof of ownership of the debt, a full accounting of the debt, and a demonstration of all calculations as to how the debt collector believes you owe a specific amount of funds.
Perhaps even worse, the lender could forgive the debt, which as of January 2014 can create a taxable event, where you would owe the IRS a third of the forgiven debt, due to the expiration of the Mortgage Forgiveness Debt Relief Act. There are options including discharging your financial obligation through filing for a bankruptcy case or negotiating directly with the lender and or debt collector. Due to all of the above, it is a very good idea before you get to this point, you speak to an experienced debt relief or bankruptcy attorney in the area. There are options you have including filing bankruptcy, or working a deal with the proper lender to avoid future issues. Many law firms including the Law Offices of Goldstein and Clegg, LLC do offer free initial consultations