15 Oct Massachusetts Foreclosure Initiative
The Boston Globe reported today that Massachusetts Governor Deval Patrick plans to launch an initiative meant to press mortgage holders to accept pre-foreclosure short sales. A “short sale” is when a homeowner sells property to a buyer for less than the amount owed on a mortgage loan. Usually this is impossible because in order to pass clean title to a buyer an owner has to obtain a discharge of any mortgage liens. However, a short sale happens when a mortgage lender agrees to discharge its mortgage for less that the amount owed. The details of the initiative, which will be tested in Lawrence and Springfield, will be announced later this week. As the director of the Massachusetts Association for Affordable Housing noted, however, the state has little real leverage with mortgage lenders beyond urging voluntary cooperation. It will be interesting to have a look at the plan once the details are announced. It is important for consumers facing foreclosure with either home equity or regular income to explore Chapter 13 bankruptcy early in the foreclosure process. This is because once the foreclosure process begins (and a referral is made to an outside law firm) only an agreement with the mortgage lender stops the foreclosure process. Many times homeowners get a false sense of hope based on discussions with mortgage loss mitigation personnel that ultimately go nowhere. When they finally realize that no new agreement will materialize it often too late.
Nicholas Ortiz, Boston Bankruptcy Attorney
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