03 Feb Mortgage Deficiencies after Foreclsoure
CNN Money recently posted an article, which can be viewed here, on the problem of mortgage deficiencies for people facing foreclosure or attempting work outs or short sales with mortgage creditors. The article rightly points out that a lender’s right to pursue an unpaid mortgage balance after foreclosure varies in accordance with state law, and the article focuses primarily on Florida. Here in Massachusetts, there are two key points to remember about a foreclosing mortgagee’s right to hold a borrower liable for a deficiency:
1. The mortgage lender must send a notice, usually called “Notice of Intention to Foreclose and of Deficiency After Foreclosure of Mortgage,” to the borrower at his last known address not less than twenty one days before the date of the sale, and;
2. A mortgage lender must sue within two years of the foreclosure sale to hold the borrower liable for any deficiency.
But this is Massachusetts foreclosure deficiency procedure, if you are in another state, you should consult an attorney there if you’re curious about your exposure and options. Moreover, the scenarios described in the CNN article, in which borrowers have been surprised by demands for deficiencies after short sales, are cautionary tales: You should always know what you are agreeing to and, if possible, have an experienced attorney review your documents before you sign them.
Nicholas Ortiz, Boston Bankruptcy Attorney
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