office of massachusetts attorney general maura healey

Office of Massachusetts

Attorney GeneralMaura Healey

One Ashburton PlaceBoston, MA 02108

(617) 727-2200www.mass.gov/ago

© 2016 Massachusetts Office of the Attorney General

Attorney General

Maura Healey is the chief

lawyer and law enforcement

officer of the Commonwealth

of Massachusetts.

The Job of the Attorney General


Who:The Commonwealth

Who the AGO Serves & How

Investigation Enforcement

Prevention Policy

How: Four Major Ways this Work is Executed

Residents of the Commonwealth and their public interests

State departments, officers, and commissions

Groups of consumers

Attorney General Maura Healey and her staff engage with every city and town of the Commonwealth. The Attorney General’s Office also runs a statewide Consumer Advocacy and Response Division, and supports over thirty regional local consumer, face-to-face, and consumer advocacy programs, which you may choose to contact.


Where the AGO is located

Western Massachusetts1350 Main Street

Springfield

Central Massachusetts 10 Mechanic Street

Worcester

Southeastern Massachusetts

105 William StreetNew Bedford

Boston One Ashburton Place

and

100 Cambridge Street


How the AGO is Organized

Six Bureaus

Executive

Public Protection &

Advocacy

Government

Energy & Environment

Healthcare & Fair

Competition

Criminal

Avoiding Foreclosure and Eviction

Consumer Advocacy and Response Division

September 29, 2016

Sources of Rights and Responsibilities

• The Deed– Right to property given from former

owner to current owner

• The Note– Promise to Pay from borrower to lender

• The Mortgage– Given from mortgagor (owner) to

mortgagee (lender)– Security Interest and Property Interest

Who is Your Mortgage Company?Owner / Investor


House

Investor

$

$$ Bank- Originator

Monthly Payments

© 2016 Massachusetts Attorney General’s Office

Principal payment function of

Interest payment function of

Escrow payment function of town taxes, homeowner’s insurance, loan agreement, and servicer policy

Default

• Failure to make total monthly payment under the note and mortgage

• Causes– Income goes down– Expenses go up– Payment can change


SaleDate

Post Foreclosure

Referral to Foreclosure

Borrower Defaults

90 Day Right to Cure Period

SCRA Notice & 30 Day Response Period

Publications of Sale(minimum 3 weeks)

35B Election Periodonly 30 days

*The events leading to a foreclosure may vary significantly. This is particularly true where a borrower has defaulted and reinstated the loan or where foreclosure has been resumed after a prior halt to the process.


Notice to Quit &Eviction Process

Foreclosure Overview

Last Chance for Modification

NOTICEM.G.L. c. 244, s.

35A150 Right to Cure

$5489.13

Past Due

Past Due

90 Right to Cure Notice


House

Borrower

Investor

Servicer

Past Due$5489.13

Refinancing

• Obstacles– Loan-to-value ratio (LTV)

above 80%– Bad credit and/or prior

bankruptcy– Insufficient income– Current loan must not be in

default


NOTICE- Sept. 1M.G.L. c. 244, s. 35A

150 Right to Cure $5489.13

Past Due

Past Due

Right to Request Modified Loan


House

Borrower

Investor

Servicer

Past Due

NOTICE- Sept. 1M.G.L. c. 244, s.

35BRight to Request

Modification

CompleteBy October 1

$265,984.50

Modification Process

• Servicer will collect application• Servicer will verify income

– Every Source should be on RMA– Every Source will need supporting documentation

• Wages = paystubs• Self-employment = profit & loss• Rent = copy of lease• Government benefits = award letter

• Servicer will determine basic eligibility• Servicer will run waterfall


Affordability: Housing Expense Ratio

• Housing Expense Ratio = Housing Expenses / Income

• 31% is target • Monthly Housing Expense

includes– Principal & Interest– taxes and insurance

(usually escrow)– Condo or Homeowner

Association Fees• Income is Gross Monthly

Income


HAMP Eligibility


• Mortgage originated before 2009?• Unpaid principal balance less than $729,450

(for single family) • Hardship• Must finish applying by December 2016

Making Payment More Affordable

Payment will decrease if*Maturity Date goes up *Interest rate goes down*Principal balance goes down


Modification Waterfall


Gross Monthly Income HAMP- 31% HAMP Tier II- 15% - 55%

$2,000 $620 $300 - $1,110

$3,000 $930 $450 - $1,650

$4,000 $1,240 $600 - $2,200

$5,000 $1,550 $750 - $2,750

$6,000 $1,860 $900 - $3,300

Current Balance $200,000 Remaining Term 20 years

Current Arrearage $20,000 Current Payment $1,400

HAMP Step 1 HAMP Step 2 HAMP Step 3

HAMP Tier II / Streamlined

Property Value 2% 40-year term Principal Deferment All Steps

$100,000 $1,214.12 $666.22 $302.83 $619.89

$200,000 $1,214.12 $666.22 $466.35 $885.56

$300,000 $1,214.12 $666.22 $466.35 $885.56

$400,000 $1,214.12 $666.22 $466.35 $885.56

$500,000 $1,214.12 $666.22 $466.35 $885.56

Common Reasons for Modification Denial

• Missing Documents• Insufficient Income• Excessive Equity• Prior Modifications• Homeowner is not the borrower• Investors do not offer modification options


Short Sale


• Borrowers sell property sold to 3rd

Party for market value• Investor agrees to

release mortgage for less than amount owed

• Investor should agree to forgiven deficiency

Released

$100,00 Forgiven?

$300,000

$200,000

Deed In Lieu of Foreclosure


Forgiven

$300,000

• Borrowers gives property to investor

• Investor agrees to forgive deficiency

Investor

Service Members Relief Act


House

Investor

Servicer

Is owner(s) in active duty? If No

Land Court Order

Foreclosure Sale


House

Investor

Servicer

Land Court Order

October 24

October 10

October 3

October 17

October 10

Eviction Notice


House

Investor / Purchase

ForeclosureDeed72 Notice to

QuitSummons

and ComplaintNovember

3

October 31

November 25

Eviction Hearing


House

Investor / PurchaseWho Has Right to Possess House?If Purchaser

72 Notice t Quit

Summo and

Complai

ForeclosureDeed

Judgment For Possession

November 25

Execution


House

Investor / Purchase

Judgment For Possession as

of May 1, 2016

Execution48 Hour Notice December 5

December 7

The End
