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
© 2016 Massachusetts Office 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.
© 2016 Massachusetts Office of the Attorney General
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
© 2016 Massachusetts Office of the Attorney General
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
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House
Investor
$
$$ Bank- Originator
Monthly Payments
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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
© 2016 Massachusetts Attorney General’s Office
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.
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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
© 2016 Massachusetts Office of the Attorney General
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
© 2016 Massachusetts Office of the Attorney General
NOTICE- Sept. 1M.G.L. c. 244, s. 35A
150 Right to Cure $5489.13
Past Due
Past Due
Right to Request Modified Loan
© 2016 Massachusetts Office of the Attorney General
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
© 2016 Massachusetts Office of the Attorney General
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
© 2016 Massachusetts Attorney General’s Office
HAMP Eligibility
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• 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
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Modification Waterfall
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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
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Short Sale
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• 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
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Forgiven
$300,000
• Borrowers gives property to investor
• Investor agrees to forgive deficiency
Investor
Service Members Relief Act
© 2015 Massachusetts Office of the Attorney General
House
Investor
Servicer
Is owner(s) in active duty? If No
Land Court Order
Foreclosure Sale
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House
Investor
Servicer
Land Court Order
October 24
October 10
October 3
October 17
October 10
Eviction Notice
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House
Investor / Purchase
ForeclosureDeed72 Notice to
QuitSummons
and ComplaintNovember
3
October 31
November 25
Eviction Hearing
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House
Investor / PurchaseWho Has Right to Possess House?If Purchaser
72 Notice t Quit
Summo and
Complai
ForeclosureDeed
Judgment For Possession
November 25
Execution
© 2016 Massachusetts Office of the Attorney General
House
Investor / Purchase
Judgment For Possession as
of May 1, 2016
Execution48 Hour Notice December 5
December 7
The End
© 2016 Massachusetts Office of the Attorney General