An Act Protecting and Preserving Home Ownership

Beveridge & Diamond, P.C. - Massachusetts Environmental, Land Use & Real Estate Alert, May 2008

On May 1, 2008 section 11 of Chapter 206 of the Acts of 2007 (“Section 11”), the so-called mortgage foreclosure prevention act, took effect.  Section 11 amends General Law chapter 244 by inserting section 35A providing a right to cure for mortgagors of owner-occupied residential property with four or less separate households.  Pursuant to Section 11, the mortgagee may not begin foreclosure proceedings or otherwise enforce the mortgage due to the mortgagor’s failure to make payments under the mortgage or note unless at least 90 days written notice has been given to the mortgagor.  During the 90 days, the mortgagor shall have a right to cure the default by full payment of the amounts due without acceleration of the mortgage maturity date.  The right to cure a default under Section 11 is only allowed once during any five year period regardless of the mortgage holder.

Section 11 requires the notice to be mailed to the mortgagor’s address last known to the mortgagee and must include: i) the nature of the default and notice of the statutory right to cure; ii) the date by which the default may be cured and information on where payment may be made; iii) notice of the effect of failure to cure default; iv) the name of the current and former mortgage broker or mortgage loan originator for the mortgage or note; and v) notice of potential assistance from the Massachusetts Housing Finance Agency and the Division of Banks and a local or toll free telephone numbers to request assistance. 

The mortgagor shall not be required to pay any charge, fee or penalty attributable to the right to cure, in order to cure a default but the mortgagor shall pay late fees and per-diem interest.  Likewise the mortgagor shall not be required to pay attorneys’ fees incurred prior to or during the 90 day right to cure period.  The mortgagee may voluntarily allow reinstatement after the 90 day notice period.  A copy of the required notice and an affidavit demonstrating compliance with Section 11 must be filed by the mortgagee in any foreclosure proceeding and a copy of the notice must also be filed with the commissioner of the Division of Banks.  Furthermore, if the property is ultimately sold at a foreclosure sale, written notice of the date of the sale and the purchase price must be given to the commissioner.

This is one of the many provisions of the mortgage foreclosure prevention act that will take effect throughout 2008.