Office of Massachusetts Attorney General Maura Healey. One Ashburton Place Boston, MA (617)

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1 Office of Massachusetts Attorney General Maura Healey One Ashburton Place Boston, MA (617)

2 The Job of the Attorney General Attorney General Maura Healey is the chief lawyer and law enforcement officer of the Commonwealth of Massachusetts.

3 Who the AGO Serves & How Who: The Commonwealth How: Four Major Ways this Work is Executed Residents of the Commonwealth and their public interests State departments, officers, and commissions Investigation Enforcement Groups of consumers Prevention Policy

4 Where the AGO is located 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. Western Massachusetts 1350 Main Street Springfield Central Massachusetts 10 Mechanic Street Worcester Boston One Ashburton Place and 100 Cambridge Street Southeastern Massachusetts 105 William Street New Bedford

5 How the AGO is Organized Executive Criminal Six Bureaus Public Protection & Advocacy Healthcare & Fair Competition Government Energy & Environment

6 Avoiding Foreclosure and Eviction Consumer Advocacy and Response Division September 29, 2016

7 The Deed Sources of Rights and Responsibilities 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

8 Who is Your Mortgage Company? Owner / Investor $ Bank- Originator $ Investor $ House

9 Monthly Payments Principal payment function of Interest payment function of Escrow payment function of town taxes, homeowner s insurance, loan agreement, and servicer policy 2016 Massachusetts Attorney General s Office

10 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

11 Foreclosure Overview Borrower Defaults 90 Day Right to Cure Period SCRA Notice & 30 Day Response Period Last Chance for Modification Publications of Sale (minimum 3 weeks) Referral to Foreclosure Sale Date Post Foreclosure 35B Election Period only 30 days Notice to Quit & Eviction Process *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.

12 90 Right to Cure Notice NOTICE M.G.L. c. 244, s. 35A 150 Right to Cure $ Investor Borrower Past Due Past Due Past Due $ House Servicer

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

14 Right to Request Modified Loan Borrower NOTICE- Sept. 1 M.G.L. c. 244, s. 35A NOTICE- Sept Right to Cure M.G.L. c. 244, s. $ B Right to Request Modification Past Due Past Due Past Due $265, Investor House Complete By October 1 Servicer

15 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

16 Affordability: Housing Expense 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 Ratio 2016 Massachusetts Attorney General s Office

17 HAMP Eligibility Mortgage originated before 2009? Unpaid principal balance less than $729,450 (for single family) Hardship Must finish applying by December 2016

18 Payment will decrease if *Maturity Date goes up *Interest rate goes down *Principal balance goes down Making Payment More Affordable

19 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 Tier II / Streamlined HAMP Step 1 HAMP Step 2 HAMP Step 3 Property Value 2% 40-year term Principal Deferment All Steps $100,000 $1, $ $ $ $200,000 $1, $ $ $ $300,000 $1, $ $ $ $400,000 $1, $ $ $ $500,000 $1, $ $ $ Massachusetts Attorney General s Office

20 Common Reasons for Modification Denial Missing Documents Insufficient Income Excessive Equity Prior Modifications Homeowner is not the borrower Investors do not offer modification options

21 Short Sale $200,000 Released $300,000 $100,00 Forgiven? Borrowers sell property sold to 3 rd Party for market value Investor agrees to release mortgage for less than amount owed Investor should agree to forgiven deficiency

22 Deed In Lieu of Foreclosure Borrowers gives property to investor Investor agrees to forgive deficiency $300,000 Forgiven Investor

23 Service Members Relief Act Is owner(s) in active duty? If No Land Court Order Investor House Servicer 2015 Massachusetts Office of the Attorney General

24 Foreclosure Sale Land Court Order Investor October 10 October 17 October 10 October 24 House October 3 Servicer

25 Eviction Notice Investor / Purchase 72 Notice to Quit October 31 Summons and Complaint November 3 Foreclosure Deed House November 25

26 Eviction Hearing November Notice t Quit House Who Has Right to Possess House? If Purchaser Judgment For Possession Investor / Purchase Foreclosure Deed Summo and Complai

27 Execution Judgment For Possession as of May 1, 2016 Investor / Purchase House 48 Hour Notice December 7 Execution December 5

28 The End