FINANCE, FORECLOSURE, AND INSURANCE ► CHAPTER 12 © 2009 South-Western, Cengage Learning

 Massachusetts is title theory state (NOT lien theory – NOT intermediate theory )  mortgages in writing to be enforceable (statute of frauds)

© 2009 South-Western, Cengage Learning  attorney disclosure of mortgagee representation  appraisal available to mortgagor for 30 days

© 2009 South-Western, Cengage Learning  due on sale clause (a/k/a alienation/non-alienation clause)  direct reduction loan  reverse mortgage loan  installment land contract (a/k/a contract for a deed)  payoff letter  satisfaction of mortgage

© 2009 South-Western, Cengage Learning  power-of-sale clause  non-judicial or entry by possession (both often provided)  entry by possession (rarely employed)  non-judicial foreclosure (Order of Notice and Notice of Sale)  excess proceeds  equitable right of redemption  no statutory right of redemption  deficiency judgment

© 2009 South-Western, Cengage Learning  notice of default – new 90 day MA grace period as of 5/01/08  tenant at sufferance (former mortgagor)  tenant in a foreclosed property  notice of accounting – following sale

© 2009 South-Western, Cengage Learning For owner-occupied 1 to 4 dwelling units:  must be licensed  mortgage broker Loan Origination & Compensation Agreement  thorough background check and license requirements  mortgage document (must identify mortgage broker or reference “no mortgage broker”)

© 2009 South-Western, Cengage Learning ☞ Attorney General regulations ( generally does not include reverse mortgages or HELOCs) ☞ advertising practices ☞ mortgage disclosures ☞ prohibited practices ☞ public evaluation by Division of Banks

© 2009 South-Western, Cengage Learning

For owner-occupied 1 to 4 dwelling units:  Predatory Home Loan Practices Act  prepayment penalties: no prepayment penalty after 36 months 1st year – lesser of 3 month’s interest or remaining due to refinance in 3 years - up to 3 month’s interest FHA mortgage - reimbursement of fees/premiums  late charges or penalties  subprime mortgage loans

© 2009 South-Western, Cengage Learning ☂ insurance-cancelation notification – mortgagee 20-day notice ☂ nondiscrimination in homeowners insurance ☂ coverage – not in excess of replacement cost ☂ FAIR plan ☂ flood insurance

KEY TERMS © 2009 South-Western, Cengage Learning direct-reduction loan due-on-sale clause entry by possession FAIR Plan foreclosure rescue mortgage broker mortgage discharge mortgage originator National Flood Insurance Program non-judicial foreclosure Notice of Sale payoff statement power-of-sale clause predatory lending prepayment penalty title theory