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Foreclosures Underwriting Guidelines PDF Print E-mail

Date:         December 4, 2013

To:            Massachusetts Agents & Approved Attorneys

From:        Underwriting Department

Re:            Updated Massachusetts Underwriting Guidelines for Insuring Titles through Foreclosures or REOs.

(Updates to our October 27, 2010 Guidelines are shown in italics.)

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NOTE:  Additional requirements may be necessary upon review of specific transaction details. 

1. Examine the Mortgage.

- Does the mortgage include a power of sale?

- Properly executed by all the record owners of the property?

- Is there a proper acknowledgment clause that is fully completed?

- Are there any authority issues relative to the mortgagor?

2. Compare the Mortgage to the Vesting Deed.

- Do the names match?

- Are there typographical errors?

Missing signatures?

Have any marginal notations on the face of the mortgage that refer to recorded instruments been examined?

3. Examine any recorded Assignments.

Are the names of the assignor and assignee correct and consistent?

Are any assignments missing?

Is the foreclosing mortgagee the holder under the assignment?

Are the actual dates of execution and acknowledgement of the assignment(s) prior to the date of the first publication of the Mortgagee’s Notice of Sale? You cannot rely on assignments that are stated as being effective prior to the date of execution.

If any Notice of Sale was sent, or publication of Mortgagee’s Notice of Sale made, on or after November 1, 2012, were all assignments recorded prior to the date of the first notice under M.G.L c. 244 § 14?

4. Examine the legal description on all documents.

Does the legal description in the vesting deed match that in the mortgage?

Does the legal description make sense? Does the legal description contain discrepancies or typographical errors?

5. Servicemembers Civil Relief Act.

Is the Act applicable and, if so, is there a proper Order of Notice on record as well as a Judgment that is executed by a Judge and issued before the date of the foreclosure sale and entry?

Does the Complaint name the owner of the equity of redemption (current record owner of the property)

6. Review Bankruptcy Docket using PACER or request a search of the Bankruptcy Court record if Notice of Bankruptcy has been filed.  

Was Relief from Automatic Stay needed?

Was the Order granting Relief from Automatic Stay filed or recorded in the Registry of Deeds or Registry District of the Land Court?

7. Examine the Foreclosure Deed & Affidavit of Sale.

Does the description of the publication "proof" attached to the foreclosure deed match the description in the vesting deed and the mortgage that is being foreclosed?

Is the foreclosure grantor and affiant the same party as described as the mortgagee in the original mortgage, or as the assignee in an assignment, or assignments, of the mortgage?

Does the affidavit allege a default which may exist under the terms of the original mortgage, and indicate a sale at public auction to the highest bidder?

Is the foreclosure notice printed in a newspaper published or having a general circulation in the town or city where the land lies?

Does the Notice of Sale properly identify the current holder of the mortgage as the foreclosing mortgagee?

If any Notice of Sale was sent, or publication of Mortgagee’s Notice of Sale made, on or after November 1, 2012, is recording information for all Assignments of Mortgage included in the Mortgagee’s Notice of Sale?

Does the affidavit show that the sale was made at the time and place advertised, at public auction, and, if the sale was postponed, does the notice state that the sale was postponed by public proclamation to a date and time certain and the sale subsequently held at that date and time?

If more than one lot is covered by said mortgage, does publication state on which lot the sale is to take place?

Is there a statement to the effect that notice of the sale was sent by registered mail to the owner or owners of record of the equity of redemption, as of 30 days prior to the date of sale, to the last address of the owner or owners of the equity of redemption, and to any person of record as of thirty days prior to the date of sale holding an interest in the property junior to the mortgage being foreclosed?

Have "green cards" and certified mail receipts been reviewed to confirm that notice of the sale to any such above parties has been provided? Such notice must be sent at least 14 days prior to the date of sale.

Was the first date of publication at least 21 days before the date of sale and published once a week for at least three consecutive weeks?

Does the foreclosure deed run to the bidder as set forth in the affidavit or if the bid has been assigned, does the foreclosure deed run to the assignee of the assignment of bid? An assignment of bid must be recorded with the affidavit and must run from the original bidder to the assignee.

Does the purchase price set forth in the affidavit match the consideration that is set forth in the foreclosure deed?

If a Federal Tax Lien is being extinguished by the foreclosure, the IRS is entitled to a "special" form of notice at least 25 days before the date of safe. The foreclosure affidavit should acknowledge that this form of notice was provided to the IRS. Even with proper notice being provided, the IRS has a 120-day period after the date of the sale to exercise a right of redemption unless it is waived or released, and a foreclosure purchaser would be subject to this right.

If the property has been classified and taxed as forest land or assessed and taxed as recreational, agricultural or horticultural land, notice must be provided at least 90 days prior to the date of sale to the city or town in which the property is located.

 

8. Confirm compliance with Eaton: 

                        If any Notice of Sale was sent, or publication of Mortgagee’s Notice of Sale made, on or after June 22, 2012, examine the Eaton Affidavit (see Eaton Memo dated July 13, 2012, as amended by Massachusetts Foreclosure Developments and Updated Guidelines dated December 4, 2013).

Is the affidavit from the foreclosing mortgagee?

Does the affidavit state that the foreclosing mortgagee was the holder of the Note (or acting on behalf of the holder of the Note) from the date of commencement of the power of sale foreclosure proceeding (i.e., the giving of the first notice under M.G.L c. 244 § 14), up to and including the date of the foreclosure sale?

Does the affidavit contain a Jurat?

Have you reviewed a copy of the Note (together with any amendments, endorsements or allonges) to confirm the accuracy of the affidavit? Be sure to retain copies in your title file.

9. Confirm compliance with M.G.L. c. 244 §§ 35B and 35C.

                        If any publication of Mortgagee’s Notice of Sale was made on or after November 1, 2012, examine the c. 244 §§ 35B and 35C Affidavit (Note: This requirement must be satisfied in addition to compliance with Eaton; see Massachusetts Foreclosure Developments and Updated Guidelines dated December 4, 2013).

Is the affidavit signed prior to the date of the first publication under c. 244 §14?

Is the affidavit from the creditor (usually the foreclosing mortgagee)?

Does the affidavit state that based on a review of the creditor’s business record, the provisions of §§ 35B and 35C have been complied with (or do not apply), and that the mortgagee is the holder of the note (or acting on behalf of the holder of the note)?

Does the affidavit contain a Jurat?

NOTE: If c. 244 §§ 35B and 35C do not apply, it is acceptable to include a statement to that effect in an Eaton affidavit. A separate §§35B and 35C affidavit will not be required.

Have you reviewed a copy of the Note (together with any amendments, endorsements or allonges) to confirm the accuracy of the affidavit? Be sure to retain copies in your title file.

10. If applicable, confirm compliance with 209 CMR 18.21A. 

                        If any third party loan servicer relationship is disclosed in any affidavit or other foreclosure document:

Are all affidavits used in the foreclosure process expanded to include a detailed description of the basis of the affiant's claimed personal knowledge of information, including sources of all information recited, and a statement as to why the sources are accurate and reliable?

Do the affidavits include a statement that the third party loan servicer has complied with any and all provisions of 209 CMR 18.21A(2)?

11. Examine the Certificate of Entry.

Are there two witnesses to the Entry?

Was the Entry made by the foreclosing lender?

Any authority issues relative to the Entry?

Has the Certificate of Entry been made under oath as prescribed by statute?

Does the Certificate of Entry contain a Jurat?

 

12. Examine any Votes, Powers of Attorney, and other evidence of authority of signatories.

If relevant, make sure they name the exact lender that holds the mortgage.

Make sure they address the purpose for which they are being exercised or relied upon.

Make sure that the signatory is sufficiently designated.

The evidence of authority must be in full force and effect.

13. Homestead Issues.

As to Homesteads recorded prior to March 16, 2011, if the property that is being foreclosed is solely owned by a married individual, and if that individual declared a Homestead prior to the mortgage that is being foreclosed, there may be a need to obtain a release/waiver/subordination of the Homestead from the non-title holding spouse of the individual unless that spouse also executed the subject mortgage. Homestead rights extend to spouses (even if he or she is not a record owner of the property) and families of the Declarant; these rights may need to be released/waived/subordinated to the mortgage that is being foreclosed in order to extinguish them.  Many factors are involved in this type of scenario (i.e., the application of concepts such as abandonment), and questions should be directed to an underwriter for a detailed analysis.  

As to Homesteads recorded (or automatically existing) on or after March 16, 2011, no release/waiver/subordination of Homestead from the non-record spouse is required, as M.G.L. Ch. 188, Sec. 9 provides for the automatic subordination of all homestead rights to a mortgage executed by all record owners of the property.

14. Tenants, Lessees and Parties-in-Possession.

Has vacancy of the foreclosed property been independently verified? Remember, title cannot be insured if the foreclosed mortgagor or related parties still occupy the property.

Is it appropriate to modify or delete the General Schedule B Exception from any title insurance policy for rights of tenants, lessees or parties-in-­possession?


To further assist in your analysis of foreclosures, please review the attached Massachusetts Foreclosure Developments and Updated Guidelines.

 

If you have any questions or concerns about foreclosure proceedings in any transaction you are being asked to insure, do not hesitate to contact our underwriting department.

 
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