The passage of
ten years from the last foreclosure crisis has caused our collective memories
of the
devastation wrought on our communities by that event to fade. As a
Gateway City, Lowell was one of the prime casualties of that crisis with
foreclosures peaking at 370 in 2008 – there had only been 19 in 2005.
Besides the
disruption to individual families, the volume of foreclosures caused severe
disruption to several of Lowell’s neighborhoods. Houses facing foreclosure were
often abandoned by their occupants early in the process and remained unoccupied
for years as the process dragged on. These vacant properties became magnets for
crime with lawless entrepreneurs stripping them of copper and other valuables.
Many of the shells that remained became shooting galleries for addicts. This
happening to a single home would drag down the value of those surrounding it,
creating a downward spiral for the entire neighborhood.
A contributing
factor to this collateral damage was the inability of local officials and
members of the public to ascertain from the registry of deeds record what was
going on with these properties. One way to address for the future this lack of
public information about a pending foreclosure would be to require the notice
of mortagee’s sale already required by MGL c.244, s.14 to also be
recorded at the registry of deeds.
To understand the
rationale of this proposal, it helps to review the process of a residential
foreclosure. Most begin with the lender filing a complaint in the Land Court in
compliance with the Service Members’ Civil Relief Act. The only issue in that
litigation is whether the defaulting homeowner is serving in the military. If
the homeowner is not, the Land Court issues a judgment in favor of the lender
and the lender is free to schedule and conduct a foreclosure auction.
To commence the
foreclosure, the lender prepares a notice of sale in accordance with MGL c.244,
s.14. This notice includes the date and
time of the auction, the deposit amount required, the legal description of the
property and information about the mortgage being foreclosed. The notice of sale
must be served on all parties in interest and must be published in a local
newspaper for three successive weeks with the first publication at least 21
days before the sale.
On the scheduled
date, an auctioneer conducts the sale on the property. The high bidder signs a memorandum
of sale and eventually pays the full bid price to the foreclosing lender who in
turn delivers a foreclosure deed. This foreclosure deed is recorded at the
registry of deeds, however, there is no time limit during which that must
occur.
From the time
the order of notice is recorded at the start of the process until the foreclosure
deeds is recorded at the end of the process, there is an informational black
hole about the ownership status of the property. The duration of that gap is a
significant amount of time. A study of 200 foreclosure deeds recorded for
Lowell in 2008 found that the average time from the recording of the order of notice
to the recording of the foreclosure deeds was 208 days, while the time from the
actual foreclosure auction to the recording of the foreclosure deeds was 102
days.
While the time
between the auction and the recording of the foreclosure deeds has lessened
somewhat, it remains long enough to cause problems. For the 83 foreclosure
deeds recorded in Lowell between January 1, 2018 and November 30, 2018, for
example, it took an average of 77 days from the auction to the recording of the
foreclosure deed. The quickest a foreclosure deed was recorded was 18 days
after the auction while the longest was 275 days after. Thirteen of the foreclosure
deeds – 16 percent – were recorded more than 120 days after the auction.
To provide municipal
officials, neighbors, homeowners and members of the public with an easily
accessible record of what is happening with a property undergoing foreclosure, MGL
c.244, s.14 should be amended to require that the same notice of mortgagee’s sale
that is already being served on all parties in interest and published in a
local newspaper also be recorded at the registry of deeds for the district in
which the land is situated not less than 21 days before the day of the sale set
forth in the notice. This would provide
universal notice of the date and time of the auction and allow the public,
local government and other parties to learn of the pendency of the auction.
Furthermore, the
recorded notice of mortgagee’s sale would clarify the state of title (and state
of responsibility for the property) in the weeks and months until the
foreclosure deed was recorded. As for the effort needed to comply with this
proposal, the notice of mortgagee’s sale already must be created for
publication and service so there is no additional effort there and with a
recording fee of just $75, the added cost would be minimal in light of the
benefit it would provide.
Dick Howe’s column, “From the Recording Desk...,” is
a regular feature of REBA News. Dick has
served as register of deeds in the Middlesex North Registry since 1995. He is a frequent commentator on land records
issues and real estate news. Dick can be
contacted by email at richard.howe@sec.state.ma.us.
