By Elliott Topkins, Esquire
3/14/11
As a Massachusetts real estate attorney with more than 40 years of experience, I have, on many occasions, run into situations in the real estate area which I find worthy of reporting.

There follows one such situation, which, fortunately, would appear to be coming to a positive conclusion for my client, but which highlights the mass confusion, and inefficiencies. existing when people fall behind on their mortgages. My client has lived with her Aunt and parents in a home in suburban Boston for the past twenty years. The home was owned by her Aunt. About two years ago, her Aunt lost her job and was unable to pay her mortgage or her property taxes. She informed the Lender about her problem, and asked for a Loan Modification to lower her monthly payment, which my client and her parents would help pay. Despite frequent requests, no Loan Modification was agreed upon, and the Lender, after many delays, foreclosed on the property and made it REO property in the Lender’s real estate portfolio.

This is where the story gets interesting. My client, her parents and her Aunt remained living in the home. In Massachusetts, believe it or not, if you are foreclosed upon, and do not leave your former home voluntarily, you are afforded the same rights as a tenant. About six months after the foreclosure, the Lender instituted eviction proceedings to remove the occupants (now tenants) from the home. This is when my client retained my firm to assist her.

We ascertained from my client that she and her parents had been able to save up a substantial amount of money by living in the home rent free for the past two years. We made the decision to contact the Lender’s lawyers to determine if they would consider our purchasing the home for its now fair market value and stop the eviction proceeding. After some negotiation, we have now entered into a purchase and sale agreement to purchase the home for its current fair market value, using as a down-payment the money my client saved during the pendency of the foreclosure and the eviction.

While this represents a positive result for my client, it also highlights the absolute lack or direction which most Lenders have when a Borrower gets behind in his or her payments. The best solution for all concerned would have been to work out a Loan Modification. Efforts to effect a Loan Modification never got off the ground, The Lender accomplished absolutely nothing by not working with my client’s Aunt and modifying the terms of the mortgage. When will calmer heads prevail in situations like this? The waste and expense of the positions that many Lenders have been taking is appalling. We really need to develop stronger, better solutions than foreclosure. If foreclosures continue unabated, there is no real positive end in sight for the real estate crisis we all are experiencing.