Efforts by Massachusetts homeowners to stop foreclosure sales have new reason for encouragement in light of Massachusetts Attorney General Martha Coakley’s demand that banks suspend foreclosures in light of recent disclosures of widespread abuse among financial institutions. In recent months, the Attorney General contacted major lenders in response to widespread public disclosure that institutions were foreclosing based on affidavits that were not reviewed by the banks’ attorneys.
Although Massachusetts is a non-judicial foreclosure state, homeowners may stop foreclosures by commencing judicial action in the superior court. This is accomplished by filing a complaint and motion for a preliminary injunction. The announcements by the Office of the Attorney General, together with the considerable protections offered by the Massachusetts Consumer Protection Act, provide powerful ammunition for stopping a foreclosure sale in Massachusetts.
A homeowner trying to stop a foreclosure sale can raise a number of powerful arguments and causes of action, including:
- Fraud/duress as a result of misrepresentations made to the homeowner by the initial lender at the time of the loan;
- Illegality of the underlying loan due to its egregiously high costs that were deceptively withheld and/or concealed at the time of the loan;
- Failure of the loan servicer to provide foreclosure notices required under Massachusetts law;
- Lack of standing (i.e., the financial institution does not possess the initial note and/or cannot produce a complete chain of assignments).
All of these factors make it beneficial for Massachusetts homeowners to commence court proceedings to stop foreclosures and obtain injunctions.