FINANCE, FORECLOSURE, AND INSURANCE► CHAPTER 12

© 2009 South-Western, Cengage Learning

© 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

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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”)

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☞ 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

© 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

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☂ 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