It pays to be informed, prepared and diligent if you plan to participate in a foreclosure auction. Having an understanding of the entire foreclosure process from start to finish will give you realistic expectations and maximize your chances of getting the property you want.

Many homeowners occasionally face a late mortgage payment. While lender-response to tardy payments varies, every bank will ultimately seek legal intervention if loans remain unpaid. Some banks contact a lawyer just a few weeks after the missed payment. Others wait a few months. Large lenders, especially those that experienced the turbulence of the late 80s and early 90s, tend to act more quickly than smaller banks that pride themselves on a more intimate relationship with customers.

In the relatively few situations where legal intervention yields no results, the lender begins the foreclosure process. Depending on the situation, the process can take several months before the case is settled. Many factors play a role in determining the actual length of a given case.

Here is what happens in a case that results in foreclosure:

1. The homeowner fails to send in a mortgage payment.
2. After a designated amount of time has passed, the lender asks a lawyer to send a demand letter. This communication tells homeowners that their mortgage is in arrears (the legal term for unpaid or overdue), and that they have a certain amount of time to correct the arrearage.
3. If the homeowner does not respond to this letter, the lender decides to get out of the loan and foreclose the property.
4. The lender files suit against the homeowner in a Superior or Land Court, which is when ForeclosuresMass subscribers find out about the foreclosure.
5. The court asks the lender to publish, serve and record a document asking the owner if he or she is entitled to protection against foreclosure under the Soldiers & Sailors Act Civil Relief Act of 1940 as amended. The U.S. Congress passed this law during World War II to ensure that individuals who were away protecting the country could not have their properties foreclosed upon while they were gone.
6. If the homeowner is not entitled to protection under this law or does not respond to this notice by the given deadline, the lender can request a Soldiers & Sailors judgment to proceed with the foreclosure. This part of the process typically takes about 60 days.
7. The lender contacts an auctioneer to schedule the auction.
8. The Chapter 244 compliance process begins. This section of Massachusetts law is the state part of the foreclosure process that requires lenders to publish notices three times in the newspaper and meet other notification requirements. This process typically takes 45-60 days.
9. Once Chapter 244 compliance is met, the auction is held.

Unfortunately, if the Soldiers & Sailors judgment takes longer than anticipated, it can lead to the need to continue the foreclosure. Most creditors, therefore, run the Soldiers & Sailors process to completion before starting the Chapter 244 process.

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Most lenders wait until they have a Soldiers & Sailors Judgment before scheduling an auction, however some choose to run the Soldiers & Sailors and the Compliance 244 processes concurrently to save time. They call the auctioneer immediately after they've started the Soldiers & Sailors process to set an auction date for about 75 days later. Once the lender has completed the Compliance 244 process, and the Sailors & Soldiers judgment has gone through, the auction can be held on the scheduled date.

Here are some other factors that can affect the foreclosure process.

• The homeowner files for bankruptcy protection. Once the owner files, Section 362 of the federal bankruptcy code automatically prohibits the bank from moving forward with foreclosure, until the bank can ask the bankruptcy court for relief from the stay. If a federal judge grants relief from the stay, the bank may continue the process. It may take just a few weeks to get the OK to proceed, or it can take many months.
• Third parties enter the picture to work with the homeowner. This trend has occurred more often in recent years thanks in part to companies such as ForeclosuresMass. In this case the third party finds out about the foreclosure before the auction and contacts the homeowner directly. They may offer to share the owner's equity in the home and pay the owner some cash to correct the arrearage. They then take ownership of the property and the foreclosure process ends.

Tips for Potential Buyers
If you are interested in bidding on a foreclosed property, you have several options to help maximize your opportunity for success.

• Be aware of the process. Read notices and ads in the paper. Talk to people who work in foreclosures or who have purchased foreclosed properties.
• Visit some auctions without any intention of bidding. You'll see how an auction works and be more prepared when a desirable property goes up for bid.
• Get in touch with auctioneers and call them periodically to check in. Ask to be placed on their mailing lists and remember to check ForeclosuresMass's up to date auction information.
• Avoid visiting properties that are up for bid. The bank does not own these properties - the homeowners do and they are often not happy about their situation. Seeing people walking their property line or peering in their windows will not be warmly received.
• Understand that you cannot enter a property at an auction. You can see the outside, but that's about it. The property is under the homeowner's control until the auction is complete.

Every foreclosure case that ends in an auction is as diverse as the property in question. As such, you should keep in mind that each case varies in duration as a result of real life factors. Therefore, each property you pursue will require a specialized approach. Keeping the basics of the process in mind as you work will guide you in your pursuit towards investing in foreclosures real estate.

Howard D'Amico, Esq. is an attorney based in Worcester, MA. Contact him at 508-793-1606 or hbdamicopc@yahoo.com.

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