Petruccelli: Legislature Approves Bill Protecting Against
Foreclosures and Mortgage Fraud
BOSTON (July 29, 2010) –With home foreclosures continuing to rise in
the Commonwealth in spite of the improving economy, the Senate and
House sent final consumer protection legislation to the Governor
that protects both homeowners and tenants from mortgage fraud and
arbitrary evictions.
“The economic climate has made it difficult for many residents of
the Commonwealth to keep their homes. This bill will implement a
number of measures to assist them in staving off foreclosure, while
also protecting tenants from unreasonable evictions,” said Senator
Anthony Petruccelli (D-Boston).
The bill requires that tenants in foreclosed buildings can only be
evicted for just cause. A lender cannot evict a tenant for failure
to pay rent unless a written notice with proper contact information
has been posted and delivered. It does not prohibit a lender from
evicting tenants for valid reasons, such as using a unit for illegal
purposes or not allowing the lender to enter the unit to make
repairs.
For homeowners, the legislation temporarily extends the 90-day
right-to-cure period, enacted by the legislature in 2007, to 150
days. The 2007 law gave homeowners 90 days to come up with past due
payments on their mortgage before the lender could require full
payment of the unpaid balance. This was intended as a cooling off
period for the lender and homeowner to work out a new payment plan
to avoid foreclosure.
The right-to-cure period can be reduced from 150 days to 90 days if
the lender makes a good-faith effort to negotiate a commercially
reasonable alternative to foreclosure.
These new provisions require at least one meeting or telephone
conversation between the homeowner and the lender to discuss a
commercially-reasonable alternative to foreclosure. The lender’s
representative must have the authority to agree to the revised
terms.
Additionally, this new provision expands the content of the notice
of right-to-cure that banks must send to homeowners.
Further protecting homeowners, the legislation requires those who
want to obtain a reverse mortgage on their home to meet with a
counselor approved by the Executive Office of Elder Affairs.
In addition, the bill would criminalize residential mortgage fraud.
The bill also establishes a new local option property tax exemption
that permits a charitable organization that acquires a foreclosed
property, and plans to create low and moderate income affordable
housing there, to be exempt from property taxes until it rents or
leases that property, but not for more than seven years after
purchase.
This bill now goes to the Governor for his signature.
