Rep. Basile, Sen.
Senate and House Legislation Preventing Mortgage Foreclosures
BOSTON – The Legislature today sent legislation to
the Governor that will prevent unnecessary and unlawful
foreclosures, reduce the number of abandoned properties across the
Commonwealth and help remove one of the biggest remaining barriers
to the state’s ongoing economic recovery.
“As I noted when the bill emerged from the committee, we have worked
extremely hard over the course of the session, and throughout the
conference committee process, to produce a meaningful, reasonable
approach to address the outstanding foreclosure crisis,” said
Senator Anthony Petruccelli (D-East Boston), Senate chair of the
Joint Committee on Financial Services. “I am hopeful that this new
law will help families and our communities for years to come.”
The bill requires banks and other lenders to offer loan
modifications to borrowers in certain circumstances to avoid
foreclosures. Lenders must conduct a complete financial analysis of
the borrower and determine if it would be more beneficial to receive
lower monthly mortgage payments or the anticipated recovery from a
There is a 150-day timeframe for deciding whether or not to offer
the loan modification which may come in the form of a reduced
interest rate or principal, or an extension of the loan repayment
period. The modified loans would allow borrowers to stay in their
homes, lenders to avoid foreclosure costs and potential market
losses, and neighborhoods to avoid the problem of abandoned
properties and vacant lots.
“I commend my colleagues on the conference committee for this
prudent piece of legislation. It represents a good compromise that
will undoubtedly help many people in the Commonwealth. This bill
will help people to keep their homes, save local communities from
the adverse effects of unnecessary foreclosures, and stabilize the
housing market, thus strengthening our economy,” said Representative
Carlo P. Basile (D-East Boston), House Vice Chair of the Joint
Committee on Financial Services.
“Even banks have acknowledged that it often makes
more financial sense to create an affordable payment plan rather
than foreclosing and selling a home at a substantial loss. This bill
gives us a fair and reasonable approach to offer modifications to
more than 100,000 Massachusetts borrowers. We can keep people in
their homes without sacrificing the banks’ bottom lines, and save
families and communities.”
Loan modifications would be available for owner-occupied homes and
apply to loans that are considered risky, such as adjustable rate
mortgages and interest-only loans. The bill compliments the work of
loan modification specialists in the Attorney General’s Office who
assist borrowers in their negotiations with lenders.
The bill also incorporates a recent Supreme Judicial Court decision
requiring lenders to prove they are the current legal holder of a
mortgage before beginning a foreclosure.
The legislation also prohibits lenders from passing along costs of
prior improper foreclosures or imposing fees for services not
provided in connection with a foreclosure.
Furthermore, it requires the Division of Banks, in
consultation with the Attorney General’s Office, to track the
resolution of certain mortgage loans and report to the Joint
Committee on Financial Services within 90 days of the end of each
calendar year through December 31, 2017.
The Legislature had consistently worked to protect homeowners and
residents. In 2010, legislation passed that prevented tenants in
foreclosed buildings from being evicted without just cause. It also
required written notice with proper contact information to be posted
and delivered before evicting a tenant for failure to pay rent.
For homeowners, that legislation temporarily extended 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.