BOSTON – State Sen. Brian A. Joyce recently supported a bill that establishes greater protections for homeowners by preventing unnecessary and unlawful foreclosures, reduces the number of abandoned properties across the commonwealth and removes one of the biggest remaining barriers to our ongoing economic recovery.
“The economic recovery of the commonwealth depends largely on supporting our neighborhoods and communities,” said Joyce. “No one wins on a foreclosure. A family loses their home, a neighborhood loses value and a community loses tax revenue that goes directly to vital local services. That is why I was happy to support this legislation and make Massachusetts a national leader in establishing these protections.”
The bill requires banks and other lenders to offer loan modifications to homeowners in certain circumstances to avoid foreclosures. Lenders must conduct a complete financial analysis and determine which would be more beneficial: receiving lower monthly mortgage payments or the anticipated recovery from a foreclosure.
Currently, 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 families 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.
The legislation also includes a provision that gives borrowers the right to go into mediation with lenders prior to foreclosure proceedings to work out renegotiated loan terms through a neutral third-party. Under the bill, the mediation program will be run by the Massachusetts Office of Public Collaboration at the University of Massachusetts Boston.
“For many, homeownership is the pinnacle of the American dream,” said Joyce. “Unlawful and predatory foreclosure and lending practices contributed to this crisis and as we begin to rebuild, these big banks need to give our families and communities the flexibility they need to remain whole.”
The legislation also:
-Prohibits lenders from passing on to third parties the costs of correcting prior improper foreclosures;
-Forbids lenders from imposing a fee upon a borrower for goods or services not provided in connection with a foreclosure; and
-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 Dec. 31, 2017.
