Lead Sponsor: Senator Jamie Eldridge

Summary: This bill would require that a bank or lender prove that they are the holder of a mortgage and provide the specifics of the borrower’s default before they can foreclose on a home.  A bank or lender who cannot prove this would be denied the right to foreclose unless the case is brought to court, where a judge would scrutinize the paperwork and the borrower has the right to notice and an appearance.

Why This Matters: This bill was filed in response to the recent Supreme Judicial Court decision invalidating certain foreclosures in the Commonwealth because the lenders failed to prove they were the holders of the mortgages at the time of foreclosure and unjustly foreclosed on a number of homes.

The primary goal of the bill is to assure the continuing integrity of mortgage foreclosures and the resulting land titles under principles of law that have long protected both borrowers and lenders.  This proposal would not only set standards for future securitized loans, but, if enacted, would also apply to foreclosures on loans already signed.

What this Bill Would Do: This bill would establish in statute that securitized loans must meet the same standards historically applied to mortgages; requiring that in order to foreclose, a mortgagee must:

1. present evidence of full authority as note holder
2. present evidence of the terms of the note
3. present details of the borrower’s default

A mortgagee who cannot meet these standards would, if they are looking to foreclose, be required to bring the case to court where a judge would scrutinize the paperwork, and the borrower has the right to notice and an appearance.