Legislature Approves Bill ProtectingAgainst Foreclosures and Mortgage Fraud

BOSTON -With home foreclosures continuing to rise in the Commonwealth in spite of the improving economy, the Senate and House today sent final consumer protection legislation to the Governor that protects both homeowners and tenants from mortgage fraud and arbitrary evictions.

“The foreclosure crisis has had a serious impact on many communities in my district, hurting homeowners and tenants and destabilizing neighborhoods.  Over the past year, it’s only grown worse, with the number of affected units in the district growing by 15%, according to the Massachusetts Housing Partnership. This legislation will help reduce foreclosures and keep people in their homes. It’s an important bill, and I was proud to support it,” said State Senator Jamie Eldridge (D-Acton).

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.


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