Yesterday, the Massachusetts State Senate passed a number of important pieces of legislation to make our Commonwealth a better place – for our youth, for families, for homeowners, AND for renters.
In addition to giving final approval to a bullying-prevention bill that was largely based on a bill that I filed at the beginning of this session, and that I have been working on for many months, the Senate passed a series of consumer protection laws designed to protects residents from mortgage fraud and unsolicited loans, protect tenants in foreclosed properties from arbitrary evictions and help people stay in their homes.
The foreclosure crisis has had a serious impact on many communities in my district, hurting both 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.
Before I was elected to the Legislature, I served for several years as a public interest attorney with Merrimack Valley Legal Services in Lowell, a non-profit organization that provides free legal services to the poor and the elderly in the areas of housing, unemployment, disability and domestic violence. In this position, I sometimes worked with families who were struggling to keep their home from being foreclosed upon. Many of these families had been talked into bad loans and mortgages they couldn’t afford by unscrupulous mortgage companies looking to make easy money. Many more were being evicted from their homes, with little or no reason or warning, because the house or apartment they rented was being foreclosed upon by a bank that didn’t want them to stay.
Foreclosures and unfair lending practices are a problem affecting tens of thousands of families across the Commonwealth. I’m pleased the Senate is taking action on it, and I was proud to support this legislation.
Major components of the bill, S2407, An Act to Stabilize Neighborhoods are:
- Tenants in foreclosed buildings can only be evicted for just cause, or if the building is purchased by a third party. Also, a lender cannot evict a tenant for failure to pay rent unless it has posted and delivered a written notice including critical information, including a contact number for the new owner. This does not prohibit a lender from evicting tenants for other valid reasons, such as interfering with the quiet enjoyment of other tenants, using a unit for illegal purposes, or refusing to allow 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 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.
- 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. 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.
- The bill also allows the 150-day right to cure to be granted once every 3 years; currently, the 90-day right to cure is only available once every 5 years. On January 1, 2016, the 150 day right to cure period, along with the meeting requirement, will revert back to 90 days.
- Additionally this new provision expands the content of the notice of right to cure that banks must send to homeowners, and includes an advisory for homeowners whose primary language is other than English that the notice is an important document, and that they should have it translated.
- 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, in legislation advocated by the Attorney General, 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 7 years after purchase.
- Lastly, the legislation establishes a 2-year pilot program within the Division of Banks that requires all property owners, including lenders, trustees, and service companies, to register and maintain vacant and/or foreclosing properties in the Commonwealth.