Sen. Jehlen: Foreclosure Bill Will Keep People in Their Homes
Legislation was passed last week.
The following information was Sen. Patricia Jehlen's office:
The Massachusetts State Senate last week approved a bill aiming to require lenders to offer modified loans to people on the verge of foreclosure.
Under the legislation, lenders conduct a financial analysis to determine whether receiving lower monthly mortgage payments from the borrower would bring a better return than the anticipated recovery from a foreclosure.
Sen. Patricia Jehlen, a Democrat serving Medford and Somerville, has been vocal in her support of the bill.
“This bill will help keep people in their homes,” Jehlen said in a written statement. “The foreclosure crisis has affected many, with 62 properties already foreclosed upon and 179 more in the process in my district alone. This important step will aid struggling home owners and help Massachusetts recover from the foreclosure crisis.”
The bill, passed by the senate last Thursday, calls for 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.
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 legislation also includes, as a result of an amendment co-sponsored by Sen. Jehlen, 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. Furthermore, the bill incorporates a recent Supreme Judicial Court decision requiring lenders to prove they are the current legal holder of a mortgage before commencing a foreclosure.
In 2010, the Legislature passed legislation that states tenants in foreclosed buildings can only be evicted for just cause and that lenders cannot evict a tenants for failure to pay rent unless a written notice with proper contact information has been posted and delivered. For homeowners, that legislation also 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.