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Legislature Approves Bill Protecting Against Foreclosures and Mortgage Fraud
July 28, 2010

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.
 
“This legislation will help us get control of home foreclosures, which has been a major challenge during our economic recovery,” Senate President Therese Murray (D-Plymouth) said. “It protects residents and helps people stay in their homes at a time when many are already struggling.”
 
“As folks across the Commonwealth continue to struggle to make ends meet, this bill will institute measures to help keep our residents in their homes,” House Speaker Robert A. DeLeo said. “In these uncertain fiscal times, this bill aims to provide a degree of stability to the families of Massachusetts.”
 
“This bill provides no-cost solutions that will help to stabilize neighborhoods across the Commonwealth that are hard hit by foreclosures while also ensuring that seniors fully understand the risks and benefits of reverse mortgages,” said Senator Susan Tucker (D-Andover), Senate Chairwoman of the Joint Committee on Housing.
 
“This bill is a significant step toward stabilizing communities adversely impacted by the foreclosure crisis in Massachusetts,” said Representative Kevin Honan, House Chairman of the Joint Committee on Housing. “By protecting tenants and promoting negotiation between homeowners and lenders, economic hardships for many families will be avoided.”
 
“When a property lays vacant and abandoned it is an invitation to drug addicts and vandals, and can be a general eyesore to a whole neighborhood. With this legislation, we will help keep families in their homes and take reasonable steps to hold accountable those persons that committed fraudulent acts that led to much of the turmoil homeowners are now facing,” said House Committee on Ways and Means Chairman Charles Murphy.
 
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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