Massachusetts Foreclosure Bill Signed into Law

Governor Deval Patrick of Massachusetts signed into law a bill Friday that will require lenders to first determine the value of modifying a loan before foreclosing on a home. If a modification will bring in a greater financial advantage, then lenders must opt for a modification over a foreclosure.

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""This legislation establishes strong consumer protections for borrowers that are unparalleled in other states,"" said Patrick in a statement. ""Foremost among these protections is the requirement for creditors to take reasonable steps to avoid foreclosure for certain mortgage loans.""

The bill, known as An Act Preventing Unlawful and Unnecessary Foreclosures, also includes provisions which forces lenders to prove loan ownership before foreclosing on a home and prohibits lenders from unfair costs and added fees for services not performed.

""This new law will put Massachusetts in a strong position to rebound from the housing market decline and recover from the foreclosure crisis,"" said Attorney General Martha Coakley. ""This bill establishes first-in-the-nation standards which promote reasonable loan modifications, keep people in their homes, prevent abandoned properties in our communities, and don't require banks to sacrifice the bottom line.""

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The bill also forms a task force to examine foreclosure mediation and other alternatives.

""We have found that when a lender and homeowner sit down face-to-face to review a mortgage, that is when things can best happen to keep a family in its home,"" said Barbara Anthony, Undersecretary of Consumer Affairs and Business Regulation. ""Mediation could be a valuable tool for homeowners and lenders going forward.""

In a ""blog"":http://www.shortsalene.com/foreclosure-prevention-bill-becomes-law/ written by ""John McGeough and Anthony Lamacchia"":http://www.shortsalene.com/author/mcgeough/, one overlooked aspect of the law was addressed.

""The intent of the law was to decrease foreclosures and in the short term it probably will. However in the long term it will probably increase them because distressed borrowers probably do not realize that if they do not respond to their bank or their banks counsel within 30 days that they will automatically be waiving their 150 day right to cure period down to 90 days,"" the Massachusetts realtors wrote.

Lamacchia pointed out that this specific portion of the ""bill"":http://www.mass.gov/legis/journal/desktop/Current%20Agenda%202011/H4323.pdf can be found on line 214.

According to a ""recent report"":http://dsnews.comarticles/foreclosures-wane-in-bay-state-as-economy-mends-report-2012-07-19 from the ""Warren Group"":http://www.thewarrengroup.com/, foreclosure activity for the state rose in the second quarter, with foreclosure petitions up 66 percent to 4,783 compared to the same quarter a year ago. The number of completed foreclosures in the second quarter also saw a yearly increase, ticking up 4 percent to 2,190.

However, in June, foreclosure petitions fell by nearly 30 percent month-over-month from May. And, foreclosure deeds, which represent completed foreclosures, fell by nearly 24 percent year-over-year to 715 in June.

The Warren Group cited the recent improvements to an improving economy, more jobs, and activity in the real estate market.