Attorney General Martha Coakley Files Legislation as Part of her Office's Continued Efforts to Tackle the Mortgage Foreclosure Crisis in the Commonwealth
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- Press release attachments ( includes PDFs: transcript of speech, summaries and full text of each bill)
BOSTON - Attorney General Martha Coakley has filed legislation as part of her office's continued effort at tackling the ongoing mortgage foreclosure crisis that has gripped the Commonwealth. The first piece of legislation, An Act to Require Commercially Reasonable Efforts to Avoid Foreclosure, filed with Senator Susan Tucker and Representative Steven Walsh, would mandate loan modifications in certain circumstances. The second piece of legislation, An Act Regarding Community Leadership, Neighborhood Revitalization and Urban Violence Protection, filed by Attorney General Coakley, along with Senator James Timilty and Representative Barry Finegold, is designed to address the problem of abandoned properties that result from foreclosures, and the negative impacts they have on the Commonwealth's neighborhoods and economy. Attorney General Coakley announced the legislation in a speech this morning before the Greater Boston Chamber of Commerce Government Affairs Forum.
"We hope that this legislation can provide for Massachusetts some relief while we wait for action at the national level. The effects of the housing crisis have rippled through all sectors of our economy, and until we tackle the underlying problem of the subprime lending crisis, no bail out package, no matter how big, can appropriately stabilize our economy," said Attorney General Coakley.
An Act to Require Commercially Reasonable Efforts to Avoid Foreclosure, aims to prevent additional foreclosures and would mandate loan modifications in certain circumstances. Specifically, the loan modification legislation requires that creditors take commercially reasonable efforts to avoid foreclosure upon mortgage loans securing homes that are owner-occupied. This would apply only to loans on principal residences, and to loans with certain risky features, such as interest-only loans, adjustable rate mortgages, and loans with short-term introductory interest rates. The legislation also provides a safe harbor for creditors to comply with this requirement of commercial reasonableness.
"It is time for new innovative tools to bring borrowers and lenders to the table. Clearly, some foreclosures are unavoidable, but each day we are losing opportunities to modify loans that are in the best interest of the lender, the homeowner, and the neighborhood," said Senator Susan Tucker (D-Andover).
"Attorney General Coakley has made it a major priority to address the foreclosure crisis in Massachusetts, which has hit communities such as mine particularly hard," said Representative Steven Walsh (D-Lynn). "This legislation will benefit working families as well as creditors and I am eager to work with Attorney General Coakley towards its passage."
Additionally, in an effort to address the problem of abandoned properties that result from foreclosures, Attorney General Coakley, along with Senator James Timilty and Representative Barry Finegold, has filed An Act Regarding Community Leadership, Neighborhood Revitalization and Urban Violence Protection, designed to address the problem and the negative impact it has on our neighborhoods and our economy. Thousands of foreclosures in communities large and small across the state have resulted in properties being abandoned, or left vacant. These properties, which can remain empty for months or years at a time, are susceptible to building code violations, dilapidation, and criminal activity such as copper stripping and theft, drug dealing, and even arson. Such issues not only threaten public safety, but they hinder law enforcements efforts to revitalize neighborhoods ravaged by foreclosures and to help communities regain economic stability. Senator Tucker also supports this bill.
The legislation would do two things. First, it would create a two-year pilot program establishing a statewide abandoned housing registry housed within the Attorney General's Office. The registry would be known as the Massachusetts Abandoned Property Registry, or MAP, and would serve as a state-wide registry for vacant and foreclosed properties. Under the legislation, all property owners, including lenders, trustees, and service companies, would be required to register and properly maintain vacant and foreclosed properties.
Second, the legislation would establish a statewide Second-Hand Metal Registry. One of the public safety side effects of the foreclosure crisis is the increase in copper and scrap metal being stolen from abandoned properties. An individual who steals scrap metal from a property is likely selling it to a junk dealer for quick cash. Such illegal practices are roadblocks to fighting the foreclosure crisis because they prevent homes from selling and therefore have a detrimental effect on our neighborhoods.
"Abandoned properties and the resulting thefts of copper and other metals are ripple effects of the foreclosure crisis that are affecting communities statewide. In fact, Senate President Therese Murray has also expressed her concern about this issue, and we look forward to working with her to find effective solutions," said Attorney General Coakley.
Under the legislation, all junk dealers and pawn brokers would be required to register and license their business with the state. Such a registry will not only prevent theft of scrap metal from abandoned properties to ensure that the properties will be sold and occupied, but it will also provide law enforcement with the necessary tools to bring metal thieves to justice.
"With our economy struggling we have seen dramatic levels of theft throughout the Commonwealth. From copper piping and building materials in abandoned or foreclosed homes and construction sites, to cell phones and GPS devices, and even municipal property with high market-valued metal content; everything has become a target," stated Senator Jim Timilty (D-Walpole). "We need to provide our law enforcement officers with more tools to prevent these crimes. It is my sincere belief that with this database we will prevent crime and make our neighborhoods safer, and I look forward to working with Attorney General Coakley to pass this legislation."
"Abandoned houses can bring down a neighborhood, we need to make sure we are aware of what is out there," said Representative Barry Finegold (D-Andover). "We have seen this registration work so well in the City of Lawrence, and I applaud Attorney General Martha Coakley for her efforts to bring its positive effects statewide."
In addition to filing this legislation, Attorney General Coakley is working to expand her office's Abandoned Housing Initiative. This initiative was developed in the mid-1990's in response to complaints about crime and safety issues imposed by one or two abandoned homes in an otherwise viable neighborhood. Members of the Attorney General's staff work with municipal inspectional services to identify properties that are abandoned and therefore a threat to the neighborhood. By using the enforcement authority of the state sanitary code, the Attorney General's Office can step in when a property is in violation of those codes and offer the owner the chance to rehabilitate the property. If the owner cannot be located, the Attorney General's Office then works with the housing court to appoint a receiver who will rehabilitate the property. The Attorney General's Office recommends to the court a receiver who is committed to improving the community. The proposed abandoned property registry, if passed, would improve this process as municipalities would be able to identify who is responsible for a property and to enforce sanitary codes.
Since taking office in January 2007, Attorney General Coakley has made addressing the foreclosure crisis a priority of her administration. In addition to the legislation announced today, the Attorney General's Office has brought several civil lawsuits - including a lawsuit filed in October 2007 against Fremont Investment & Loan, and against Option One and its parent company, H&R Block, Inc., in June 2008, alleging that they originated thousands of risky subprime loans in Massachusetts, with reckless disregard as to whether borrowers would be able to afford their loan payments. In addition to these and other civil cases the Attorney General's Office has brought criminal prosecutions against individual brokers and other professionals who took advantage of consumers. The Attorney General's Office implemented regulations banning foreclosure rescue schemes and barring unscrupulous mortgage broker and lender conduct in the Commonwealth.
In addition to these initiatives at the state level, the Attorney General's Office continues to take a leadership role among the states in advocating for action at the federal level. Last month, Attorney General Coakley, along with Attorney General Tom Miller in Iowa, led a group of over 20 Attorneys General in urging U.S. House and Senate Leadership Congress to amend the U.S. Bankruptcy Code to permit federal Bankruptcy Courts to protect families from foreclosure. Last week, Attorney General Coakley submitted testimony to the U.S. House Judiciary Committee, which is considering legislation to amend the bankruptcy code. For more information about the Attorney General's foreclosure prevention efforts, please visit the Foreclosures and Mortgage Lending section of the Attorney General's website.
Download and view Attorney General Coakley's speech:
Download and view An Act to Require Commercially Reasonable Efforts to Avoid Foreclosure:
Download and view An Act Regarding Community Leadership, Neighborhood Revitalization, and Urban Violence Protection: