GOVERNOR DEVAL PATRICK SIGNS COMPREHENSIVE FORECLOSURE PREVENTION LEGISLATION INTO LAW
Landmark legislation will help homeowners, fight ongoing rise in foreclosures, and set national standard for protecting consumers
"This legislation is a critical step in protecting homes, families and communities throughout the Commonwealth," said Governor Patrick. "These reform measures will give the Commonwealth and its citizens some of the tools necessary to fight the surge in home foreclosures and unfair lending practices."
This legislation is the result of the coordinated efforts of the Patrick Administration, House and Senate leadership and members, Attorney General Martha Coakley and Boston Mayor Thomas Menino. It also draws upon the recommendations of the Mortgage Summit Group, a partnership of 50 participants with a wide range of expertise- from non-profit agencies, government agencies and the mortgage lending industry.
"The mortgage lending bill enacted by the Legislature and signed today by Governor Patrick marks another important step to address the subprime lending crisis and to prevent future abuses in mortgage lending," said Attorney General Coakley. "We appreciate the Governor's and the Legislature's attention to this matter, and look forward to ongoing collaboration as we continue our work to address issues around predatory lending in the Commonwealth."
"This new law will help protect home-buyers from predatory lending and bring meaningful assistance to those facing foreclosure," said House Speaker Salvatore F. DiMasi (D-Boston). "This problem is only going to get worse so acting now with this bold measure is critically important.
"The rate of mortgage foreclosures in Massachusetts continues to be a concern," Senate President Therese Murray (D-Plymouth) said. "This legislation will help prevent a future foreclosure crisis as it takes aim at predatory lenders and gives homeowners and borrowers a fighting chance."
"This law is a major step forward toward finding a solution to foreclosure in Massachusetts," Mayor Menino said. "Governor Patrick and other partners in the state have worked very hard to pass this legislation. In Boston, we have seen the successes of our homeowner education program. I look forward to having the new strategies included in the legislation implemented."
The statute creates a centralized statewide foreclosure database of foreclosure activity to monitor and analyze foreclosures and foreclosure patterns at the Division of Banks; and mandates that mortgage holders file a 90-day notice of intent to foreclose with the homeowner and the Division of Banks. Further, this bill requires mortgagees to receive consumer counseling prior to obtaining nonconforming variable rate mortgage loans
Provisions of the law include:
- Improved oversight and monitoring of certain mortgage lenders.
- Requiring loan originators to be licensed by the Division of Banks and providing a $3 million appropriation to the Division to implement the provisions of the bill.
- Extending $2 million in grants to establish 10 education centers around the Commonwealth and promote first time homebuyer and foreclosure counseling.
- Granting tenants of foreclosed properties additional tenant at will rights.
- Requiring every mortgage to have endorsed on it the name, address, and license number of the mortgage broker and mortgage originator, if applicable.
- Mandating an accounting of the disposition of the proceeds of a foreclosure sale to a foreclosed consumer, including whether there is any surplus due to the consumer or if any deficiency remains.
- Establishing a foreclosure database at the Division of Banks to include information on all preliminary Right to Cure or foreclosure filing notices and all final foreclosure sale information.
- Requiring a 90 day "Right to Cure" and that a notice of the Right to Cure be filed with the Division of Banks.
- Requiring that the holder of a mortgage notify the Division of Banks of the date of a foreclosure sale and the purchase price of the property.
- Prohibiting a subprime adjustable rate mortgage for first time homebuyers unless they a) affirmatively opt into a subprime adjustable rate product, and b) get in person counseling from a certified counselor.
A number of legislators played critical roles in the passage of the legislation.
"If this bill had been in place six years ago, thousands of Massachusetts families would have been spared the heartache and devastation of foreclosure," said bill sponsor Senator Sue Tucker (D-Andover), Senate Chairwoman of the Joint Committee on Housing.
"Buying a home is the biggest financial decision most of us will ever make," said Rep. Ronald Mariano (D-Quincy), House Chairman of the Joint Committee on Financial Services. "We need to make sure consumers, especially first-time buyers, understand what they are getting into. We also need to ensure that the person guiding them through this process understands the complexities and can be trusted."
"While mortgage foreclosures continue to affect thousands of homeowners throughout the Commonwealth, the multi-faceted approach taken in this legislation will do a great deal to eliminate many of the bad actors responsible for the current crisis, and ensure that this situation does not repeat itself in the future," said Senator Buoniconti, Senate Chairman of the Joint Committee on Financial Services.
"This legislation is a comprehensive effort to provide borrowers with the educational information they need before entering into a mortgage. It also ensures that the standards that honest lenders already meet are followed by the entire lending industry," said Representative David Torrisi (D-North Andover).