Governor Patrick's five point foreclosure prevention plan is designed to keep people in their homes and stabilize neighborhoods across the Commonwealth:
- Neighborhood Stabilization Pilot Programs
Neighborhood stabilization pilot programs will be launched in Lawrence, Boston, Brockton, New Bedford, Springfield and Worcester. The Department of Housing and Community Development (DHCD), working with lenders and non-profits, will seek to reclaim foreclosed properties and make them available to qualified first-time homebuyers with the goal of restoring neighborhoods to fully occupied status as quickly as possible.
- Outreach and Education
NeighborWorks' Center for Foreclosure Solutions has a free hotline at 1-888-995-HOPE that is available 7 days a week, 24 hours a day to provide foreclosure prevention information to Massachusetts homeowners and referrals to non-profit agencies for additional housing counseling. More details are available from the Neighborworks Hotline.
For consumers facing imminent foreclosure, the Division of Banks and its mortgage hotline (1-800-495-BANK) can intervene and work with lenders to secure a 30 to 60 day delay in the foreclosure process.
- MassHousing Loan Refinancing Program
MassHousing's $250 million foreclosure prevention program provides fixed-interest rate refinancing loans and counseling services to struggling sub-prime borrowers. The program is privately financed through a $190 million commitment from Fannie Mae and a $60 million contribution from MassHousing. Eligible borrowers can be up to 60 days delinquent on their mortgage and have credit scores as low as 560. More details are available at MassHousing.
- Transition Resources
Participating lenders* will provide moving expenses and first and last month's rent to eligible homeowners who have lost their homes to foreclosure. Eligible homeowners are those with a sub-prime** adjustable rate first mortgage on an owner-occupied 1-4 family home that was originated between January 1, 2004 and December 31, 2006 who have been foreclosed on within 4 years after the loan closed. Homeowners must also work with an approved housing counselor, fully vacate the property within 30 days of foreclosure and leave it in habitable condition. Homeowners should contact NeighborWorks at 1-888-995-HOPE to locate a participating housing counseling agency.
* To date, Option One Mortgage Corporation and the Massachusetts Credit Union League, Inc. have agreed to provide funding for transition resources. Negotiations are ongoing and this site will be updated to reflect recent developments as they become available.
** For purpose of this program, a sub-prime loan is one where the borrower's credit score was 630 or less at the time of closing.
- Best Practices
The foreclosure prevention plan also outlines the following best practices for lenders which will become increasingly important as more adjustable rate mortgages reset to higher interest rates:
- contact borrowers at least three months prior to a mortgage reset;
- consider long-term loan modifications;
- review whether a sub-prime borrower qualifies to refinance into a more affordable product after one year of satisfactory payments;
- require escrow of taxes and insurance for all new sub-prime borrowers;
- allow a pre-foreclosure sale or a deed in lieu of foreclosure