For Immediate Release - January 31, 2013

Massachusetts Division Of Banks Proposes New Rules For Foreclosure Prevention Options

Lenders Prohibited from Foreclosing on Loan if Modification Will Cost Less

BOSTON-The Patrick-Murray Administration’s Division of Banks today announced it has filed proposed regulations that would prohibit lenders from foreclosing if modifying the mortgage is less expensive than foreclosing on the property.

The regulations come on the heels of a law signed by Governor Patrick in August 2012 that requires lenders to conduct a net present-value analysis prior to foreclosing on certain mortgage loans, including those with “teaser rates,” interest-only payments or loans that were originated without full documentation. The law also requires lenders to send a notice to borrowers of their right to request a loan modification for certain mortgage loans.

“The new rules are not only in line with Massachusetts’ strong foreclosure protection efforts but they go a step further by requiring that the lenders do the math to determine whether foreclosing makes the most economic sense,” said Undersecretary of Consumer Affairs Barbara Anthony.

The proposed regulation establishes the process for lenders to notify borrowers about their rights and defines the good-faith efforts lenders are required to take to avoid foreclosure. The regulations include a timeline for lenders to send notices and respond to borrowers. They also set forth the expectations for how and when lenders should communicate with borrowers, how and when borrowers should respond to lenders, and sets clear standards to determine if lenders have met the requirements of the law.

The proposed amendments supplement the Division’s existing foreclosure prevention regulations by providing incentives for lenders and servicers to engage in earlier meetings to discuss alternatives to foreclosure.

“Early intervention is key to avoiding foreclosure,” said Commissioner of Banks David Cotney. “The proposed changes encourage lenders to perform loan modifications earlier on in the process so that more borrowers can be helped and more homes can be saved.”

The regulation also sets forth the process for borrowers to request a mortgage loan modification and details the actions that represent a borrower’s good faith response to the right to request a mortgage loan modification notice. A copy of the proposed regulation is available on the Division’s website at The public hearing during which the Division will accept testimony and comments is scheduled for:

Wednesday, Feb. 6, at 10:30 a.m., 1000 Washington St., Hearing Room 1-E, Boston, MA.

Written comments may be submitted to the Massachusetts Division of Banks, 1000 Washington St., 10th Floor, Boston, MA 02118-6400 or at All comments to the Division must be submitted by 5 p.m. on Friday, Feb. 15.

The Division of Banks oversees state-chartered banks and credit unions as well as mortgage lenders and brokers, debt collectors, and check-cashers, and is an agency within the Office of Consumer Affairs and Business Regulation. Follow the Office at, its Consumer Connections Blog, on Facebook and Twitter, @Mass_Consumer