Massachusetts Legislature Passes Bill Reining In Foreclosures

November 23rd, 2007

On Tuesday a bill was passed by Massachusetts Legislature that gives more teeth to the law in trying to solve foreclosure problems. In the following week the Governor will sign and ratify it. This bill together with other regulations imposed last month is the harshest crackdown any state has taken on the mortgage industry. The final bill excluded some of the terms of consumer protection that had been in the initial version of the bill. One such rule was that after foreclosure the new owner had the right to evict bonafide tenants who had regular lease papers. This was obliterated from the final version giving respite to the harangued tenants. The legislature turned down a request to define a crime of mortgage fraud.

Lenders had gone on an orgy of foreclosures nabbing about 6,200 residences this year. This is three times the numbers of last year. The reason was mostly predatory lending in the sub-prime mortgage sector.

While addressing the present the bill is mainly focusing on the future so that a repeat situation does not arise. As for the present – grants will be given to those who have fallen 90 days behind schedule to catch up on the dues before the lenders take action. It is critical to act boldly here and now says the Speaker Salvatore DiMasi.

As per the new law brokers and lenders are to register themselves by submitting a fee. They will then come under the supervision of the Massachusetts Division of Banks. The money collected from licenses will fund counseling for those who are buying houses for the first time and do not fall for the outward shine of risky mortgages.

The system of registration will allow for grading the lending firms depending on the number and kind of loans they deal with especially in the lower-income pockets in the locality. The system is moulded on the Community Reinvestment Act, which is a federal law that is used for ranking banks and how they see to the needs of the underprivileged. The main motivation in this matter came from Governor Patrick. It is a watershed in law making, highlighting the cooperation between the governor, the House as well as the Senate. It will save homes and bring back normalcy to afflicted neighbourhoods. The bonus point is that even those who were initially skeptical are now enthusiastic about it.

Via