News

May 16
State Representative John W. Scibak  joined his colleagues in the Massachusetts House of Representatives this afternoon in passing legislation to prevent unlawful and unnecessary foreclosures. The bill establishes a procedure where banks must offer a loan modification option to borrowers prior to foreclosure in cases where the lender knew, or should have known, that the borrower would not be able to repay. In cases where borrowers hold “certain mortgage loans,” the legislation requires lenders to perform an assessment of the borrower’s financial standing and to consider the value of a loan modification as opposed to the anticipated recovery the lender would gain from foreclosure. If the loan, as modified, is worth more than the amount the lender expects to recover after foreclosure, the lender must offer a loan modification to the borrower. In addition, this legislation prohibits lenders from foreclosing without proper documentation, including written proof that the foreclosing party currently holds the mortgage. “I applaud Chairman Costello and the Committee on Financial Services for their efforts in crafting this legislation,” said House Speaker Robert A. DeLeo. “This bill takes an important step to protecting homeowners from the dangers of predatory mortgages by forcing banks to converse with borrowers and evaluate the best possible solution for the family, the bank, and the community.” “Even banks have acknowledged that it often makes more financial sense to create an affordable payment plan rather than foreclosing and selling a home at a substantial loss,” said Chairman Michael A. Costello of the Committee on Financial Services. “This bill gives us a fair and reasonable approach to do just that for more than 100,000 Massachusetts families. We can keep people in their homes without sacrificing the banks’ bottom lines, and save families and communities.”  

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