While legislators in the Massachusetts House of Representatives were concerned about helping homeowners facing foreclosure before the recent ruling reversing two foreclosures, now they are ramping their efforts up a notch to address the “bad behavior” of banks in the first session of 2011[1]. The bills include motions to require all foreclosures to be reviewed by a judge and new laws that would “force lenders to negotiate with troubled borrowers.” Furthermore, there could be a number of protective measures enacted to prevent former homeowners from being evicted from their homes until their foreclosures have been reviewed, said Grace Ross, the Massachusetts Alliance Against Predatory Lending’s coordinator. “This is a crisis that affects everybody,” she said, “and we’ve got to get on top of it.”
Barbara Anthony, undersecretary of the state Office of Consumer Affairs and Business Regulation, responded, saying that the state government is “talking to national lenders to make sure they follow state law when they foreclose” and that the lenders and the state are working together to improve efforts to help troubled homeowners. “We are pressing them [lenders] to do more,” she said.
Others in the state’s political and real estate arena are concerned that the ruling and the resulting flood of legislation could end up doing more harm than good as good intentions overwhelm good sense. “We need to calm down a little bit and take a more judicious approach…not use this as a pretext to completely change our foreclosure process,” said Ward P. Graham, a member of legislation and title standards committees for the Real Estate Bar Association for Massachusetts. However, the new requirements do not really seem that unusual. Proposed legislation includes requiring lenders to prove ownership of title and requiring a judge to sign off on foreclosures; the latter is something that 23 other states in the country already require. Compulsory negotiations with troubled homeowners are a bit more controversial, but even this legislation does not mandate compromise, only allows a lender to foreclose more quickly if they show that they made a good-faith effort to resolve the issue another way before proceeding with the foreclosure.
Of greater interest to many is the legislation in the pipeline that will protect homeowners who have already lost their homes to foreclosures. Some proposals require that evicted families be allowed to remain in the home until it is sold at auction as long as they pay rent, while other bills (and their proposing members) hope to simply block evictions entirely until the property in question is actually resold.
Clearly, the Massachusetts situation is not unique, though the state is dealing with it in a unique manner. Do you think that this new legislation will help or hurt the real estate market and the people involved in it?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.boston.com/business/articles/2011/01/18/mass_lawmakers_consider_foreclosure_regulations/
