To stem foreclosures, committee recommends loan modication bill

May 14, 2012

Stop foreclosure! There are a variety of options for distressed home owners such as loan modifications, deed-in-lieu or a short sale. Find out which option helps you the best!

New news and new avenue for distressed home owners!  Please see the Boston Herald article reprinted below.  There is a new hotline in Massachusetts for residents facing foreclosure.  If you are facing foreclosure, there are a variety of options available to you.  Call or email to me to find out what they are.  You can also visit www.dontforeclosenow.com to review them.

“In an effort to stem the tide of foreclosures, a key legislative committee on Wednesday advanced a bill that would require banks to make loan modifications available to homeowners when financially feasible to prevent families from unnecessarily losing their homes.

The Joint Committee on Financial Services unanimously recommended passage of the bill (H 1219) on Wednesday, with 10 of the 17 committee members voting in favor of the legislation, which has been a priority for Attorney General Martha Coakley.

“This is a fair and balanced approach that brings both the bank and the borrower to the table to look at the mortgage,” said Rep. Michael Costello, a Newburyport Democrat and co-chair of the Financial Services Committee.

The bill, filed by Rep. Steven Walsh (D-Lynn), would require banks and other lenders to assess a borrower’s ability to pay and the value of a loan modification compared to the cost of foreclosure before entering into foreclosure proceedings. If a modified loan is worth more than the amount the bank expects to recover through foreclosure, the lender must offer a modified loan to the borrower, according to the bill.

The legislation also addresses two recent Supreme Judicial Court decisions by requiring that lenders produce proper documentation showing they are the legal holders of the mortgage before foreclosing.

Coakley, who says foreclosures are a major obstacle to a full economic recovery, applauded the advancement of the bill on Wednesday. Coakley has said that in addition to pushing families out of their homes, unnecessary foreclosures have led to more abandoned property in cities and towns.

“Addressing the foreclosure crisis is a critical step toward moving our economy forward. This bill would promote reasonable loan modifications that keep people in their homes, keep properties on the tax rolls, and without requiring banks to sacrifice the bottom line,” Coakley said in a statement.

Among those who cast votes, the bill received unanimous support in the Financial Services Committee. Ten members voted in favor, four did not vote and three Republicans reserved their rights. Sen. Michael Knapik and Reps. Nicholas Boldyga and Marc Lombardo reserved their rights, while Sen. Brian Joyce and Reps. Kevin Murphy, Lori Ehrlich and James Cantwell did not vote.

According to Costello’s office, more than 45,000 Massachusetts residents have lost their homes due to foreclosure since the start of 2007. In February, there were almost 1,400 new foreclosures started, more than double the amount from a year ago and showing that the problem has not gone away even as the economy has rebounded.

The Warren Group recently reported completed foreclosures in Massachusetts dropped more than 30 percent last year, compared to 2010, but analysts believe the drop was partly due to lenders slowing the process down.

With $44.5 million paid to Massachusetts as part of a national settlement over illegal foreclosures and loan servicing with Bank of America, JP Morgan Chase, Wells Fargo, Citigroup and GMAC/Ally, Coakley two weeks ago launched a HomeCorps program featuring the hotline (617-573-5333), which makes loan modification experts available to advise residents.

Coakley said last week that the hotline had been inundated with calls from more than 1,000 homeowners calling in the first week, averaging 200 to 300 calls a day.

“We are going to try to help everybody we can to stay in their homes,” Coakley told Fox 25. “For a lot of people this can be real relief.”

Under the national settlement, the banks are also ordered to provide about $14.6 million in cash payments to Bay State borrowers and $257 million worth of mortgage relief across Massachusetts, money that Coakley said can be used for refinancing or principal reduction.

By Matt Murphy / State House News Service