Chapter 258: An Act to Stabilize Neighborhoods

In August of 2010, the Governor Patrick signed An Act to Stabilize Neighborhoods to provide foreclosure relief to the many households affected by mortgage foreclosures in the state. The legislation, Ch. 258 of the Acts of 2010, includes the following provisions:

• Delays a foreclosure by an additional sixty days (to 150 days) if the financial institution neglects to consider a loan modification;
• Protect lawful tenants of foreclosed properties from unnecessary displacement so long as the tenant pays rent to the lender. The protections end when there is a purchase and sale contract for the lender to sell the property;
• Criminalizes willful acts of mortgage fraud;
• Mandates that a lender assume a Massachusetts Rental Voucher Program rental assistance payment contract;
• Creates a local option for municipalities to forgive property taxes on foreclosed properties acquired by nonprofits during the term of the rehabilitation;
• Requires in-person counseling for reverse mortgages beginning in 2012.

Full text available here.

Chapter 206: An Act Protecting and Preserving Homeownership

On November 29, 2007, Governor Patrick signed Ch. 206 of the Acts of 2007, An Act Protecting and Preserving Homeownership

The Act includes following provisions:

• The Legislation provides the Division of Banks with $3,000,000 to regulate the mortgage lending industry and maintain a foreclosure database.  The Division of Banks shall provide an additional $2,000,000 in grants to 1) create a pilot program for best lending practices, 2) fund first-time homebuyer counseling for sub-prime loans and 3) help fund 10 foreclosure prevention centers.  The funds will be raised from newly established mortgage lender licensing fees.




• Monitoring and oversight of mortgage lenders by the Division of Banks (DOB).  Lenders are rated on their practices in assisting low and moderate income residents, ensuring that rates and terms for applicants are consistent with similarly situated borrowers, employing safe and sound business practices, ensuring that there is not an undue concentration a systematic pattern of lending resulting in foreclosures, and working with delinquent residential customers to resolve delinquency.  Inability to receive positive ratings under this monitoring system may result in denial of a license by the DOB.




• Mortgage loan originators are required to be licensed.  In order to be licensed by the DOB, the originator must pass a background check, take a residential mortgage lending course, and meet 8 hours of continuing education requirements every 3 years.




• Failure to comply with the DOB's monitoring and oversight regulation is a felony under the legislation, punishable by up to 5 years in prison and $2,000.




• Mandatory, third party in-person counseling for first-time home loan borrowers assuming subprime loans at adjustable/variable rates.  DOB must promulgate regulations or guidelines to effectuate this provision.




• Establishes a 90 day right to cure a default, during which the loan may not accelerate and fees (with the exception of late fees not exceed 3 per cent of the amount of principal and interest overdue) cannot be added to the balance.  The bill limits the right to cure to once during any 5 year period.




• Lenders must give notice of a default before being able to accelerate the loan and foreclose on the property.  The notice must include information on the right to cure, the address and toll free number to whom payment should be made, and contact information for a representative of the current mortgage holder to work with to resolve the dispute.




• Includes modest tenant protections providing that foreclosures do not affect the tenancy agreement of a tenant who rental payment is subsidized by the state or federal government, and providing that other tenants in 1-4 family properties that are foreclosed on become a tenant-at-will. 




• Community Development Corporations that make mortgage loans are excluded from the mortgage lender licensing fee.




• Increases the amount a holder of a mortgage may charge for a fee to revise a loan to one percent of the outstanding balance of the existing note and mortgage.

For additional information about the implementation of Chapter 206, please visit the Division of Bank's website.

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