Thursday, August 12, 2010

FORECLOSURE PROTECTION: Homeowners, renters may get more help

Legislation would increase protections against foreclosures.

Renters threatened with eviction from foreclosed properties and homeowners struggling to keep their homes would gain new protections from a law passed by the state Legislature late Wednesday and expected to be signed by Governor Deval Patrick.

The bill, called “An Act to Stabilize Neighborhoods,’’ is aimed at helping hundreds of tenants in Massachusetts being forced from their foreclosed apartments through no fault of their own, according to housing advocates. It also would force lenders to make a good-faith effort to work with homeowners who are behind on mortgage payments, or wait an additional two months before taking back their properties.

Housing advocates and lawmakers said the legislation marks a major step forward in the state’s battle against foreclosures, which are increasing at an alarming rate.

“It is one of the strongest pieces of tenants’ rights legislation we’ve seen in a decade,’’ said Amaad Rivera, director of the Massachusetts Alliance Against Predatory Lending, a nonprofit that lobbied for more than two years for the enhanced protections. “This is a huge step forward.’’

The changes are meant to help people like Gerald McConnon, 55, who is being evicted from his foreclosed South Boston apartment by CitiMortgage even though he has consistently paid rent for 15 years. The new rules would prevent lenders from evicting rent-paying tenants, unless they are selling to a third party. The legislation also trumps a federal law that allows renters to remain in foreclosed homes for 90 days. Had the law been passed earlier, McConnon, a former security guard who stopped working two years ago after he was diagnosed with cancer, would not be battling to stay in his home. He said he has consistently paid $130 a week to live in his dilapidated, one-bedroom apartment that was transferred between several delinquent owners before being taken over by CitiMortgage in December. He plans to ask a housing judge for a reprieve.

“I got no place to go. I know I’m going to end up on the street,’’ said McConnon. “I’ve paid my bills all my life. I’m just a regular guy who is caught up in this mess.’’

CitiMortgage officials said they could not discuss specific of McConnon’s situation, but Mark Rodgers, a spokesman for the lender, said it often offers tenants more help than required by law. We have a responsibility to recover the property either for ourselves or the investor-owner of the mortgage, so it can be marketed and sold promptly,’’ Rodgers added.

Local lenders said they worry the new law could make it more difficult to sell foreclosed homes if tenants are still living in them. Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association, said members were shocked at how quickly the bill was passed this week. He also said lenders fear the law will drag out the foreclosure process for months.

“This is a very difficult bill for the industry,’’ Cuff said. “This bill is all geared for the consumer protection side.’’

Senator Susan C. Tucker, an Andover Democrat, said she filed the bill two years ago after hearing about evictions of tenants in her district, which includes Lawrence, a city ravaged by foreclosures. The bill was unanimously approved by the Senate in April and by the House this week, with a few minor amendments.

“We think this is a win-win for both the lender and the tenants,’’ Tucker said yesterday.

In addition to helping tenants in foreclosed homes, the legislation extends from 90 days to 150 days the state’s “right to cure’’ law, requiring lenders to wait two additional months to take back a property if they do not negotiate with homeowners. To avoid the added time, lenders must have at least one meeting or conversation with a homeowner about renegotiating a mortgage.

The bill also criminalizes mortgage fraud, which is not specifically addressed by existing law. That would give state regulators more power to prosecute predatory lenders and mortgage brokers, as well as fraudulent investors.

The law would also require in-person counseling for low-income homeowners interested in reverse mortgages, which allow seniors to take a loan on their homes to be paid back when they sell the property or die.

The bill comes at a time when the number of local foreclosures is skyrocketing. During the first half of the year, 7,431 Massachusetts homeowners lost their properties to foreclosure — a 56.7 percent increase from the same time last year, according to the Warren Group, a Boston company that tracks real estate.

Representative Kevin G. Honan, House chairman of the Joint Committee on Housing, said members of the governor’s staff worked on the legislation, and he expects Patrick to sign the bill. “If you are a tenant who is paying your rent, you deserve to be able to stay,’’ Honan said.

But Patrick’s office yesterday would not say when, or if, the bill will receive the governor’s signature. Kimberly Haberlin, a Patrick spokeswoman, said only that Patrick is looking forward to reviewing the bill.

“Keeping people in their homes and stabilizing neighborhoods are the two overriding goals of the administration’s comprehensive foreclosure prevention efforts,’’ she said.

Jenifer B. McKim Boston Globe July 30, 2010

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