Last week, a bill has been passed in the Senate to provide stronger protection to struggling homeowners. This legislation will prevent unlawful and unnecessary foreclosures which will help to reduce the total number of distressed properties in the housing market.
According to this bill, the lenders and the banks have to provide loan modification schemes to homeowners under various conditions which will help them save their properties from foreclosure. All the lenders need to perform a total financial analysis of homeowners to see whether the homeowner needs anticipated recovery or will be comfortable with reduced monthly installments.
In the words of the Senator Mike Rush, “The issue of foreclosure has continued to affect homeowners and slow our economic growth. The bill recently adopted in the Senate is the product of meetings with many stakeholders and will help remove one of the biggest remaining barriers to our ongoing economic recovery. I am proud that my colleagues were able to work together and act decisively to help prevent unnecessary foreclosures.”
Filing the main bill, Attorney General Martha Coakley stated, “The Senate today has taken another critical step in our effort to assist struggling homeowners in Massachusetts and ensure that Massachusetts fully recovers from the foreclosure crisis. These first-in-the-nation standards will promote reasonable loan modifications that keep people in their homes without requiring banks to sacrifice the bottom line. We thank Senate President Murray, Chairman Petruccelli and Senator Spilka for their leadership on this important issue and we look forward to continuing to work with the Legislature to prevent unnecessary foreclosures and help move our economy forward.”
A period of 5 months will be given to the lender to decide whether the lender will approach the homeowners with a loan modification scheme which includes either a discounted rate of interest or an extended repayment period. This loan modification scheme will allow homeowners to live in their houses, help lenders save on costs of foreclosure processing and also help neighborhoods from being plagued by foreclosed and distressed properties.
Owner-occupied properties and risky loans will be subjected to loan modifications. This bill also provides an opportunity to borrowers to meet lenders through an unbiased third-party for mediation before the foreclosure process starts so the terms of the loan can be modified through negotiation. According to this bill, this mediation will be conducted by University of Massachusetts Boston-based Massachusetts Office of Public Collaboration.
Photo by Photostock.
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