Bill requires lenders to try to modify loans
Massachusetts Attorney General Martha Coakley’s office revised and refiled a bill yesterday requiring banks to offer loan modifications to homeowners with subprime loans before attempting to foreclose.
The bill requires creditors to determine whether a borrower’s monthly payment would be higher than potential losses associated with a foreclosure and sale of the property. If the calculation makes modification more attractive, a modification must be offered.
The measure, first filed last year but never acted on by the Legislature, also includes new requirements, including that a bank or lender prove it is the current legal holder of a property before foreclosing. The addition follows a Massachusetts Supreme Judicial Court decision earlier this month that upheld a decision to void two Springfield foreclosures because the lenders could not prove they owned the mortgages.
If passed, the bill would give the attorney general’s office or individual homeowners the right to sue a lender.