Progress steady to stem foreclosures

What’s the mortgage scam du jour?

Companies that falsely promise struggling homeowners that if you use the services of their company, they will guarantee a loan modification. No one can guarantee the lender will modify your loan. It is illegal to require a payment up front. That is something we are looking at right now.

The state has made efforts to limit scams against seniors seeking reverse mortgages, a product that allows them to take equity out of their homes. This includes a new law requiring in-person counseling by 2012 for borrowers interested in such mortgages. What would you advise seniors do until then?

Get counseling. Go to the Executive Office of Elder Affairs and find the approved list of reverse mortgage counseling agencies and talk to somebody there. Do not make this decision in isolation. Careful counseling is necessary to make sure the equity you take out will last the rest of your life.

More than 12,000 homeowners lost properties to foreclosure last year. What has the state done to help abate the foreclosure crisis?

We’ve held 12 foreclosure prevention workshops for 3,500 homeowners across the state, where homeowners and lenders meet to work out modifications. We are planning more. All the major lenders participate. Hundreds of homeowners come in and sit across the table. I ask consumers, “Have you ever met your lender?’’ They say, “No this is the first time . . . I’ve tried on the phone. I get a different person every time you call.’’ It just breaks your heart. It is very hard to modify a mortgage long distance.

Has there been any follow-up to see if the workshops have been successful?

I can’t give you exact numbers. We formed an ongoing lenders advisory group. We have conference calls with them about every six weeks and talk about how many modifications they’ve had and what can we do better.

What are the challenges?

Many lenders, especially large national banks, have been too slow to set up procedures for handling loan modifications on a massive scale. They are terrible bureaucracies, and they still don’t have it right. We find smaller mortgage servicing companies do a much better job. They understand it is a lot cheaper to modify a loan than drag out a long foreclosure process.

Does your office have teeth to push lenders to act?

The big foreclosure players are national banks and national mortgage companies. These companies have to comply with a new state law requiring a 150-day wait before they can initiate a foreclosure process. They have to file information with our Division of Banks that they have complied. If we find they do not obey the law, we can turn that information over to the attorney general.

What about concerns that this process is taking too long?

If banks are worried this is going to slow down foreclosures, all they have to do is follow the law and things will move along.

The federal program known as the Home Affordable Modification Program has provided about 521,000 permanent loan modifications to troubled borrowers, far less than expected. What do you think of the effort?

Everybody acknowledges that it hasn’t lived up to expectations. The large national banks that held the bulk of foreclosed properties were not ready. But new Treasury Department guidelines for lenders are having a positive effect.

Given these lackluster results, would you recommend that Massachusetts residents stick with local banks?

I am a big fan of community banks and credit unions. That is not to say I don’t ever do business with big banks. The local banks offer products you can not get at national banks. I’m old fashioned in that way. I like to know where my mortgage is. It makes me sleep easier.