Late to the foreclosure party?
Here's Attorney Richard D. Vetstein with the next, inevitable, step regarding foreclosures in Massachusetts.
You knew this was coming. Massachusetts politicians smell a big political opportunity with the foreclosure mess here in the Bay State, post-Ibanez, and are filing legislation left and right.The latest is legislation filed by State Senator Karen Spilka and Attorney General Martha Coakley mandating loan modifications in certain circumstances. Specifically, the loan modification legislation requires creditors to take “commercially reasonable efforts” to avoid foreclosure upon certain sub-prime loans. The legislation also provides a safe harbor for creditors to comply with this requirement of commercial reasonableness.
The legislation also addresses problems with foreclosures highlighted in the recent decision by the Massachusetts SJC, U.S. Bank v. Ibanez by prohibiting foreclosures where creditors lack the documents supporting their purported right to foreclose, and prohibits passing on certain fees and costs to homeowners. Specifically, this legislation:
• Codifies the recent SJC decision in Ibanez by requiring a creditor commencing foreclosure to show it is the current legal holder of record of the mortgage. The bill also forbids misrepresentations to courts concerning holder status;• Prohibits passing on to third parties the costs of remedying prior improper foreclosures or absence of recorded assignments;
• Prohibits “junk fees” (for goods or services not performed) tacked on during foreclosure and prohibits bribes, referral and similar fees for foreclosure business; and
• Requires recording of assignment establishing the creditor as present holder of the mortgage before it can foreclose on the property.
A violation of this legislation would constitute a violation of the Massachusetts Consumer Protection Act, Chapter 93A which carries triple damages and attorneys’ fees.Is this too little too late? Is it even necessary at all given that a large percentage of subprime loans have been defaulted and foreclosed?
