Massachusetts Senate Passes Foreclosure Protection, Homestead Update, and Consumer Protection Bills

by Rich Vetstein on May 5, 2010 · 5 comments

in Foreclosure, Homestead, Landlord Tenant Law, Massachusetts Real Estate Law, Mortgage Crisis

Update (June 28, 2010): The bill is heading up to Gov. Patrick’s office for approval.

The Massachusetts Senate recently passed wide-ranging legislation that updates the homestead law, protects tenants in foreclosed properties from arbitrary evictions, criminalizes mortgage fraud and certain unsolicited loans. The legislation, part of a series of consumer protection bills that passed the Senate, was approved unanimously.

Metrowest Senator Karen Spilka, who spearheaded the changes, writes about them on her blog (and she has a Facebook Page!).

Foreclosure Bill

  • Tenants in foreclosed buildings can only be evicted for just cause, or if the building is purchased by a third party. Also, a lender cannot evict a tenant for failure to pay rent unless it has posted and delivered a written notice including critical information, including a contact number for the new owner. This does not prohibit a lender from evicting tenants for other valid reasons, such as interfering with the quiet enjoyment of other tenants, using a unit for illegal purposes, or refusing to allow the lender to enter the unit to make repairs.
  • For homeowners, the legislation temporarily extends the 90-day right to cure period, enacted by the legislature in 2007, to 150 days. The 2007 law gave homeowners 90 days to come up with past due payments on their mortgage, before the lender could require full payment of unpaid balance. This was intended as a cooling off period for the lender and homeowner to work out a new payment plan to avoid foreclosure.
  • Bill requires at least one meeting or telephone conversation between the homeowner and the lender to discuss a commercially reasonable alternative to foreclosure. The lender’s representative must have the authority to agree to the revised terms. The right to cure period can be reduced from 150 days to 90 days if the lender makes a good faith effort to negotiate a commercially reasonable alternative to foreclosure.
  • Allows the 150-day right to cure to be granted once every 3 years; currently, the 90-day right to cure is only available once every 5 years.
  • Creates a 2-year pilot program within the Division of Banks that requires all property owners, including lenders, trustees, and service companies, to register and maintain vacant and/or foreclosing properties in the Commonwealth.

Coverage on this bill from the Boston Globe can be found here.

Homestead Law Update

  • Updates the homestead law to protect up to $500,000 of a home’s value. It also includes unsecured debts, such as credit card debt, that were incurred before the homestead was filed.
  • Extending homestead protection to manufactured homes, and multifamily properties of up to 4 units.
  • Requiring homeowners with more than one property to file a declaration, signed under the penalty of perjury, of which dwelling is their primary residence and therefore eligible for homestead protection to avoid fraud.
  • Clarifying that the proceeds of fire/casualty insurance or sales/takings are protected from creditors. Fire/casualty proceeds are protected until re-occupancy; a homestead is declared on new home; or for 2 years after the date of the fire/casualty.
  • Protecting the proceeds from sales or taking until a new homestead is declared or for 1 year, whichever occurs first.
  • Allowing trustees of trusts to file homestead declarations on behalf of trust beneficiaries who reside in the property as their principal place of residence.
  • Creates an automatic homestead of $125,000 for all homeowners.

Other Consumer Protection Provisions

  • As advocated by the Attorney General, the bill would criminalize residential mortgage fraud.
  • Prohibits financial institutions and lenders from sending consumers unsolicited loans which are a negotiable check, money order, draft or other instrument that may be used to unknowingly activate a loan that was not solicited by the consumer.  10 day right of rescission on these loan products.

The three bills now move to the House of Representatives for further action.

The homestead law update is long-awaited and much needed. I wrote about it in the Fall here.

The foreclosure bill is quite a victory for tenant and distressed property owner advocates.

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  • marie

    Dear Ms. Collins,

    I read your statement of 11/04/10 and was disheartened by what you described as your MA foreclosure experiences. My husband and I are having our own house issues and perhaps what happened to you could help our research in some way. We too have tried many state offices for help with no luck. Thank you.

  • Collene Collins

    I have no faith in MA officials because we have dealt with every state office and they are all guilty of dereliction of duty. We lost our home due to an illegal foreclosure. We were not in arrears and we never received notice of a sale nor was it listed in the paper per chapter 244 section 14. We sent a complaint to the Division of Banks with proof of over 90,000 in payments that were made and never credited and they did not send the proof along with the complaint so the banks response was based on false info the bank employee had reported. This is only one situation. I have records of every payment, statement, letters. complaints sent and their response. It is like the fox guarding the hen house. These people working in the state offices protect their own. Our lives have been destroyed and we had our home for 23 yrs. I need an ethical person who has a voice that will be heard to expose our case. Please help. Dealing with all this and our son being deployed has taken a toll on us the past couple of years.

  • dan

    when do the provisions of this law go into effect..why is that info not in any of these articles?

    • I believe Gov. Patrick has signed it into law, so it’s in effect now.

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