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New Foreclosure Regulations Possible In Massachusetts



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By : Karim El Sheikh    99 or more times read
All eyes have turned again towards Massachusetts in regard to foreclosure legislation. Earlier in the month the Massachusetts Supreme Court ruled in favor of two home owners in a foreclosure case, stating that the lender did not have the authority to foreclose. The case was in reference to a lender having the correct paperwork proving they actually owned the mortgages in question. Many lenders have panicked over this ruling because the amount of cases questioning foreclosure authority could escalate and bankrupt the mortgage industry.

Now, in another bold move, Massachusetts law makers are putting up three pieces of legislation that will affect the banks and foreclosure process. Many other states are watching closely to see if this legislation will pass, and if they will consider it for their own states.

Legislators in Massachusetts are facing high foreclosure rates. The empty buildings are causing other property values to decrease at alarming rates. This event is taking place in every part of the state, from rural homes to exclusive neighborhoods. The legislators have proposed that by enacting the following legislation, foreclosures could be brought under control.

The first piece of legislature would require all foreclosures in the state to be brought before, and approved by, a judge. This is already law in 23 other states. Massachusetts wishes to add their state to that list to avoid any other robo-signing scandals.

The second piece of legislation will require the lenders to prove that they posses legal title to the mortgage before they can process an eviction. This legislation is in direct accordance with the Massachusetts Supreme Court case cited above.

The last piece of legislation will require banks and other lenders to sit down with the distressed home owner, using a third party mediator, and try to work out a solution before foreclosure proceedings are begun. Many of these lenders have refused to work with home owners in trying to rectify the situation. Lenders have the ability to modify loans, especially through the Home Affordable program, but often pass the opportunity up, opting to foreclose instead. Lenders will be required to submit written proof that the mediation was held prior to foreclosure.

This last piece of legislation will also add eviction protection to current home owners. This is in response to legislation that was enacted last summer protecting renters of foreclosed homes. This new wording will provide eviction protection to the home owners if they select to pay rent to the banks until the property is sold. Most banks are not willing to cooperate with this measure. Many advocates feel that this will help everyone involved in the foreclosure process, but have stated that banks are more willing to let the properties remain vacant than accept a rent payment.

There are several opponents to these bills, including certain committees for the Real Estate Bar Association in Massachusetts. A spokes person for the committee has stated that he believes the legislatures may be acting too fast or moving too harshly. The foreclosure laws that are in place in Massachusetts have been in place for 200 years, leading him to believe they work fine the way they are. However, many believe that these foreclosure laws are outdated and do not address the problems home owners and lenders are facing today.

Most people, when asked, will state that they believe the banking system is broken. They believe that foreclosed homes may be inevitable for anyone facing a financial crisis. This belief has led many to demand that the banks be held accountable for their actions. This is a widespread thought pattern, and many are watching Massachusetts to see if the legislation will pass. If it does, you can believe that these same type of laws will begin to show up in other states almost immediately.
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