Massachusetts Attorney General Martha Coakley has highlighted her proposed legislation to address the ongoing mortgage foreclosure crisis that has hit the state of Massachusetts. "An Act to Prevent Unnecessary and Unreasonable Foreclosures," sponsored by Sen. Karen Spilka and Rep. Steven M. Walsh, requires that creditors take reasonable steps to avoid foreclosure and prohibits foreclosures without appropriate documentation.
"An Act to Prevent Unnecessary and Unreasonable Foreclosures" will also prevent additional foreclosures by mandating loan modifications in certain circumstances. AG Coakley discussed the legislation during her keynote address at the North Shore Association of Realtors’ Annual Membership Meeting and Business Expo in Peabody, Mass.
“Our communities have been devastated by the housing crisis,” said AG Coakley. “The proposed legislation will help rebuild our communities by promoting a process in which creditors and borrowers work together. Requiring creditors to take reasonable efforts to avoid unnecessary foreclosure is in everyone’s best interest.”
The legislation targets loans generally considered to have a higher risk of default, such as interest-only loans, adjustable-rate mortgages (ARMs), and loans with short-term introductory interest rates. Under the bill, creditors are required to have appropriate documentation that supports their right to foreclose prior to beginning foreclosure proceedings and are prohibited from passing on certain fees and costs associated with foreclosure to homeowners. The legislation makes the failure to comply with the law a violation of the Massachusetts Consumer Protection Act.
Since taking office in January 2007, combating the foreclosure crisis has remained a priority of Coakley’s administration. During this economic crisis, Coakley’s office has taken on Wall Street and big banks to recover more than $440 million for taxpayers and keeping more than 15,000 people in their homes. The office has brought predatory lending cases against two major sub-prime lenders, Fremont Investment & Loan/Fremont General and H&R Block/Option One Mortgage Corporation. Coakley’s Office has also reached settlements with investment giants Goldman Sachs and Morgan Stanley for their role in securitizing sub-prime loans. Additionally, the AG’s Office has brought enforcement actions against mortgage professionals who engaged in loan application fraud and other loan origination misconduct.