Massachusetts homeowners will see enhanced protections under regulations filed by the Patrick Administration’s Division of Banks that prevent national and state lenders from foreclosing on a property if an application for a loan modification is in process.
“This is another step in the right direction to further strengthen protections provided to Massachusetts borrowers and homeowners,” said Consumer Affairs and Business Regulation Undersecretary Barbara Anthony. “These new rules complement the recently adopted foreclosure prevention regulations that require lenders and servicers to modify certain mortgage loans if the cost of modification is less than the cost of foreclosure.”
The new regulations were established as a result of the law signed by Governor Deval Patrick in August 2012. Under the new rules, mortgage servicers will be required to explore more options to avoid foreclosure and third-party mortgage servicers will be prohibited from initiating a foreclosure when an application for a loan modification is in process.
Third-party loan servicers will also have to provide a single point of contact for the borrower, follow detailed loan modification procedures, and communicate with borrowers in a timely manner to comply with the new regulations.
These new regulations include many provisions of the Attorneys General’s 2012 mortgage settlement with the five largest national mortgage servicers. The Division also considered the recently published Consumer Financial Protection Bureau (CFPB) rules which go into effect in January 2014.
“These regulations ensure that state regulatory requirements are consistent with the requirements of the Bureau’s mortgage servicing rules,” said Commissioner of Banks David Cotney. “These rules will provide clarity for lenders and servicers so that they can appropriately and fairly service the mortgage loans of Massachusetts borrowers.”