|
Home | District | News | Links | Contact | Bio | Campaign Back to News from Rep. Bradley House Brings Relief to Homeowners Facing Mortgage Foreclosure Legislation Offers 90-day Right to Cure, Licenses Mortgage Lenders and Creates Incentives for Lenders to Help Borrowers on the Cusp of Foreclosure BOSTON – Representative Garrett J. Bradley announces that the House of Representatives recently passed bold new legislation to help stem the rising tide of mortgage foreclosures by encouraging banks to help borrowers, providing a new three-month window to cure defaults and mandating tough new licensing standards for mortgage loan originators. The new legislation comes as foreclosure rates continue to rise nationwide and in Massachusetts, causing thousands of families to lose their homes. In Massachusetts, the foreclosure rate is up 76 percent in the past year, with 1,000 foreclosures in Boston in the past six months. The wave of foreclosures is not expected to crest until 2008, when many variable-rate mortgages readjust. “As mortgage foreclosures are sweeping across the country, the House acted to provide relief to residents of the Commonwealth who are confronting the effects of foreclosure, and to prevent future borrowers from facing foreclosure. This legislation is critical to the prosperity of so many communities in Massachusetts and to the economy of our state,” said Representative Bradley. Under this legislation, homeowners would be protected from foreclosure by the 90 day right-to-cure provision, which would require lenders to give homeowners 90 days to repay the interest and payment balance accumulated, before starting foreclosure proceedings. If the borrower successfully completes this payment, their mortgage would be reinstated without penalty or foreclosure. This clause insures that consumers are not saddled with the weight of enormous legal fees associated with a foreclosure filing for simply falling behind on payments for a short period. This bill will also encourage mortgage lenders to work with borrowers to avoid foreclosures in the coming months and years. Under this legislation, mortgage lenders will be motivated to shift adjustable rate mortgages to fixed rates. Borrowers can request to extend the length of their loan or increase their interest rate to achieve a fixed rate if they pay lenders a 1 percent fee on the cost of their mortgage. This one-time fee would enable mortgage holders to secure a fixed rate and encourage lenders to provide this security to homeowners. Hoping to guard against future problems, the bill would require licensure of 20,000 loan originators with an annual license fee of $750, allocating $3 million to employ regulators under the Division of Banking to more aggressively regulate mortgage lending practices across the Commonwealth. The bill also mandates that the Division of Banks keep a record of the mortgage practices of each loan originator in Massachusetts. The DOB will evaluate this information and rate lenders performance in the market. Poor performance may result in loss of license. By giving the commissioner the authority to hold these lenders accountable, questionable lending practices will be sharply curtailed. Unique to this bill is the creation of counseling requirements for first-time homebuyers entering into subprime loans to insure they fully understand the financial commitment of their home loan. The bill also:
# # # |