Senate Considering the Victims of Foreclosure Crisis

The Massachusetts
State Senate is considering the woes of tenants victimized by the foreclosure
crisis
. It recently gave unanimous support to a law that
targeted stabilization of the neighbourhood by giving protection to the
tenants from eviction due to foreclosure.
The Senate gave the nod to Act to Stabilize Neighborhoods.

Local housing advocates have been trying to get it pushed through
for over the past two years to solve the increasing problems emanating
from foreclosures. The law has been enacted at an important time when
per week hundreds are losing their house to foreclosures. The crisis is
hurting all from owners to tenants and localities that are blighted by
scores of eerie vacant houses.

Amaad Rivera of the Massachusetts Alliance Against Predatory Lending
(non-profit body) said, “This bill is a key movement forward for tenant
protections in Massachusetts. We are really excited.”

The bill would now proceed for consideration to the House. It will
protect those tenants who are current in their rental payments from
eviction until the property is bought by another new owner. This is one
step ahead of a federal law that is set to expire in 2012 by which
tenants are allowed to remain in the foreclosed
house
for 90 days. Here it is extended to 150 days. The lenders
will have to wait for this period prior to foreclosing if they have
not already come to some settlement with the borrower. By this clause
the lender has to try to see if the borrower is able to repay the
mortgage under terms that are more reasonable and affordable.

The bill criminalizes mortgage fraud activities. It will empower the
regulators greater leeway to prosecute the offending lenders, brokers,
investors or others linked with it and send them to jail.

The bill would also mandate personal counseling for those who want
to opt for reverse mortgages. The latter is a financial tool that
permits those seniors with low income to avail of loans on their
houses. This would be repaid when they sell the estate or die. The
counseling clause would become effective after eighteen months.

Some of the members of Massachusetts Bankers Association expressed
concern about the bill. Their contention is that by introducing
measures for the tenants the foreclosure process would be further
delayed. There was the apprehension that the borrowers in trouble might
avoid negotiations and thus lengthen the process to their benefit. It
will enable them to stay on without paying anything.

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