There aren't many moments in politics where a fast phone call can really make a difference, but this is one of them. Advocates from the Mass. Alliance Against Predatory Lending - a coalition of labor, community, homeowner and religious organizations - have fought for a state bill to "Prevent Unlawful and Unneccesary Foreclosures" (MA House 4096/Senate 2298) that would at last provide victims of toxic home loans in Massachusetts a modicum of protection against banks trying to seize their homes. Estimates indicate that about 10,000 households a year are still facing foreclosure in the Bay State. So the foreclosure crisis remains a very real threat to large number of local homeowners. The Senate version of the bill that made its way to the legislature's conference committee this week still contained important and much-needed consumer protections as discussions between state reps and state senators came to a head - while the House version was weaker. On Wednesday, the House surprised no one by supporting a conference version of the bill without most of the protections of the original Senate bill. But on Thursday, the Senate did the same. Leaving advocates few options to revive the previous Senate version of the bill.
Missing was a key reform which would have forced banks into mandatory mediation with defaulting homeowners before reselling their homes out from under them. And a number of other smaller, but still significant reforms as well. Mandatory mediation has been keeping families in their homes in 23 states around the US - including all New England states except for Massachusetts.
The remnant of that provision in the version of the bill that will now go to Gov. Deval Patrick's desk for his signature is that a task force will be appointed to study the idea of mandatory mediation. This, in and of itself, is not a bad thing. But the proposed timetable is. The current bill language says that the state will study the issue until December 31, 2013 - over a year and a half from now. Thousands of families will lose their homes in the meantime.
But despite rhetoric to the contrary from legislators, if passed, the conference committee version of the bill will actually make things much worse for homeowners in the Commonwealth than they have ever been before.
According to today's MAAPL press release
"The present bill creates new restrictions that limit homeowners and lenders to negotiate loan modification terms by mail, along with unrealistic deadlines for documents to be prepared, filed, received and returned. For example, a bank conducts a now-mandated analysis of a mortgage, which shows the lender will lose more money by foreclosing than renegotiating loan terms. The financial institution must then contact a homeowner about a loan modification; however, homeowners will have only 30 days to prepare all the necessary modification application documents and have them accepted by the bank. Lenders rarely accept an application as complete on the first attempt; across the country families have had to submit documents an average of six times to be deemed complete. This bill’s negotiation procedures are unworkable for most homeowners.
"An additional section inserted at the eleventh hour would deprive homeowners who prove a foreclosure is illegal the ability to obtain a reversal of a foreclosure if bought by a private party. The new provision asserts that a simple affidavit that the bank has the promissory note is all that is necessary to proceed with a foreclosure – trusting lenders, no matter what their history, to abide by what amounts to an honor system in their foreclosure proceedings. Real estate investors are granted broad immunity for their role in the trafficking of illegally-foreclosed homes, allowing them to hold onto properties proven to be seized through fraud.
"Even the most significant changes in the bill will offer an ever-dwindling protection to Bay State homeowners. The above-mentioned loss analysis, for example, affects only subprime loans. Federal Reserve figures show less than 30% of Massachusetts foreclosures were of subprime loans in 2009 – and that number is dropping. At best, an estimated 500 families yearly would benefit from the new protection, compared to thousands who will lose a key right to get their home back due to the last-minute legislative change now in front of Governor Patrick.
So even when bad lenders are caught with their hands in the proverbial cookie jar of loan fraud, they'll still get to keep control of people's homes, evict working families and resell the homes with impunity.
MAAPL activists are therefore asking members of the general public to do the following
Call Governor Patrick 617-725-4005 or 888-870-7770 (in state) by Monday
• Please do NOT sign the Foreclosure Bill as is!
• Remove the section that will harm homeowners’ right to sue to get their home back JUST because banks say they had the Note!
• Move the Task force on Homeowners Renting Post-Foreclosure to the end of THIS year, 2012
• Fix the loans covered by the “commercially reasonable” cost of foreclosure test, so the time line is realistic and homeowners will be notified of their rights and requirements in this new loan modification process. The process CANNOT penalize the homeowner because the bank refused to accept the application as complete in 30 days.”
Jason Pramas is Editor/Publisher of Open Media Boston