Activists Rally in Support of Changes to State Foreclosure Laws

BOSTON/Beacon Hill - Anti-foreclosure activists rallied at the Statehouse on Wednesday and testified in support of four proposed laws that would protect Massachusetts homeowners against foreclosure and eviction. Organized by the Massachusetts Alliance Against Predatory Lending a statewide coalition the rally drew about 100 supporters from some of the state’s hardest-hit communities in advance of a packed public hearing before the Legislature’s Judiciary Committee. If passed the four laws would force banks to enter into loan-modification negotiations with homeowners and produce valid legal title to homes before foreclosing. The laws would also permit court oversight of foreclosure actions and allow former homeowners to remain in foreclosed homes until the property is sold to new owners who intend it as a primary residence. “We’re fighting to get justice for homeowners renters and all of us affected by the foreclosure crisis ” coalition chairwoman Grace Ross told supporters who came from Boston Chelsea Lynn Worcester and Springfield. The statewide coalition includes some 65 community labor and legal-advocacy groups whose members collaborated with Massachusetts House and Senate sponsors to draft the bills. In Boston the foreclosure crisis is especially acute in minority communities - in Dorchester Mattapan East Boston Hyde Park and Roxbury - that were targeted by predatory lenders during the housing bubble. Now tenants’ rights and other community organizations are fighting to keep former homeowners in their homes. Foreclosed vacant houses are blighting their neighborhoods they say attracting crime and dragging down real estate values. “Passing these four pieces of legislation would make a big difference ” said Ross. “It would make the banks show up with an authorized representative and show up with documents to prove they really own the loan.” Requiring banks to prove ownership and negotiate with homeowners is crucial advocates say. Right now homeowners in arrears on their mortgages often don’t know who owns their loan until it’s too late. Olivé Hendricks of Jamaica Plain an organizer with City Life/Vida Urbana who attended the rally and is himself a victim of foreclosure said he began mediating with Flagstar Bank - which he believed owned his mortgage - after he lost his job. Three days before an agreed-upon deadline for submitting documents the bank had demanded he said “I heard people out in front of my house. I went outside and they were auctioning my house to investors!” He subsequently discovered that he had been negotiating with the wrong bank. “I was negotiating with Flagstar but I found out from the auctioneer that Fannie Mae owned my house.” Such experiences are common say advocates and could be rectified by changes in the law. One of the bills aired on Wednesday would make mediation between banks and homeowners mandatory. “Mandatory foreclosure mediation would address the impossibility of getting in touch with lenders and force banks to engage in good-faith efforts to modify the loans to reflect fair-market value or the HUD fair-market rate ” said legal advocate Andrea Park who testified at the public hearing that followed the rally. If mediation fails homeowners should have their day in court she said referring to another bill that would amend the state’s antiquated foreclosure statute to require court oversight of foreclosure actions. Massachusetts is one of a couple of dozen states that still lack judicial oversight of foreclosure and effectively rely on an “honor system” that leaves homeowners at a severe disadvantage especially if they don’t know their legal rights. Steve Meacham a City Life/Vida Urbana tenant organizer said that most foreclosed homeowners don’t realize that they have the right to remain in their homes until they’re formally evicted often accepting “cash for keys” – a one-time cash payment to the bank in exchange for vacating the premises. Another bill presented Wednesday would allow foreclosed homeowners to remain in their homes until sale to a new owner who intends it as a primary residence essentially turning former owners into tenants who pay rent to the bank. This gives foreclosed homeowners valuable time - sometimes to buy their houses back. Boston Community Capital a community development bank has been helping former owners get their homes back by buying the foreclosed properties from the banks at market value - more than the banks would get at a foreclosure auction - and selling them to the original owners with new mortgages. The new mortgages reflect the actual value of the homes instead of the inflated prices created by the housing bubble. “Getting principal reduction is the real solution of the crisis ” Meacham said. “The most unannounced thing about this crisis is people can’t afford their mortgage now but they could afford it at real value.” Inside the Statehouse advocates and foreclosure victims made their case for the new laws. “Temporary job loss medical problems - anything can throw people into arrears on their mortgages ” said legal advocate Andrea Park. A Chelsea woman testified that she began loan-modification negotiations with her bank after leaving her job to care for her ill mother. When her mother died the family traveled to Guatemala for the funeral. On their return she said “there were people outside of my home. It was an auction.” Her house was foreclosed last September. Since then she said the bank has refused to accept rent payments from her. “I want to make sure that what happened to me doesn’t happen to other families. I’m trying to buy my house back from the BCC but I need more time.” Julian Tynes Chairman of the Massachusetts Commission Against Discrimination also testified in support of mandatory mediation suggesting that banks discriminate against minorities when deciding whether to mediate with homeowners. “Access to mediation should be based on objective factors ” he said “not on protected-class status.” Claris Vega a member of the Chelsea Collaborative reminded commission members “when you consider these bills I ask that you think of the people in Chelsea and other communities … because these are the people who are dealing not only with foreclosure but also with violence and poverty and because these are the people who elected you.” According to the Massachusetts Alliance Against Predatory Lending there have been 44 100 foreclosures in Massachusetts since 2007 with an additional 88 000 households threatened. 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