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The Massachusetts Senate last week passed
Senate Bill 2298, "An Act to Prevent Unlawful and
Unnecessary Foreclosures." The Senate vote came just weeks
after the House of Representatives passed similar legislation,
(see
MLS Alert on House Foreclosure Legislation) and sets in motion
a negotiating process between the two chambers to come up with a
consensus bill before the end of the legislative session on July
31, 2012.
The House and Senate bills are largely similar,
with the goal of reducing foreclosures by forcing mortgage lenders
to analyze a number of factors on individual loans before entering
foreclosure proceedings on residential homeowners. Under both the
House and Senate bills, banks would be required to prove through a
formula that foreclosing on a mortgage would benefit the bank more
than modifying the loan.
Among the differences between the two bills is an
amendment adopted by the Senate that would mandate a mediation
process between a borrower and lender before foreclosure
proceedings could begin. The amendment, sponsored by Sen. Karen
Spilka, delegates responsibility for the mediation program to the
Massachusetts Office of Public Collaboration at UMass-Boston.
Critics of the amendment contended that it would add an unnecessary
step in the process, costing lenders additional time and money, but
Sen. Spilka successfully pitched the measure as "a tool to try
to get the parties to the table to resolve the renegotiation
process."
If differences between the two bills cannot be
resolved between the two chambers informally, the legislation will
move to a conference committee for formal negotiations. With the
governor, Attorney General, and both the House and Senate in favor
of some form of this legislation, a compromise is expected to be
worked out prior to the July 31, 2012 deadline.
ML Strategies will continue to keep you updated on
the legislation's progress.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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