For a lender, time is always money. Interest is charged on loans to account for the cost of a borrower using the bank’s money over time. And when it comes time to foreclose on a property, it is typically because the borrower has stopped making their monthly mortgage payments.
This costs the lender money, so resolving a foreclosure action as quickly as possible is always the preferred result, as that enables the lender to sell the real estate and recover as much of their loan balance as the selling price will provide.
Some lenders in Massachusetts have been suing some municipalities that have created additional hurdles for lenders to overcome when foreclosing on residential and commercial real estate.
The cities of Lynn and Worchester have been sued by banks to obtain a preliminary injunction that would prohibit the enforcement of city ordinances that would require lenders to engage in mediation with before they foreclose on their homes.
A similar ordnance from Springfield was struck down by the Supreme Judicial Court, which ruled that regulation of foreclosure procedure is the responsibility of the state, not municipalities.
The banks are asking a federal court to follow this ruling and apply it to the ordinances in Lynn and Worchester. The banks also are requesting an injunction against a separate ordinance in Worchester that forces lenders to remove “hazardous materials” from property as part of the foreclosure process.
Due diligence on any real estate deals should always include an examination of local zoning ordinances and any other regulations like these, that could affect your transaction and your property after the deal is completed.
Boston Business Journal, “Eastern Bank, others seek to put stop to Lynn foreclosure law,” Greg Ryan, February 27, 2015