As part of the $25 billion settlement deal made with five of the largest mortgage lenders, as previously reported in this blog, thus far nearly 4,000 Massachusetts homeowners have each received an average $67,450 in mortgage refinancing assistance. Nationally, almost 280,000 borrowers have received an average of $780,730 each in assistance. The $266 million received by Massachusetts borrowers is only a small part of the $21.92 billion national settlement disbursed thus far by the lenders.
A bit of mortgage relief may be at hand for Massachusetts residents thanks to the efforts of the Massachusetts Division of Banks. According to a statement released earlier this month, the banks are proposing a set of regulations that will require mortgage holders to work toward alternative options to foreclosure to lower the rate of foreclosures in the state.
Real estate transactions are often fraught with potential pitfalls, especially in today's volatile environment. The number of foreclosures on both commercial and residential real estate has proven a major problem for homeowners and investors alike. Those facing foreclosure on their property should seek to understand their rights and available options for dealing with banks and lenders.
Traditionally, foreclosure is a nightmare for Massachusetts residents. Because the home is regarded as collateral in a mortgage, banks could seize the home, effectively kicking out the homeowner. However, a new state law goes into effect in the state in November that helps to protect some residents from losing their homes. As long as the homeowner can continue to pay at least some monthly mortgage amount, the banks now have incentive to consider a loan modification rather than proceed directly with a foreclosure action.
A letter from Massachusetts Attorney General Martha Coakley was sent to the two government-controlled mortgage giants Freddie Mac and Fannie Mae instructing them of a new Massachusetts law that requires them to offer loan modifications that are "commercially reasonable." The letter was sent to the regulator of the two finance companies in hopes of raising the stakes in their dispute over whether helping struggling homeowners cut mortgage debt is beneficial. The letter informs the director of the Federal Housing Finance Agency, Ed DeMarco that Freddie and Fannie, along with other creditors are to take commercially viable steps to help homeowners avoid foreclosure on certain mortgages. The agency is currently reviewing the letter and will respond to it at some point, according to an agency spokesperson. Ms. Coakley said the new law promotes the concept that reducing the mortgage debt and providing loan modifications for some homeowners is a useful tool in preventing unnecessary foreclosures.
The director of the HomeCorps program says the program is a hit in that it has fielded almost 3,000 calls as of late April, opened 1,865 case files and prevented "dozens" of foreclosures since it began assisting distressed homeowners. The staff of six expects to triple in size due to the demand for mortgage help from Massachusetts homeowners.
Enough is enough, according to Martha Coakley, Massachusetts' Attorney General, who submitted a two-part plan for solving the state's foreclosure crisis. With some help from the Massachusetts Legislature along with the mortgage settlement reached with the five largest mortgage lenders, the state is poised to close the door on this five-year long foreclosure crisis and move forward with growing the state's economy again.