NEW ROAD, a network of bank tenant associations, together with MAAPL, the Mass Alliance Against Predatory Lending, won important new protections in the MA Senate foreclosure bill passed yesterday. These included mandatory mediation and some important technical fixes in the foreclosure bill. An important priority, eviction protection for homeowners, is still alive.

We have more work to do now, to make sure the House adopts the Senate version and to make sure the homeowner protection comes up for a vote.

Thank you all for your phone calls and support!!

MAAPL Press release:

Senate vote against foreclosures

June 7, 2012

Contacts: Grace C Ross, MAAPL 617-291-5591

Isaac Hodes, Lynn United for Change: 617-921-1786

Nadine Cohen, Greater Boston Legal Services: 617-899-1924

Local quotes available from Boston area, North shore, Worcester area, SouthEastern Mass, and Springfield area.

Shortly after 5pm Wednesday, June 6, State Senators completed voting on a package of changes to Massachusetts law supporting the Commonwealth’s residents in their fight against the foreclosing lenders. “This is a significant victory for the people of Massachusetts. We are proud that the Massachusetts Senate has voted overwhelmingly in recognition of the need to take serious steps to support homeowners to decrease foreclosures in our state,” said Magalis Troncoso of the Boston Tenant Coalition and Chair of the Mass Alliance Against Predatory Lending.

Activists had converged on the State House Tuesday afternoon and stayed through Wednesday morning, several dozens entering the State House to directly speak with legislators. This followed on days of grassroots lobbying efforts starting the previous week in earnest. Families facing foreclosures had come to speak with Senators about the devastating impacts on their lives including not only homelessness, loss of hundreds of hours of work time trying to reach – most often unsuccessfully – the banks to seek resolution to their situation besides foreclosure, as well as health impacts including heart attacks and other life changing health events.

Senator Spilka of Framingham, a trained mediator, spoke to the necessity of providing a neutral party to bring homeowners and authorized bank representatives together, pre-foreclosure, to work on alternatives to foreclosure. Her amendment would establish a mediation program for the state overwhelmingly along the lines that advocates and residents who are a part of the Mass Alliance Against Predatory Lending had composed and filed under the leadership of over a quarter of the legislature through lead sponsor Senator Chandler. Senator Chandler spoke of the 47% increase in foreclosures in the last few months, “Worcester County of course being by far the hardest hit county in our state, we simply must address this increasing crisis in our state.”

Mandatory mediation which now exists in all the surrounding New England states except for Massachusetts shows a very strong track record of loan modifications in the majority of cases and a much smaller percentage of other solutions – all alternatives to foreclosure. Such states as Connecticut are showing an 80% rate of homeowners gaining resolutions that are alternatives to foreclosure through mandatory mediation for those homeowners who opt into the process. 

Ms. Spilka clarified that mediation in this case is not mandatory for the homeowners but if they opt in the lenders must show up with an authorized representative. As a trained mediator, she addressed with great clarity that such a situation in mediation is not uncommon where one party chooses to participate thereby compelling the other party to show up. She further addressed that the unequal split in fees to pay for the mediation given the unequal economic situation of the parties is also not unusual nor does it bias such mediation efforts.

“Mandatory mediation was added to a critical standard already in the bill working its way through the legislature promulgated by Attorney General Martha Coakley. “The Attorney General’s standard is critical even if it’s a little odd that our legislature has to pass it,” explained Lew Finfier of Mass Communities Action Network. “Coakley wants our laws to require that banks make choices to lose less money than foreclosure if other resolutions to a delinquent mortgage are financial viable for the homeowner. Of course, losses from foreclosures hurt our state’s residents, bank investors, municipal coffers and our entire economy even more. Something is very wrong if we have to legislate that financial institutions lose less money – but that is exactly what is required in this crisis.”

While the Attorney General’s standard has been moving through the legislature, the legislation itself has been weakened by numerous small changes by lobbyist for the financial institutions themselves. “The existing foreclosure process is a detailed and complicated, honor code system since homeowners do not get to go in front of judge before they are foreclosed. It has been exposed repeatedly and admitted by the major financial institutions that they have been rampantly violating fundamental legal processes – like affidavits being based upon verifiable facts and signed under personal knowledge,” explained Grace Ross, Coordinator of the Mass Alliance Against Predatory Lending. “We were pleased by a few key changes by the Senate because we simply cannot have legislation passed that muddies even further a system that is so dependent on strict compliance by lending institutions with no judicial oversight.”

Activists had also continued to argue for and document clear evidence of homeowners needing to be allowed to rent given the overwhelming percentage of foreclosures that are now purchased back by financial institutions. Instead of arms length third party purchasers who will presumably put purchases to use, lenders are noticeably expanding vacant buildings all across our state.

“This policy of the major banks to evict all homeowners and leave properties vacant that often degrade within a few months in communities throughout the state has led to fires in our city of Lynn and in Fitchburg. They tear apart neighborhoods, damage property values and undermine the local tax base of cities and towns,” said Isaac Hodes, of Lynn United for Change. “Freddie Mac and in some cases HUD allow homeowners to stay and rent, there is no reason every bank in our state should not be required to.”

The Senate entertained the proposal that homeowners be allowed to rent as responsible tenants while banks own a property and voted overwhelmingly to support efforts in that direction. They chose to put together a commission to refine legislation to prevent these unnecessary vacancies. The Senate sent this initiative along with these other tools for homeowners and the state to take significant steps to address the foreclosure crisis on to a joint conference committee with the House-side of the legislature to hammer out a compromise.

“We are not done here today. We look forward to building on this victory and recognition by the state Senate that Massachusetts simply cannot continue to face foreclosures at this rate: over 10,000 per year for the coming years. They must step in and put in place serious measures to reverse this devastating crisis which is destroying our lives, our communities and our overall economy,” said Mildred Collins, who spent two days talking to Senators at the State House and is a leader in the Worcester Anti-Foreclosure Team and a foreclosed homeowner fighting to get her home back.

“We are committed to work with the legislature for however long it takes to have them join together with the people of our state seeking to make sure there are protections for homeowners in the foreclosure process. We will work with the House to ensure that they adopt the critical initiatives approved by the Senate and remove legal impediments that will harm homeowners who seek to challenge unlawful foreclosures,” Nadine Cohen, attorney, Greater Boston Legal Services Consumer Division.

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