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New State Bill Could Help Distressed Homeowners

The Massachusetts legislature introduced a new bill last week to assist distressed homeowners. As a result, Boston real estate lawyers have some new reading material, in order to stay current with the laws.

"This bill is a key movement forward for tenant protections in Massachusetts,'' said Amaad Rivera, coordinator for the Massachusetts Alliance Against Predatory Lending. The Alliance, a nonprofit group, has been pushing for the legislation for over two years.

The bill is set to go to the House for consideration. It proposes several protections for distressed homeowners.

Here are some provisions:

  • Provide eviction protection to rent-paying tenants. If a rental home forecloses, the tenants would be given some breathing space. As a result of this proposed legislation, the renters would be allowed to stay in their homes until a new buyer could be found. Currently, the federal law allows renters to stay in a foreclosed home for 90 days.
  • Make mortgage fraud a crime. Mortgage fraud is a gray area as far as criminal prosecution is concerned. As a result, this law proposes to place a definition on the criminality of mortgage fraud.
  • Lengthen the state "right to cure" law from 90 days to 150 days. The law forces a foreclosure wait period on lenders, if they do not negotiate with homeowners. The lenders are also obligated to review the borrower's ability to repay the loan under more favorable terms.
  • Require people who are interested in reverse mortgages to attend in-person counseling.

Of course, there exist opponents to the bill, largely from the lending and banking industry. A criticism of the bill is that it could make the foreclosure process a lot longer than it needs to be. Another criticism centered around the fact that the presence of renters in the property could inhibit potential buyers.

For Massachusetts real estate lawyers, however, the new bill presents new developments in tenants' rights and in the rights of distressed homeowners.

And the new bill has the potential to be extremely helpful to distressed homeowners. 

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