Thursday, April 29, 2010
Senate OK’s measure protecting tenants
Foreclosure plan delays evictions

The state Senate yesterday unanimously approved legislation aimed at stabilizing neighborhoods by providing eviction protection to tenants in foreclosed homes and helping homeowners struggling to avoid foreclosure.

The Senate approved the Act to Stabilize Neighborhoods that has been pushed by local housing advocates for more than two years as a way to help solve the state’s growing foreclosure problem. It comes at a critical time in the state when each week hundreds of homeowners lose their properties to foreclosure, hurting owners, tenants, and neighborhoods plagued by abandoned homes.

“This bill is a key movement forward for tenant protections in Massachusetts,’’ said Amaad Rivera, coordinator for the Massachusetts Alliance Against Predatory Lending, a nonprofit group that has advocated for the legislation for more than two years. “We are really excited.’’

The bill now goes to the House for consideration. Among its provisions, the legislation would:

■ Provide eviction protection to rent-paying tenants, who could remain in their homes until a new owner purchases the property. This advances a federal law, which expires in 2012, that allows renters to remain in foreclosed homes for 90 days.

■ Extend from 90 days to 150 days a state “right to cure’’ law that forces lenders to wait to foreclose if they do not negotiate with homeowners. Under this provision, the lender has to make an attempt to look at the borrower’s ability to repay the loan under more agreeable terms.

■ Criminalize mortgage fraud, which currently doesn’t have its own state law. This would give state regulators more of an ability to prosecute predatory lenders and mortgage brokers and fraudulent investors and sentence them to jail time.

■ Require in-person counseling for people interested in reverse mortgages, a complicated financial product that allows certain low-income senior citizens to take a loan on their homes to be paid back when they sell the property or pass away. The counseling provision would not go into effect for 18 months.

The bill was met yesterday with some concerns by members of the Massachusetts Bankers Association who worry that added tenants rights and new rules could add months to an already lengthy foreclosure process.

Jon Skarin, director of federal policy for the bankers association, said distressed homeowners might avoid talking to lenders to extend the foreclosure process and stay longer in their properties without paying.

Lenders also are concerned that requirements to allow tenants to remain in foreclosed properties could hurt their efforts to sell the homes, which in some cases already are in terrible condition.

“Sometimes the tenants might be better off living somewhere else,’’ he said. “You have a potential to scare off buyers if there are people living in the property. I do think we have some concerns about that.’’

But Senator Susan C. Tucker, a Democrat of Andover who authored the legislation, said the bill would help prevent tenants, who were not responsible for the foreclosure, from becoming homeless. She said it would also push more lenders to negotiate with distressed homeowners.

“Our goal is to get borrowers and lenders to the table to save those loans that can be saved,’’ she said. “We all agree that isn’t every mortgage.’’

Senator Sonia Chang-Díaz, Democrat of Boston, said the legislation will help struggling neighborhoods “that are scarred with vacant buildings, decreased property values, and increased crime.’’

“Foreclosure rates also remain as a major weight holding our economy and our neighborhoods back from economic recovery,’’ Chang-Díaz said.