Senator Sonia Chang-Diaz
Massachusetts Second Suffolk District
Legislature Gives Final Approval to Foreclosure Protection Bill
Includes measures championed by Senator Chang-Díaz for urban communities
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With home foreclosures continuing to rise in the Commonwealth in spite of the slowly improving economy, the Senate and House today sent final consumer protection legislation to the Governor that protects both homeowners and tenants from mortgage fraud and arbitrary evictions. House Bill 4934, An Act to stabilize neighborhoods, will help protect families and residents during these challenging fiscal times.

“This legislation represents a major step toward protecting residents and neighborhoods across Massachusetts” said Senator Sonia Chang-Díaz, who represents many of the Boston neighborhoods most affected by foreclosure. “As we’ve seen in news reports over the past couple of weeks, the foreclosure crisis is not anywhere near over. Reform on this issue has been one of my top legislative priorities since taking office just over a year ago, so I’m thrilled at the passage of this no-cost bill that is on its way to the Governor.”

The legislation incorporates several measures championed by Chang-Díaz, a member of the legislature’s Joint Committee on Housing.

A main provision in the bill, which Chang-Díaz also filed as a separate piece of legislation at the beginning of her term, will protect tenants from being unjustly evicted from their building when that building is foreclosed upon. Currently, tenants who are in perfectly good standing with payment of their rent, but who happen to live in a building that’s getting foreclosed upon, are often thrown out of their homes. This is a problem that particularly affects urban neighborhoods, where there are many multi-family buildings. H.4934 prohibits the lending institution that forecloses on a house from evicting a tenant unless that tenant has otherwise violated his or her lease. It does not prohibit a lender from evicting tenants for valid reasons, such as using a unit for illegal purposes or not allowing the lender to enter the unit to make repairs.

“As Chairwoman of the Housing Committee, I want to commend Senator Chang-Díaz for her contributions to this bill” said Senator Sue Tucker (D-Andover). “Her tireless work on this issue was so valuable throughout the process.”

For homeowners, the legislation also temporarily extends the 90-day right-to-cure period, enacted by the legislature in 2007, to 150 days. The 2007 law gave homeowners 90 days to come up with past due payments on their mortgage before the lender could require full payment of the unpaid balance. This was intended as a cooling off period for the lender and homeowner to work out a new payment plan to avoid foreclosure.

The right-to-cure period can be reduced from 150 days to 90 days if the lender makes a good-faith effort to negotiate a commercially reasonable alternative to foreclosure.

These new provisions require at least one meeting or telephone conversation between the homeowner and the lender to discuss a commercially-reasonable alternative to foreclosure. The lender’s representative must have the authority to agree to the revised terms.

The bill also establishes a new local option property tax exemption that permits a charitable organization that acquires a foreclosed property, and plans to create low and moderate income affordable housing there, to be exempt from property taxes until it rents or leases that property, but not for more than seven years after purchase.

Further protecting elder homeowners in the state, the legislation requires those who want to obtain a reverse mortgage on their home to meet with a counselor approved by the Executive Office of Elder Affairs.

In addition, the bill would criminalize residential mortgage fraud.

This bill now goes to the Governor for his signature.

(Caption: Senator Chang-Diaz testifying on foreclosure protection earlier this year)

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State Senator Sonia Chang-Díaz represents the Second Suffolk District, which includes all or part of the neighborhoods of Back Bay, Bay Village, Beacon Hill, Chinatown, Dorchester, Fenway, Jamaica Plain, Mattapan, Mission Hill, Roxbury and the South End.