Budget Amendment ID: FY2027-S4-803
OTH 803
Foreclosure Prevention
Mr. Gómez moved that the proposed new text be amended by inserting after section XX the following section:-
"SECTION XX. Chapter 244 of the General Laws is hereby amended by adding the following section:-
Section 35D. (a) As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings: “Borrower”, a mortgagor of a mortgage loan.
“Creditor”, a person or entity that holds or controls, partially, wholly, indirectly, directly or in a nominee capacity, a mortgage loan securing an owner-occupied residential property including, but not limited to, an originator, holder, investor, assignee, successor, trust, trustee, nominee holder, mortgage electronic registration system or mortgage servicer, including the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation; provided, however, that “creditor” shall also include any servant, employee or agent of a creditor.
“Creditor’s representative”, a person who has the authority to negotiate and approve the terms of and modify a mortgage loan, under a servicing agreement.
“Loss mitigation”, the systematic consideration of all alternatives to a foreclosure sale that will minimize losses to creditors in the mortgage loan and avoid foreclosure where possible.
“Foreclosure prevention program administrator”, a government or non-profit organization designated by the attorney general to administer the Massachusetts Foreclosure Prevention Program. The administrator, together with the attorney general’s office, shall promulgate rules regarding the program procedures including notices and forms, and trainings for mediators.
“Good faith”, honesty in fact and the observance of reasonable commercial standards of fair dealing, required by creditors participating in foreclosure prevention conferences in evaluating borrowers for all available loss mitigation options, in compliance with all state and federal laws, rules, and regulations.
“Massachusetts Foreclosure Prevention Program”, the program established by this section, that provides supervised mediation conferences where parties make a good faith effort to avoid foreclosure through application of sustainable loss mitigation alternatives
“Mortgage loan”, a loan to a natural person made primarily for personal, family or household purposes secured wholly or in part by a mortgage on residential property.
“Residential property”, real property located in the commonwealth on which there is a dwelling with accommodations for not more than 4 separate households and occupied, or to be occupied, in whole or in part by the obligor on the mortgage debt; provided, however, that “residential property” shall be limited to the principal residence of a person; provided further, that “residential property” shall not include an investment property or a residence, other than a primary residence, or residential property taken in whole or in part as collateral for a commercial loan.
(b) There shall be a Massachusetts Foreclosure Prevention Program administered by an organization appointed by the Attorney General.
(c) A creditor shall, concurrently with the notice sent to the borrower of residential property under section 35A, give notice to the borrower of the borrower’s right to participate in the Foreclosure Prevention Program by attaching to the right to cure default notice: (1) notice of the availability of foreclosure mediation, in such form as the Foreclosure Prevention Program Administrator prescribes; and (2) a foreclosure mediation request form, in such form as the Foreclosure Prevention Program Administrator. A borrower electing to participate in foreclosure mediation shall submit the foreclosure mediation request form to the creditor not more than 30 days after receipt of the notice.
(d) The notice shall include a check-box for the borrower to indicate election for all parties to participate in-person rather than by videoconference. Absent the borrower’s election for an in-person mediation session, the sessions shall be by videoconferencing device. The mediation session shall be conducted by a neutral third-party mediator between the borrower, the borrower’s representative or housing counselor and the creditor’s representative, who shall have the authority to negotiate over all available loss mitigation options, including, but not limited to:
(1) a modified mortgage loan; (2) a reduction in principal; (3) a reduction in interest rate; or (4) an increase in the amortization period of the mortgage loan; provided, however, that an alternative form of meeting may be mutually agreed upon by the mortgagor, the mortgagee and the mediator.
(e) The creditor’s representative shall provide, 10 days prior to the mediation session, a description of the available loss mitigation options and relevant information concerning the loan and the residential property required for a loss mitigation review, in a form to be developed by the Administrator.
(f) If a borrower elects to participate in the foreclosure mediation program, a creditor shall not accelerate the note or otherwise initiate foreclosure proceedings unless the creditor has obtained a certification from the mediator indicating that the creditor participated in the foreclosure mediation program in good faith and made all reasonable efforts to find an alternative to foreclosure and any agreement is in full compliance with all state and federal guidelines.
(g) The borrower’s or creditor’s rights or defenses in the foreclosure action shall not be waived by participating in the foreclosure mediation program.
(h) Nothing in this section shall require a creditor to modify a mortgage or change the terms of payment of a mortgage.
(i) Financial information confidential. Any financial statement or information provided to the parties during the course of mediation in accordance with this section is confidential and is not available for public inspection. Any financial statement or information must be made available as necessary, to the court, the attorneys whose appearances are entered in the case and the parties to the mediation. Any financial statement or information designated as confidential under this subsection must be kept separate from other papers in the case and may not be used for purposes other than mediation.
(j) Judicial enforcement. Either party may seek judicial enforcement of this section. (1) A creditor’s violation of the provisions of this section shall constitute an unfair and deceptive act in commerce and a violation of chapter 93A of the General Laws. (2) The borrower may bring an action to enforce the provisions of this section, including the requirements for creditor participation in good faith, review for all available loss mitigation options, the designation of a creditor’s representative, and the production of documents. The borrower may also bring an action to enforce program time frames or to require compliance with an agreement reached in the course of the mediation process.
(k) Program Funding (1) Costs. In addition to the charge currently assessed for filing a complaint under the Servicemembers Civil Relief Act (SCRA) under chapter 57 of the acts of 1943, as amended through Chapter 142 of the Acts of 1998, the creditor shall pay a fee in an amount and manner to be determined by the attorney general upon the filing of each Servicemember case. This cost shall not be shifted to the borrower. The Administrator will deposit these funds into a segregated fund known as the “Foreclosure Prevention Fund.” (2) Foreclosure prevention fund. (i) The funds deposited into the Foreclosure Prevention Fund shall be designated primarily for costs of administration of the Foreclosure Prevention Program and payment of mediator fees. Any remaining funds shall be applied to cover costs of administration of the program, as well as outreach directed to homeowners at risk of foreclosure or in foreclosure. (ii) The funds deposited in the Foreclosure Prevention Fund, including interest earned, shall be used solely for the purposes outlined in this section and shall not be transferred to the state’s general fund. (iii) Fee shifting barred. Other than the filing fee surcharge, the parties participating in foreclosure prevention conferences shall bear their own costs for participation.".