Massachusetts Foreclosure Procedure Could Change
With two million homes in foreclosure nationally, and another 2.2 million homes defined as at risk of foreclosure, a proposal being discussed in Washington this week seeks to help homeowners with new rules and regulations. Apparently Elizabeth Warren, the head of the newly established Federal Consumer Financial Bureau, is taking the lead on this program, which is backed by the Department of Justice, the Federal Trade Commission and Housing and Urban development. The perspective of a Massachusetts bankruptcy lawyer might be that this could help many families who want to save their home and could, with a modified mortgage. Supporters of the proposals say they would be fair and they would stabilize the housing market and countless neighborhoods.
The proposals include preventing foreclosure while a homeowner is actively trying to modify his or her loan. A frequent problem we hear all the time is that the homeowner is sending and faxing documents, sometimes for months, when the bank simply starts a foreclosure process. The second aspect of the new rules is that a trial modification program would be set up; if the homeowner makes three payments under that program, it would go into effect at the new rate. Third, any denials of a modification would go to an independent reviewing panel.
Critics of the program say it is just delaying the inevitable. They also say that anything that consumer advocate and former Harvard Bankruptcy Law Professor Elizabeth Warren says is too consumer friendly and would hurt banks. Of course, anytime there are new “rules and regulations,” many folks say there is too much government. On the other hand, the banks lending practices to homeowners were largely responsible for the Great Recession, which after enormous federal expense, we are barely out of.