This is a great article about a new foreclosure law in the Worchester Telegram & Gazette. If you or a love one is facing foreclosure give the chapter 13 bankruptcy lawyers at the Law Office of Brian R Lewis a call, it could save your home.
By Steven H. Foskett Jr. TELEGRAM & GAZETTE STAFF firstname.lastname@example.org
WORCESTER — Amid a flurry of new state laws signed recently was a foreclosure prevention bill requiring banks to weigh the benefits of modifying mortgages against the loss they would take by foreclosing on a house.The new bill also includes a provision requiring more clarity from banks in proving home ownership before putting a house in foreclosure
District 3 City Councilor George Russell, who also owns George Russell Realty, said he wasn’t too familiar with the new law, but chuckled a bit when filled in on the particulars.
“It’s kind of funny that you needed a law to say that,” Mr. Russell said.
Other local officials and activists were also unfamiliar with the new law, portions of which took effect immediately after Gov. Deval L. Patrick signed it Aug. 3, but welcomed any additional legislation offering homeowners more protection.
The bill, “An Act Preventing Unlawful and Unnecessary Foreclosures,” requires creditors to determine whether the “net present value” of modifying a loan is more than the likely value of foreclosure, and if so, the creditor must modify the loan. If the value of the loan is less than the value of the foreclosure, they do not have to modify the loan.
The provisions of the new law also require lenders to take more steps to prove they own the loans before they take foreclosure action.
“I think it’s a great idea,” Mr. Russell said. “You would think these big banks would have figured it out on their own without having to put a law on it.”
He said it’s frustrating that many families affected by foreclosures in the city are not owners, but tenants who get evicted once the bank takes possession of the house.
“What banks do is they basically won’t give a break to a family living in the house,” Mr. Russell said. “They throw them out, sell it for less money than is owed or a short sale to the third party, and allow the bank to take the loss.”
City Manager Michael V. O’Brien stood on Arlington Street Friday morning, across from the empty lot where a three-decker once stood at 49 Arlington St. A fire destroyed the house Dec. 8, and Firefighter Jon Davies was killed when he and firefighter Brian Carroll went back into the building after hearing someone may still have been inside. Surrounded by chain-link fence, the lot is still decorated with small, worn memorials.
Mr. O’Brien said he welcomes the new foreclosure prevention law.
“It’s another tool in the tool bag for us,” Mr. O’Brien said. “We’ll look to see how it actually gets put to work, to see if banks put a sincere effort into modification.”
The proof of ownership provisions particularly interested Mr. O’Brien, who said the city has been in housing court situations in which different lawyers for owners of problem properties show up at hearings, each saying their client is the owner of the property.
The manager said he has been busy in recent months working with local public and private agencies to mount another push this fall to promote home ownership. It’s a strategy he hopes will not only slow the decline of neighborhoods in the city devastated by foreclosure and absentee landlords, but will start to turn them around.
Mr. O’Brien said the new program, the final details of which are still being worked out, will barrage neighborhoods with a variety of incentives to promote home ownership, and will offer programs for existing homeowners to keep them in their homes. He said the effort will include connecting responsible local banks to potential homeowners. Three-deckers that are now boarded up and in disrepair will be restored to their former glory, he said.
He said the program will include reaching out to local clergy in an effort to find more potential homeowners. For example, he said there could be a family from Kenya who have been living and working in the city for several years, but they don’t have a solid credit history in the U.S. The city could provide some underwriting of the mortgage, or other assistance.
“How do we look to say, can we bridge that gap?” he said.
Above all, flooding neighborhoods with more owner-occupied homes will almost surely have a positive impact, he said.
“That is the legacy of the horrible tragedy that happened here at 49 Arlington St.,” Mr. O’Brien said. “The owner hadn’t looked at it in two years, the local management company had walked away. We have to wake up these Newton landlords that it’s not just an investment to draw off of.”
Mr. O’Brien said he envisions a program used in other cities that gives incentives to firefighters and other public employees to buy a house in a neighborhood like Union Hill or Vernon Hill. In turn, the new homeowners would commit to actually living in the property and staying there for a certain period of time.
The city will work “street by street, block by block,” until neighborhoods come back to life, he said. Houses beyond repair would be taken by eminent domain and razed, and the remaining lot could possibly be split between remaining homeowners to give them a side yard or a driveway. Long-term, the city would eventually repave streets, perform needed infrastructure repairs, and even plant more trees, he said.
It’s an ambitious plan, and despite Mr. O’Brien’s assurances that there is buy-in from the private and nonprofit sector, it will surely come at a cost to the city. But Mr. O’Brien argued that not doing anything will come at an even greater cost.
Mayor Joseph M. Petty, who has been working with Mr. O’Brien on the new program, said its rollout will likely require some council votes, and said some councilors might have concerns about the redirection of already dwindling federal block grant funds. But it’s worth the effort, he said, calling the program one of the most important undertakings this council will oversee.
Responding to the possibility that the program will raise the ire of taxpayers, Mr. Petty said taxpayers are already paying for the blight in neighborhoods in which foreclosures and absentee landlords dominate the landscape.
“It’s better to attack the neighborhood than just one block,” he said. “It could change the complexion of the whole neighborhood.”
According to the Warren Group, there were 365 foreclosure petitions filed in the city for the six-month period ending June 30, up from 231 foreclosure petitions for the same period in 2011, a 58 percent spike. Foreclosure deeds, the last step in foreclosure, were also up over last year, from 206 in the first six months of 2011 to 238 for the six-month period ending June 30, 2012.
Sam Moody of the Worcester Anti-Foreclosure Team works in the thick of those statistics. Members of the mostly volunteer team go around the city and stage protests at foreclosure auctions. The action shines a light on the plight of homeowners, but also often buys homeowners and tenants precious time to stay in their homes, he said.
“All they want to do is stay in their home,” Mr. Moody said. “People want to make the payments. Maybe they managed to get back on their feet, but they’re up against a terribly impersonal system. The legal paperwork is something we have to sit down with them and go through. They struggle terribly with it.”
The Anti-Foreclosure Team works with about 40 households right now, Mr. Moody said. He said he welcomed the provisions of the new state law making sure banks prove ownership; contesting ownership is a key tool Mr. Moody’s group uses.
“It stands up in the courts,” he said. “Sometimes the way it works out is, the foreclosure gets nullified, and the result is the bank is much more enthusiastic about giving a modification — they would like to keep the loan.”
Part of the new foreclosure prevention law includes the establishment of a task force, which will be chaired by the attorney general’s office and will include a representative of the Massachusetts Bankers Association.
Jon Skarin, senior vice president of the Massachusetts Bankers Association, said he felt the law struck a better balance between the interest of homeowners and lenders than other proposals. He said most banks in the state already engage in some type of analysis to determine the value of modifying certain mortgages, but he hopes the process laid out in the new law will be helpful.
He said he hopes the law encourages homeowners to contact lenders early, when they are just starting to have difficulty making ends meet.
“The earlier you can get somebody in to work with you, the better,” Mr. Skarin said. “If you wait six months, eight months, you’re going to be further behind, you’re going to be in worse financial shape. One of our goals is to try and create a system where borrowers have some responsibility to come to the table early in the process.”