House Passes Foreclosure Bill, Senate Expected to Hear it Thursday
Under the compromise, lenders would not be required to enter into mediation before foreclosing.
The House unanimously passed a compromise on the foreclosure bill that scraps the contentionous mediation provision but requires lender to modify certain loans before evicting homeowners.
The compromise, hammered out in a conference committee comprised on members of both chambers, passed the House Wednesday and is expected to go before the Senate Thursday.
According to the bill, mortgages that are more expensive to foreclose on rather than to modify need to be adjusted. In other words, if the expected recovery from a foreclosure is of less value than that which would be gained by modifying the loan, the lender is required to adjust the loan.
The bill would also ban foreclosures that lack the proper documentation. But this documenation does not have to include mediation, which was part of a previous foreclosure-prevention bill passed by the Senate.
This measure was strongly opposed by the Massachusetts Bankers Association, who said that it would low economic recovery by tightening access to credit for low- and middle-income homebuyers.
The conference committee chose not to include the mediation provision because, they say, its effectiveness is unknown. Instead, the new bill would create a task force to study the usefulness of mediation.
Statewide, foreclosures are up 32 percent over this time last year, according to The Boston Globe. And foreclosure petitions, the first step in the process, are up 77 percent. Coakley has declared a "foreclosure crisis" in Massachusetts and said the state needs to work to stop it.