Antidotes For Foreclosure Ailment

Posted in Foreclosure, October 22nd, 2007 |

Governor Patrick, the Attorney General and the Legislature have all joined hands to find an antidote for the raging foreclosure virus in Massachusetts. The approach is different from what is usually taken to grapple with bonds and real estate blues, financial or currency markets.

The first objective of the state is to bring about laws that will not allow a repeat performance of what has already happened. It is the sub-prime predatory lending with teaser rates that duped borrowers to opt for this scheme. The new laws will make this sort of deception to be treated as felony. The local administration will publish and scrutinize all information and activities of companies whose loans end up in foreclosures.

Foreclosures are taking a toll on both lenders and borrowers. It is a costly and time-consuming process that is exhausting and negative. There is very little that can be done about what has already happened. The steps are only forward looking.
In Bristol County the intensity of the foreclosure can well be gauged by the fact that the numbers jumped 68% this year. 208 houses were foreclosed during the last 12 months in New Bedford. In Massachusetts during the last 12 months there were 25,000 foreclosures – a 76% high jump over the numbers of the previous year.

A state fund of $250 million is being created to help those lagging behind in payments. They have the option to appeal to the state when a lender tries to foreclose. This might make them gain a further two or three months period of grace. Banks will now be required to give notice to them of forthcoming changes in rates 90 days in advance. Cheaper alternatives must also be offered and explained. For many even these terms might be impossible to meet. In their cases lenders will be asked to reduce and bring down the rate to the current one running. Even after all this if a house owner has to sell and pay back the lender the displaced person will have the opportunity of tapping into a state fund and take at least $5,000 as help to defray the cost of shifting to new rental quarters.

The solution is a patchwork of sorts and will not fully satisfy anyone. But a beginning has been made to solve a crisis that was triggered off by predatory lending and greedy borrowing.