BOSTON -
The result of a broad industry task force that included credit union representatives, the bill would require lenders to provide homeowners with an intent to foreclose and a right to cure a default. The notice of intent to foreclose would have to be filed with the state Division of Banks.
The bill would also require lenders who steer borrowers to subprime ARMs to allow the borrowers to opt out of a fixed-rate loan. The provision is designed to prompt lenders to provide clear disclosure about the loans they offer, and to have borrowers learn more about the full consequences of adjustable-rate mortgages with very low "teaser" rates.
These rates jump after two years, raising monthly payments by hundreds of dollars, causing some homeowners to fall behind and even lose their houses.
Regulators and subprime borrowers themselves said many borrowers did not realize the full cost of such loans at the time they took them out, and only learn when a new payment schedule arrives.
"We must help homeowners facing foreclosures," Gov. Patrick said. "The problem is complex and requires a comprehensive approach that provides for greater education and information for consumers before securing a mortgage; a more responsive legal framework for homeowners facing foreclosure, and clear consequences for those who engage in mortgage fraud."
The state is also exploring other efforts to rescue homeowners, including a multi-million dollar fund that would provide low-cost refinancing.
