Massachusetts homeowners facing foreclosure can expect improved protections under regulations filed by the state's Division of Banks that prevent national and state lenders from foreclosing on a property if an application for a loan modification is in process.
The new regulations were established as a result of the law signed by Gov. Deval Patrick in August 2012. Mortgage servicers will be required to explore more options to avoid foreclosure and third-party mortgage servicers will be prevented from starting a foreclosure when an application for a loan modification is underway.
Third-party loan servicers also will have to provide a single point of contact for the borrower, follow detailed loan modification procedures and communicate with borrowers in a timely manner to comply with the new regulations.
The regulations include many provisions of the attorneys generals 2012 mortgage settlement with the five largest national mortgage servicers. The division also considered the recently published Consumer Financial Protection Bureau rules, which go into effect in January 2014.
This is another step in the right direction to further strengthen protections provided to Massachusetts borrowers and homeowners, Consumer Affairs and Business Regulation Undersecretary Barbara Anthony said in a news release.
These new rules complement the recently adopted foreclosure prevention regulations that require lenders and servicers to modify certain mortgage loans if the cost of modification is less than the cost of foreclosure.