Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S653 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	1 of 1
2	2	SENATE DOCKET, NO. 909 FILED ON: 1/18/2023
3	3	SENATE . . . . . . . . . . . . . . No. 653
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Adam Gomez
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act establishing a Massachusetts foreclosure prevention program.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :Adam GomezHampdenChristine P. Barber34th MiddlesexPeter Capano11th EssexJames B. EldridgeMiddlesex and Worcester3/6/2023 1 of 12
16	16	SENATE DOCKET, NO. 909 FILED ON: 1/18/2023
17	17	SENATE . . . . . . . . . . . . . . No. 653
18	18	By Mr. Gomez, a petition (accompanied by bill, Senate, No. 653) of Adam Gomez, Christine P.
19	19	Barber, Peter Capano and James B. Eldridge for legislation to establish a Massachusetts
20	20	foreclosure prevention program. Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Third General Court
24	24	(2023-2024)
25	25	_______________
26	26	An Act establishing a Massachusetts foreclosure prevention program.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 SECTION 1. Chapter 244 of the Massachusetts General Laws is hereby amended by
30	30	2inserting after section 35C the following section: -
31	31	3 Section 35D. FORECLOSURE PREVENTION PROGRAM
32	32	4 Section 35D. (a) As used in this section, the following words shall, unless the context
33	33	5clearly requires otherwise, have the following meanings:-
34	34	6 “Massachusetts Foreclosure Prevention Program”, the program established by this
35	35	7section, that provides supervised conferences where parties make a good faith effort to avoid
36	36	8foreclosure through application of sustainable foreclosure prevention alternatives.
37	37	9 “Covered loans”, all loans secured by 1 or more liens placed with the borrower’s consent
38	38	10on real property that serves as the borrower’s primary residence, including properties with up to
39	39	114 rental units provided that the property also serves as the borrower’s primary residence, 2 of 12
40	40	12including voluntary liens and liens created under terms of a deed of trust or mortgage, including
41	41	13loans secured by reverse mortgages, condominium, and cooperative units; provided further that
42	42	14covered loans shall not include judgment liens, tax liens, liens for municipal services, or any
43	43	15liens imposed by a governmental unit in connection with an assessment or penalty. This section
44	44	16applies to loans secured by reverse mortgages, condominium, and cooperative units.
45	45	17 “Creditor”, a person or entity that holds or controls, partially, wholly, indirectly, directly
46	46	18or in a nominee capacity, a mortgage loan securing an owner-occupied residential property,
47	47	19including, but not limited to, an originator, holder, investor, assignee, successor, trust, trustee,
48	48	20nominee holder, Mortgage Electronic Registration System or mortgage servicer, including the
49	49	21Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation;
50	50	22provided, that ''creditor'' shall also include any servant, employee or agent of a creditor; and
51	51	23provided, further, that the bodies politic and corporate and public instrumentalities of the
52	52	24commonwealth established in chapter 708 of the acts of 1966 and in section 35 of chapter 405 of
53	53	25the acts of 1985 shall not be a creditor.
54	54	26 “Creditor’s representative”, a person who has the authority to negotiate and approve the
55	55	27terms of and modify a mortgage loan, or a person who, under a servicing agreement, has the
56	56	28authority to negotiate and approve the terms of and modify a mortgage loan, and has the
57	57	29authority to appear on behalf of the creditor at the foreclosure prevention conferences, and has
58	58	30the authority and ability to communicate loss mitigation decisions at the foreclosure prevention
59	59	31conference; provided further that the creditor’s representative may not be the attorney
60	60	32representing the creditor of the loan in the foreclosure. 3 of 12
61	61	33 “Eligible borrowers”, a mortgagor of a mortgage loan, or successor in interest to a
62	62	34mortgagor, who meet 1 or more of the following: (i) borrowers with covered loans who are
63	63	35served with a notice of right to cure pursuant to section 35A and elect to participate in the
64	64	36conference program; (ii) borrowers with covered loans who have not been served with a notice
65	65	37of right to cure pursuant to section 35A, including borrowers who are current in mortgage
66	66	38payments, but who are at imminent risk of default and elect to participate in the conference
67	67	39program; (iii) borrowers who are referred to the conference program by a judge at any time; (iv)
68	68	40borrowers in active bankruptcy cases whose loans are in default or are at imminent risk of default
69	69	41and are eligible to participate in the conference program so long as the bankruptcy court, either
70	70	42in the individual case or through a standing order, has granted relief from the automatic stay to
71	71	43all parties for the purpose of participating in the conferences, provided further that the
72	72	44borrower’s prior discharge of personal liability on the underlying loan debt does not preclude
73	73	45participation in the conferences.
74	74	46 “Foreclosure prevention program administrator”, a government or non-profit organization
75	75	47designated by the attorney general to administer the Massachusetts Foreclosure Prevention
76	76	48Program. The administrator shall develop guidelines and standards for conference monitor
77	77	49trainings to ensure monitors have a working knowledge of all federal and state programs
78	78	50available to help homeowners retain their homes.
79	79	51 “Foreclosure prevention program conference monitors”, individuals appointed by the
80	80	52administrator and trained to facilitate foreclosure prevention conferences, who may include (i)
81	81	53active retired justices or judges who may be assigned by the respective chief justice or justice of
82	82	54the court; (ii) people educated or experienced in the professions of law, real estate, accounting, or
83	83	55mediation, or (iii) people who have worked with homeowners or creditors. Conference monitors 4 of 12
84	84	56will be immune from civil liability for performance of their duties under this section, except for
85	85	57gross negligence.
86	86	58 “Good faith”, honesty in fact and the observance of reasonable commercial standards of
87	87	59fair dealing, required by creditors participating in foreclosure prevention conferences in
88	88	60evaluating borrowers for all available foreclosure prevention options, in compliance with all state
89	89	61and federal laws, rules, and regulations,
90	90	62 “Certificate of compliance”, certificate issued by the administrator upon finding that (i)
91	91	63the creditor made a good faith effort to reach a mutually agreeable commercially reasonable
92	92	64alternative to foreclosure, or (ii) despite reasonable notice, the borrower declined to participate in
93	93	65the foreclosure prevention program.
94	94	66 “Loss mitigation”, systematic consideration of all alternatives to a foreclosure sale that
95	95	67will minimize losses to creditors in the covered loan and avoid foreclosure where possible.
96	96	68 (b) Conference procedure: The creditor of a covered loan and eligible borrower shall
97	97	69engage in good faith in the Foreclosure Prevention Program conferences as set out in this section.
98	98	70 (1) Notice of intention to foreclose. The creditor of a covered loan who serves a borrower
99	99	71with the notice of right to cure under section 35A shall concurrently serve the Administrator with
100	100	72a copy of the notice.
101	101	73 (2) Notice of conference. Within 5 business days of the Administrator’s receipt of the
102	102	74copy of the notice of right to cure, or a request from an eligible borrower to participate in the
103	103	75foreclosure prevention program, the Administrator shall mail to the borrower a notice of right to
104	104	76participate in a supervised foreclosure prevention conference. The notice shall describe the rules 5 of 12
105	105	77and procedures for the conference and provide the borrower with referral information for HUD-
106	106	78certified housing counselors approved by the Administrator. The notice shall describe the state
107	107	79law foreclosure procedures and timeline.
108	108	80 (3) Election to proceed with conference. The notice of the conference shall include a
109	109	81check-box for the borrower to indicate an election to participate. The notice will also include a
110	110	82check-box for the borrower to indicate election for all parties to participate in-person rather than
111	111	83by videoconference. The notice shall indicate that the election form must be returned to the
112	112	84Administrator within 30 days of service in order to preserve the right to participate, but
113	113	85additional time may be granted for good cause. The Administrator will promptly notify the
114	114	86creditor of the borrower’s election.
115	115	87 (4) Appointment of conference monitor. Upon receipt of the borrower’s election to
116	116	88participate, the Administrator shall designate a conference monitor for the matter.
117	117	89 (5) Notice to the parties. Within 10 days of the Administrator’s receipt of the borrower’s
118	118	90election to participate, the conference monitor shall notify in writing the creditor or creditor’s
119	119	91attorney and the borrower of the Foreclosure Prevention Program and inform the parties of the
120	120	92identity of the conference monitor, the requirements of the program, and the date, time and
121	121	93location of the initial phone conference. Sending the notice shall constitute the beginning of the
122	122	94conference process as set forth in this section. Together with the notice the Administrator shall
123	123	95provide a list of documents that the creditor will be required to provide to the monitor and the
124	124	96borrower before the conference. The monitor shall set deadlines for the submission of
125	125	97documents. 6 of 12
126	126	98 (6) Notice to non-foreclosing lien holders of covered loans. The Administrator shall
127	127	99provide written notice of the conference sessions and procedures to all non-foreclosing lien
128	128	100holders of a covered loan identifiable from public land records and invite their participation. The
129	129	101notice shall inform such lienholders that their rights could be affected by the loss mitigation
130	130	102conferences.
131	131	103 (7) Communication and document exchange. To the extent feasible and accessible by all
132	132	104parties, the monitor shall use secure internet portals or document storage sites for the exchange
133	133	105of documents. These shall be under the control of the Administrator and not the parties.
134	134	106Borrowers will not be denied access to the Program because they provided documents to the
135	135	107monitor and the parties by a method other than an internet portal or document storage site.
136	136	108 (8) The foreclosure prevention conference:
137	137	109 (i) The monitor shall schedule a conference which will be held virtually via a
138	138	110videoconferencing platform unless the borrower requests that all parties attend an in-person
139	139	111conference. The creditor’s representative and the borrower may appear with counsel. The
140	140	112borrower may appear with a housing counselor or other individual designated by the borrower.
141	141	113 (ii) The creditor’s representative shall provide, 10 days prior to the conference, relevant
142	142	114information concerning the loan and the property required for a loss mitigation review, in a form
143	143	115to be developed by the Administrator.
144	144	116 (iii) During the conference the parties must first engage in evaluating the borrower for all
145	145	117options to retain the home. When home retention options have been exhausted or if the borrower
146	146	118wishes to exit the property, the creditor must review for non-retention options such as a short 7 of 12
147	147	119sale or deed-in-lieu of foreclosure. This section does not mandate the implementation of a
148	148	120specific loss mitigation option under a particular set of circumstances.
149	149	121 (iv) If the creditor appears for the conference with appropriate authority, has provided all
150	150	122required documents, made a good-faith effort to agree to a commercially reasonable alternative
151	151	123to foreclosure, and has reviewed all loss mitigation options without reaching an agreement, the
152	152	124monitor shall issue a Certificate of Compliance with the conference program. If the borrower
153	153	125declines the election to participate, or fails to appear at a conference without cause, there shall be
154	154	126a basis to certify the creditor’s compliance with this section.
155	155	127 (v) Continuance of a conference for cause may be granted once by the conference
156	156	128monitor and thereafter only upon agreement of all parties. Notice of continuance dates shall be
157	157	129provided to all interested parties, including non-foreclosing lien holders of a covered loan.
158	158	130 (vi) As a pre-condition to conducting a valid judicial or non-judicial foreclosure sale the
159	159	131creditor must first record in the registry of deeds of the county where the property is located a
160	160	132Certificate of Compliance with the provisions of this section. The Certificate must bear the
161	161	133signature of a duly authorized conference monitor or a judge. If the conference monitor does not
162	162	134issue a Certificate of Compliance, the creditor will be prohibited from continuing with the
163	163	135foreclosure process.
164	164	136 (vii) A foreclosure sale of a covered loan shall not pass title to the purchaser unless the
165	165	137Certificate of Compliance was recorded before the sale.
166	166	138 (viii) Conducting a foreclosure sale without having obtained and recorded a Certificate of
167	167	139Compliance shall constitute an unfair and deceptive business practice under section 2, chapter
168	168	14093A of the General Laws. 8 of 12
169	169	141 (ix) If the borrower does not elect to participate in the Program and does not pursue a
170	170	142modified mortgage loan under section 35B, if eligible, foreclosure may proceed under this
171	171	143chapter. If a borrower elects to participate in the Program, a creditor shall not accelerate the note
172	172	144or otherwise initiate foreclosure proceedings unless the conference monitor has issued a
173	173	145Certificate of Compliance to show that the creditor participated in the program in good faith.
174	174	146 (9) Conference Report. The conference monitor shall complete a Conference Report and
175	175	147provide a copy of the Report to the parties and the Administrator within 5 business days of the
176	176	148date of the conference. The Report shall state the names and addresses of attendees and the dates
177	177	149and times of all conferences, list the documents presented, and summarize the options
178	178	150considered. If an agreement was reached in full or partial settlement, the Report shall summarize
179	179	151the terms of the agreement. If the agreement provides for a trial modification or forbearance
180	180	152plan, the Report shall schedule an appropriate review date to monitor the finalization of the
181	181	153agreement. The Report shall state with specificity the grounds for the monitor’s decision to
182	182	154provide or decline to provide a Certificate of Compliance. The Report shall not be a matter of
183	183	155public record.
184	184	156 (c) Judicial enforcement and sanctions. Either party may seek judicial enforcement of this
185	185	157section.
186	186	158 (1) If a creditor or their attorney fails to attend a conference or to make a good faith effort
187	187	159to participate in the Foreclosure Prevention Program, including review for all loss mitigation
188	188	160options, the court may impose appropriate sanctions. In determining the nature and extent of
189	189	161appropriate sanctions, the court shall consider the need for deterrence of similar future conduct
190	190	162by the entity being sanctioned and by others and may take into account prior orders imposing 9 of 12
191	191	163sanctions upon the sanctioned party, whether in the same case or in other previous cases. The
192	192	164imposition of any sanction does not bar any independent action by a defendant to seek recovery
193	193	165with respect to the actions giving rise to the order of sanctions.
194	194	166 (2) Sanctions. The court may impose sanctions upon the creditor. The sanctions may
195	195	167apply prospectively to compel compliance or retroactively to punish past non-compliance, or the
196	196	168court may impose sanctions that operate both prospectively and retroactively. Sanctions may
197	197	169include: tolling of interest and other charges pending good faith completion of the conferences,
198	198	170per diem monetary penalties, assessment of costs and fees, assessment of reasonable attorney
199	199	171fees, entry of judgment, dismissal without prejudice, dismissal without prejudice with a
200	200	172prohibition on refiling the foreclosure action for a stated period of time, dismissal with prejudice
201	201	173or reduction or release of the lien, or any other sanctions the court deems appropriate. Sanctions
202	202	174assessed to a creditor shall not be shifted to the borrower.
203	203	175 (3) A creditor’s violation of the provisions of this section shall constitute an unfair and
204	204	176deceptive act in commerce and a violation of chapter 93A of the General Laws.
205	205	177 (4) Either party may seek judicial relief to compel a party to execute a written agreement
206	206	178embodying the terms of a conference settlement;
207	207	179 (5) The borrower may bring an action to enforce the provisions of this section, including
208	208	180the requirements for creditor participation, the designation of a creditor’s representative, and the
209	209	181production of documents. The borrower may also bring an action to enforce program time frames
210	210	182or to require compliance with an agreement reached in the course of the conference process.
211	211	183 (6) Breach of settlement agreement. If the creditor claims that the borrower breached the
212	212	184terms of a conference agreement and wishes to foreclose, the creditor may notify the monitor and 10 of 12
213	213	185borrower of the creditor’s claim of breach and intention to proceed with a foreclosure. The
214	214	186conference monitor shall provide the borrower with at least 10 days to object to the creditor’s
215	215	187request. If the borrower does not timely object, the monitor shall issue a certificate of compliance
216	216	188allowing the foreclosure to proceed and so notify the parties and the Administrator. If the
217	217	189borrower objects, the monitor shall schedule a further conference to determine whether a breach
218	218	190occurred and whether the creditor should be given certification to foreclose. The rules contained
219	219	191in this section for conferences shall apply to such a conference, except that additional
220	220	192documentation and the scope of the conference shall be limited to evidence of the alleged breach
221	221	193of agreement.
222	222	194 (7) Use of conference information. The information discussed in or presented during a
223	223	195conference session shall be kept confidential and shall not be used in any legal proceeding,
224	224	196except for actions to enforce this section or if the information can be obtained from sources
225	225	197outside the Program.
226	226	198 (8) Data reporting. The monitor shall submit copies of conference records, including
227	227	199document checklists, conference scheduling orders, conference reports, and settlement
228	228	200agreements, to the Administrator. These records shall not be available to the public. However,
229	229	201the Administrator or its designee may, consistent with the policy of protecting participant
230	230	202confidentiality, review the conference records for research purposes. The Administrator shall
231	231	203review conference records on a regular basis in order to provide the legislature and publicly
232	232	204posted a summary of Program data including (a) the number of borrowers who are notified of the
233	233	205program; (b) the participation rate for borrowers and creditors; and (c) the number of Certificates
234	234	206of Compliance issued, and any other relevant data. 11 of 12
235	235	207 (d) Program Funding
236	236	208 (1) Costs. In addition to the charge currently assessed for filing a complaint under the
237	237	209Servicemembers Civil Relief Act (SCRA) under chapter 57 of the acts of 1943, as amended
238	238	210through Chapter 142 of the Acts of 1998, the creditor shall pay a fee in an amount and manner to
239	239	211be determined by the attorney general upon the filing of each Servicemember case. This cost
240	240	212shall not be shifted to the borrower. The Administrator will deposit these funds into a segregated
241	241	213fund known as the “Foreclosure Prevention Fund.”
242	242	214 (2) Foreclosure prevention fund. (i) The funds deposited into the Foreclosure Prevention
243	243	215Fund shall be designated primarily for costs of administration of the Foreclosure Prevention
244	244	216Program and payment of monitor fees. Any remaining funds shall be applied to cover costs of
245	245	217administration of the program, as well as outreach directed to homeowners at risk of foreclosure
246	246	218or in foreclosure. The Administrator shall implement a plan for outreach that will include
247	247	219mailings and phone contact designed to encourage participation in the supervised conference
248	248	220program.
249	249	221 (ii) The funds deposited in the Foreclosure Prevention Fund, including interest earned,
250	250	222shall be used solely for the purposes outlined in this section and shall not be transferred to the
251	251	223state’s general fund.
252	252	224 (iii) Fee shifting barred. Other than the filing fee surcharge, the parties participating in
253	253	225foreclosure prevention conferences shall bear their own costs for participation. Unless ordered as
254	254	226a sanction for non-compliance by a court, a creditor shall not shift its costs of participation to the
255	255	227borrower, including costs for attorney’s fees or the conference program fee. Creditors may not
256	256	228charge borrowers fees as a condition of agreement to a loss mitigation option. 12 of 12
257	257	229 (e) Implementation. The provisions of this section will apply to all foreclosures in which
258	258	230the creditor gives an initial foreclosure notice or notices of acceleration 60 days after the date of
259	259	231enactment of this section.
260	260	232 (f) Relation to other laws. This section does not preclude courts from enforcing other
261	261	233state and federal statutes, common law remedies, and equitable doctrines that might bar
262	262	234foreclosure in particular circumstances, or require implementation of a loss mitigation option. As
263	263	235set forth in section 4, a court is authorized to impose sanctions on the creditor of a covered loan
264	264	236or the creditor’s attorney, upon finding that the creditor failed to participate in the conference
265	265	237process in good faith as defined in section 2.8. Unless expressly provided for in the terms of a
266	266	238written agreement, by participating in the conferences under this section the parties do not waive
267	267	239existing and future legal claims arising from the loan transaction.