In 2012, Massachusetts passed “An Act Preventing Unlawful and Unnecessary Foreclosures,” aimed at helping struggling homeowners
stay in their homes. One of the key components of this law, the right to request a modified mortgage loan, is an effective tool for foreclosure defense.
This law, found in G.L. c. 244, § 35B, requires lenders to make a “good faith effort” to avoid foreclosure for borrowers with “certain mortgage loans.” The definition of “certain mortgage loans” is lengthy, but does cover a large share of residential mortgage loans. Pursuant to the Division of Bank’s regulations, if the lender cannot determine if the loan falls into this list of definitions, it is considered a “certain mortgage loan” and the lender therefore must consider the borrower for a modification. The right to request a modified mortgage loan only applies to borrowers who have received a right-to-cure notice after November 1, 2012.
The right to request a modified mortgage loan law requires lenders to consider borrowers for a loan modification. Lenders have several different loan modification models to choose from, but the federal Home Affordable Modification Program (“HAMP”) is likely to be the most widely used option. For this reason, this law is also known as “State HAMP,” because it makes HAMP a requirement at the state level (HAMP is presently a federal program that only applies to a list of specific lenders).
Borrowers who are entitled to request a modified mortgage loan will receive a notice from their lender informing them of this right, and the documentation needed to process such an application. The deadline for the borrower to respond to this letter is generally thirty days, so borrowers need to act quickly in preparing an application. After receipt of the application, the lender is suppose to respond to the applicant’s request with an assessment of their eligibility for a modification.
G.L. c. 244, § 35B is important for foreclosure defense because it makes many Massachusetts residents eligible for a loan modification who previously had not been. I also like this law because it explicitly requires a lender to perform a “compliant” loan modification analysis. While it is no secret that lenders routinely mess up loan modification applications, fighting these mistakes are not always easy, as consumer protection laws and common law remedies do not always cover these abuses. However, G.L. c. 244, § 35B appears to open the door for allowing homeowners to challenge loan modification denials.
If you are in need of assistance in preparing a loan modification application or fighting the denial of your modification, contact me.